The IATA says the main driver of the reduction in funds repatriation recorded so far was due to a significant clearance of blocked funds in Nigeria
The International Air Transport Association (IATA), a top global trade association of airlines, has said that 98 per cent of airlines' trapped funds in Nigeria have been cleared.
In a statement published on its website on Sunday, IATA acknowledged that significant progress has been achieved in the repatriation of trapped funds in Nigeria and from governments globally.
According to IATA's Director General, Willie Walsh, as of June 2023, Nigeria's blocked funds amounted to $850 million. This, he said, affected airline operations and finances in the country significantly.
He explained that carriers faced difficulties in repatriating revenues in US dollars, and that the high volume of blocked funds led some airlines to reduce their operations, while one carrier temporarily ceased operations to Nigeria, which severely impacted the country's aviation industry.
"However, as of April 2024, 98% of these funds have been cleared. The remaining $19 million is due to the Central Bank's ongoing verification of outstanding forward claims filed by the commercial banks," the official said.
"We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical.
"We are on the right path and urge the government to clear the residual $19 million and continue prioritising aviation."
Background
Last November, IATA criticised Nigeria and other African countries for not allowing international airlines to repatriate their profits.
The group said trapped funds in African countries is currently estimated at $1.68 billion, noting that the challenge is impeding the growth and development of air transportation on the continent
As of August 2022, reports indicated that foreign airlines' funds trapped in Nigeria stood at $793 million amidst lingering forex scarcity.
Of this figure, $300 million is said to be legacy debt, which the CBN has taken, but yet to be remitted to IATA on behalf of the airlines.
This prompted some major airlines, particularly Emirates Airline, to suspend flights operations in the country.
However, in March, the Central Bank of Nigeria (CBN) announced that the government had cleared all 'valid' foreign exchange backlogs.
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The move prompted Emirates airlines to announce recently that it will resume flight services to Nigeria from 1 October.
Progress in repatriation
According to the statement, IATA said it has reported a 28 per cent decrease in the amount of airline funds blocked from repatriation by governments globally.
"The total blocked funds at the end of April stood at approximately $1.8 billion, a reduction of $708 million (28%) since December 2023," the statement said.
The group reiterated the call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.
"The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements," Mr Walsh said.
He added that even more importantly, it is a prerequisite for airlines--who operate on thin margins--to be able to provide economically critical connectivity.
"No business can operate long-term without access to rightfully earned revenues," Mr Walsh noted.
"Egypt also approved the clearance of its significant accumulation of blocked funds. However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira," the statement said.
