Nigeria is withholding an estimated $450 million in revenues belonging to foreign airlines according to data from IATA.
The data is as of May 2022 and indicated Nigeria restricted funds rose 12.5% month on month. This amount represents the total amount of foreign airline revenues that cannot be repatriated by the airlines.
In a report first published by Reuters, IATA claims airlines are owed about $1 billion globally in revenues held by countries suggesting that Nigeria alone accounts for 45% of the total share.
Other African countries, Algeria, Ethiopia, and Zimbabwe also account for a combined $271 million also owed to foreign airlines.
What the report is saying
According to IATA, Nigeria restricted the funds to allow for foreign currency to be used for imports of essential goods and services as well as for investors looking to repatriate dividends.
According to Reuters, the IATA official, Kamal Al Awadhi described the negotiations with central bank officials as a “hectic ride” suggesting that it can be frustrating to get the country officials to release funds. He also expressed fears that the situation could “damage” Nigeria’s aviation sector down the road as airlines seek options to protect their revenues.
- “The International Air Transport Association’s Vice President for Africa and the Middle East, Kamal Al Awadhi, described talks with Nigerian officials to release the funds as a “hectic ride. “We keep chipping away and hoping that it clicks that this is to damage the country down the road.” Kamal Al AwadhiÂ
- Awadhi also explained that CBN officials were “not responsive” to releasing any funds or even paying down some of them.
Nairametrics understands some airlines already charge higher ticker fares when it is booked from Nigeria compared to when it is booked from abroad where forex is already paid for.
Why is this happening?
Nigeria has been going through a major currency crisis as the exchange rate disparity between the official rates and the black market spike to an all-time high of about N180.
- The exchange rate disparity has forced companies with forex inflows to stash their money abroad to avoid risking the need to declare locally and forced to exchange at official rates when they can make a bigger spread on the black market.
- Airlines, on the other hand, charge ticket fees in local currency even though airfares are converted to local currency using the prevailing CBN Nafex exchange rate.
- Nigeria’s oil revenues have also failed to plug the revenue gap as output remains lower than expected.
