Nigeria's Central Bank releases $265 million out of the total $464 million in trapped funds to foreign airlines
The Central Bank of Nigeria has moved to mitigate Nigeria’s flight risk. On Friday, CBN released $265 million out of the total $464 million in trapped funds to foreign airlines.
ICYMI: According to the International Air Transport Association (IATA), Nigeria owes foreign airlines a total of $464 million from revenues made by the airlines. Due to Nigeria’s ongoing foreign exchange scarcity, foreign airlines have found it difficult to repatriate their funds.
Earlier this month, Emirates Air announced that it would be suspending flights to Nigeria by September 1 as it could not retrieve its $85 million revenue trapped in the country. This came weeks after the airline initially announced it would be reducing flights to Nigeria for the same reason.
After Emirates’ announcement, the IATA admonished the Nigerian government in a Twitter thread, stating that “Airlines can’t be expected to fly if they can’t realise revenue from ticket sales. Loss of connectivity harms the economy, hurts investor confidence, impacts jobs and people’s lives. The Government of Nigeria needs to prioritise the release funds before more damage is done.”
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The president of the National Association of Nigeria Travel Agencies (NANTA), Susan Akporiaye, also reported, in a conversation with ThisDay, that other airlines—including British Airways, Lufthansa, Air France and Turkish Airlines—are at a risk of leaving the country if the Nigerian government doesn’t resolve its FX issues.
CBN responds: Last week, the CBN moved to curtail further losses. It released a total of $265 million—$230 million as part of a special FX intervention, and $35 million through Retail Secondary Market Intervention Sales (SMIS) auction.
CBN director of corporate affairs, Osita Nwansiobi, confirmed the release of the funds which the CBN hopes will assuage airlines threatening to exit the country.
Zoom out: Africa accounts for 67% of the $1.6 billion owed to airlines globally with Nigeria, Zimbabwe, Algeria, Eritrea, and Ethiopia owing $900 million.