Recent data from the Central Bank of Nigeria (CBN) have revealed that foreign airlines repatriated a total of N795.48 billion from Nigeria over a six-month period.
According to the CBN’s Balance of Payment compilation, foreign airlines withdrew $1.76 billion, converted to naira at the rate of N451/$, during the first and second quarters of 2023. The Balance of Payment account received a total credit of $19.39 million (N8.75 billion) from airline travel.
Breaking down the debit side of the balance of payments, the expenses include passenger ticket costs (N779.61 billion), cargo fees ($10.22 billion), and other miscellaneous charges (N5.65 billion).
The Balance of Payments is described on the apex bank’s website as a systematic record of economic and financial transactions between residents of an economy and non-residents. It encompasses various aspects such as merchandise trade, invisible (service) trade, transfer payments, and international reserves movements.
Despite the repatriation figures, foreign airlines have consistently faced challenges in accessing their funds, with approximately 90% of their $783 million in trapped funds remaining unpaid as of November 2023. The Chairman of the Association of Foreign Airlines and Representatives, Mr. Kingsley Nweokoma, disclosed this during a stakeholders’ forum with the Minister of Aviation and Aerospace Development, Festus Keyamo.
The International Air Transport Association (IATA) revealed in December 2023 that $790 million in ticket revenue is currently trapped in Nigeria. Nigeria leads in the amount of airlines’ blocked funds at $792 million, followed by Egypt ($348 million), Algeria ($199 million), AFI zone ($183 million), and Ethiopia ($128 million).
Kamil Alawadhi, IATA Regional Vice President for Africa & Middle East, emphasized the importance of engagement between parties to resolve the issue of blocked funds. He noted challenges in engaging with Nigeria’s CBN governor but expressed optimism in discussions with the aviation minister.
These blocked funds contribute to the estimated $7 billion outstanding foreign exchange obligations of the CBN on forex forwards contracts owed to commercial banks. In January 2024, the CBN announced the payment of $2 billion to clear part of this backlog, with $61.64 million allocated to foreign airlines.
Hakama Sidi Alia, the CBN Acting Director of Corporate Communications, stated that these payments are part of ongoing efforts to settle remaining valid forward transactions and alleviate pressure on the country’s exchange rate. The move is anticipated to boost the Naira against major world currencies and increase investor confidence in the Nigerian economy.
Responding to these developments, Susan Akporiaye, the President of the National Association of Nigerian Travel Agencies, highlighted the reduction in the old outstanding debt and its impact on ticket pricing, partially attributing expensive Nigerian routes to the trapped funds.
