Foreign airlines returned N795.48 billion from Nigeria during the course of six months, according to Central Bank of Nigeria data.
According to the apex bank’s Balance of Payment compilation, airlines withdrew (as debits) $1.76 billion (converted to naira at N451/$) in the first and second quarters of 2023. The total credit to the Balance of Payments account for airline travel was $19.39 million (N8.75 billion).
The debit side of the balance of payments comprises the amount spent on passenger tickets (N779.61 billion), freight ($10.22 billion), and other expenses (N5.65 billion).
According to an explanatory note on the apex bank’s website titled Note D, the Balance of Payments is “defined as a systematic record of economic and financial transactions for a given period between residents of an economy and non-residents.”
The National Bureau of Statistics would in a document titled ‘International Trade and Balance of Payments Statistics’ added, “In other words, it is a record of all the receipts and payments in respect of merchandise trade, invisible (service) trade, transfer payments, short-term and long-term capital movements and movement of international reserves between the reporting country and other countries.”
Despite this, international airlines have repeatedly complained about their inability to repatriate all funds. As of November 2023, several airlines reported that approximately 90% of their $783 million stuck funds had not been reimbursed.
Mr Kingsley Nweokoma, Chairman of the Association of Foreign Airlines and Representatives, made the statement during a stakeholder roundtable with Festus Keyamo, Minister of Aviation and Aerospace Development.
He said, “The bulk of the blocked funds are with Nigerian commercial banks. The bulk of the money has not been paid.”
In December 2023, the International Air Transport Association revealed that $790 million in ticket sales is currently stranded in the country. According to Kamil Alawadhi, IATA Regional Vice President for Africa and the Middle East, Nigeria has the most airlines’ blocked funds at $792 million, followed by Egypt ($348 million), Algeria ($199 million), the AFI zone ($183 million), and Ethiopia $128 million.
Commenting on the challenges of getting the funds out, he said, “The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward. I have not been able to engage with Nigeria’s CBN governor.
“He said he would engage with me when he had a solution. He is not promising but I have engaged with the aviation minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.”
These blocked monies are part of the Central Bank of Nigeria’s estimated $7 billion in outstanding foreign exchange liabilities on FX forward contracts owed to commercial banks. In January 2024, the apex bank reported that it had paid $2 billion to eliminate some of this backlog. $61.64 million of this total went to foreign airlines.
In a statement, the CBN Acting Director of Corporate Communications, Hakama Sidi Alia, stated, “These payments represent the CBN’s continuous efforts to complete all remaining legitimate forward transactions, thereby alleviating the current pressure on the country’s currency rate.
“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira hug against other major world currencies and further increase investor confidence in the Nigeria economy.”
Reacting to this, the President of the National Association of Nigerian Travel Agencies, Susan Akporiaye, noted, “The old debts are being settled at the prevailing rate when tickets are sold, with the exchange rate around N400/450 to one dollar. The debt, which was originally over $800m, has been reduced.
“This specific issue led to Emirates discontinuing flights into Nigeria. The government has committed to paying the old outstanding debt at the rates prevalent during the sales period.”
Experts have partly linked these trapped funds to why Nigerian routes are expensive.