Data from the Central Bank of Nigeria (CBN) indicates that foreign airlines withdrew N795.48 billion from Nigeria within a span of six months.
Information from the central bank’s Balance of Payment compilation indicates that airlines made withdrawals (as debits) totaling $1.76 billion (converted to naira at N451/$) during the first and second quarters of 2023. The overall credit to the Balance of Payment account from airline travel amounted to $19.39 million (N8.75 billion).
On the debit side of the balance of payments, the breakdown includes expenses for tickets by passengers (N779.61 billion), cargo ($10.22 billion), and other miscellaneous costs (N5.65 billion).
According to an explanatory note on the apex bank’s website titled, Note D, 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.”
Nevertheless, foreign airlines have continually expressed dissatisfaction with their inability to repatriate their entire funds. As of November 2023, these airlines revealed that approximately 90 percent of their $783 million trapped funds remain unpaid.
Mr. Kingsley Nweokoma, the Chairman of the Association of Foreign Airlines and Representatives, conveyed this information during a stakeholders’ forum with the Minister of Aviation and Aerospace Development, Festus Keyamo.
He said, “The bulk of the blocked funds are with Nigerian commercial banks. The bulk of the money has not been paid.”
As of December 2023, the International Air Transport Association revealed that Nigeria is currently holding $790 million in trapped ticket revenue. Kamil Alawadhi, the IATA Regional Vice President for Africa & Middle East, highlighted that Nigeria has the highest amount of blocked funds among airlines at $792 million, followed by Egypt ($348 million), Algeria ($199 million), the AFI zone ($183 million), and Ethiopia ($128 million).
“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 funds form part of the estimated $7bn outstanding foreign exchange obligations of the Central Bank of Nigeria on forex forwards contracts owed to commercial banks. In January 2024, the apex bank announced that it has paid $2bn to clear part of this backlog. $61.64m of this amount went to foreign airlines.
In a statement, the CBN Acting Director of Corporate Communications, Hakama Sidi Alia, said, “These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange 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.