The International Air Transport Association (IATA), saddled with the responsibility of monitoring blocked funds globally, yesterday put foreign airlines’ funds currently stranded in the Nigerian economy at N120 billion ($600 million).
The IATA, therefore, appealed to Nigerian government and four others to respect international agreements obliging them to ensure airlines are able to repatriate their revenues.
The funds were proceeds from sale of tickets by the airlines in the last 12 months, which could not be repatriated due to Federal Government’s policy on foreign exchange.
Estimates have it that both Delta and United Airlines have an estimated sum of $180 million hanging in the Nigerian economy. Those of Air France-KLM are estimated to be over $150 million.
British Airways has a total of $100 million as of March 2016, while Iberia, which had already withdrawn its services has $5 million of its funds trapped.
Director-General of IATA, Tony Tyler, at the opening of 72nd yearly general meeting of the organisation in Dublin, yesterday said: “While air connectivity is vital to all economies, the airline industry is a competitive business operating on thin margins.
“So, the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity. It is not reasonable to expect airlines to invest and operate in nations where they cannot efficiently collect payment for their services.”
A global estimate disclosed at the meeting shows that Nigeria is second after Venezuela as the country with highest number of trapped funds. While Venezuela traps a total $3.8 billion in its economy in the last 17 months, others like Sudan has $360 million for four months; Egypt, $291 million in the last four months and Angola, $237 million for seven months.
For Nigeria, IATA said that repatriation issues arose in the second half of 2015 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.
“Nigerian authorities are engaged with the airlines and are together with the industry seeking possible measures to make the funds available.
“Blocked funds are a problem in a diverse group of countries, some of them undergoing significant economic challenges, particularly with a fall-off in oil revenues. But one thing all five nations have in common is the urgent need for robust air connectivity that is being hampered by airlines’ difficulty in repatriating funds.
“Strong connectivity is an economic enabler and generates considerable economic and social benefits – something that struggling economies need more than ever. It is in everybody’s interest to ensure that airlines are paid on-time at fair exchange rates and in full,” Tyler further said.