N430/$: Foreign Airlines Reject CBN’s Offer on FX Repayment, Insist on Payment Using Emefiele's Rate
- Foreign airlines have explained why they cannot use the exchange rate at the I&E window to get their trapped funds
- This came after the CBN claimed that it had completed all outstanding foreign exchange (FX) obligations
- The president of foreign airlines and representatives in Nigeria want the CBN to show proof that it settled all FX backlog
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Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
Foreign airlines have stated that they cannot exchange foreign currency at the I&E window at the present exchange rate; hence, their repatriated trapped funds from the sale of plane tickets remain unattended to.
Source: Getty Images
Kingsley Nwokoma, president of the Association of Foreign Airlines and Representatives in Nigeria (AFRAN), said this in response to claims made by the Central Bank of Nigeria (CBN) that all outstanding foreign exchange (FX) obligations had been successfully settled.
Speaking to Daily Sun, he explained that foreign airlines would instead get paid at the price at which they sold their tickets—less than N1,000 for every dollar.
On February 5, Olayemi Cardoso, the governor of the CBN, claimed that the $7 billion foreign exchange backlog he took over when he took over as head of the apex bank in September 2023 had shrunk to $2.2 billion.
In a statement released on Wednesday, March 20, the apex bank's acting director of corporate communications, Hakama Sidi Ali, said that the financial regulator had just finished paying $1.5 billion to meet obligations to bank clients, clearing the remaining balance of the foreign exchange backlog.
She noted that the independent auditors from Deloitte Consulting carefully examined each transaction, ensuring that only legal claims were honoured and that invalid transactions were quickly reported to the appropriate authorities for additional investigation.
Foreign airlines reject claims
Nwokoma, however, refuted this claim. He stated that although foreign airlines have been directed to use the I&E window to collect their outstanding balances, they are unwilling to do so because doing so would result in losses.
He stressed that the naira had not depreciated to its current value at the time of ticket sales.
He explained that foreign airlines were compelled to convert at the current rate, which ranges between N1,400 and N1,700 to a dollar.
Meanwhile, when they were selling tickets, it was in naira at the CBN-approved exchange rate, which was N430 to a dollar during the Godwin Emefelie government.
He argues that airlines would lose more than 60% of their funds if they do this. Hence, they insist that they get their funds at the agreed-upon rate.
He said:
“What we are saying is that the Central Bank of Nigeria should avail us the figures of the backlog they said they have cleared. The foreign airlines have been pushed and told to go to the I and E window to get their money. However, they cannot go to the I and E window as they would run at a loss because the amount they sold their ticket at the time was not the exact amount the CBN told them to collect.
“The foreign airlines insist they need to get their money at the rate that they sold tickets when the dollar rate was below N700. If going to the I and E window means you have cleared the FX backlog, tell us how much was paid and which airlines benefitted.
“The last time, they released a figure saying that they paid $65 million, now they have said they cleared the backlog. What the airlines want is to have a figure and data to indicate how much has been cleared. Telling them to go to the I and E means that they would lose almost everything.”
In the view of Charles Abuede, a financial analyst, the settlement of debt will cause the naira to improve in value.
"When the CBN takes seriously the mandate of liquidity injection into the system to ensure fx stability and availability, we will see positive movement and gradual appreciation in the naira value."
Mixed reactions trail CBN's forex clearance claim
Legit.ng reported that the CBN recently claimed it completed the payment obligations to bank clients, essentially closing the remaining balance of the foreign exchange backlog.
This is according to a statement released by Hakama Sidi Ali, acting director of corporate communications at CBN.
Reacting to this, foreign airlines argue that nothing has changed despite the CBN statements that it has successfully satisfied all outstanding foreign exchange (FX) obligations.
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Source: Legit.ng
