Funds trapped from foreign carriers in Nigeria rise from $450m to $600m and could reach $1bn by December
The ongoing controversy raging over the entrapped funds of foreign airlines in Nigeria may soon explode in the eyes of the federal government as the entrapped funds have risen from $450 million to $600 million.
Nigerian Tribune reports that as of March 2022, the funds trapped amounted to $285 million.
Reports reaching the Nigerian Tribune said debts which hit $450m in June have again skyrocketed to $600m, with speculation that the amount could rise further to nearly $1bn. by the end of the year if the federal government does not intervene. .
The amount which consists of the accumulated funds generated by the more than 27 foreign carriers operating in Nigeria through air transport services rendered to the Nigerian traveling public but which became trapped in the Central Bank of Nigeria (CBN) in due to the shortage of foreign exchange, continued to generate negative reactions both inside and outside Nigeria.
According to information collected by the Nigerian Tribune over the weekend, the latest trapped funds of $600 million represent almost half of the entire $1.620 billion owed to foreign carriers, showing that Nigeria is the most indebted to foreign airlines.
Previously, several efforts by foreign airlines to repatriate the trapped funds to their home countries failed to yield any positive response from the government and the CBN.
The culmination of the controversy that took center stage at the recent International Air Transport Association (IATA) Annual General Meeting in Doha, United Arab Emirates (UAE), had the Chief Executive of the global clearinghouse for over 300 airlines worldwide. , Willie Walsh expressing his displeasure with funds being trapped in Nigeria and other parts of the world.
The latest reports that the trapped funds have risen to $600 million, however, has drawn backlash from industry stakeholders, with many warning that if the trapped funds continue to pile up, it could pit the federal government. against the countries of origin of foreign airlines.
Although some have argued that the circumstances surrounding the trapped funds are beyond the government given the global scarcity of forex, others have accused the government of not complying with existing international trade agreements in the policy of bilateral trade deals. Air Services (BASA) between Nigeria and foreign airline countries which have agreed that these funds should be able to be repatriated to the countries of the airlines which generate these funds.
While some key players have claimed that the continued trapping of said funds in Nigeria could cause a boomerang, Zenith Travels Director and Aviation Roundtable Member Mr. Olumide Ohunayo said in his reaction that a large consequence awaits the country as funds continue to rise. .
His words: “In June 2022, it was $450 million, this increased to $600 million that Nigeria owes to foreign airlines that they could not repatriate, which is their statutory liability based on of the bilateral agreement.
“The whole world now owes foreign airlines $1.620 billion, but of that, Nigeria alone owes $600 million. The amount increases. It was $285 million in March, but it went to $450 million in June and has now gone to $600 million and the consequences are there for us. Some of the airlines no longer sell their cheap fares to Nigeria and now they have stopped selling their tickets in Naira. Here are some of the effects.
Speaking along the same lines, the President of the National Association of Nigerian Travel Agencies (NANTA), Ms. Suzan Akporiaye, concurred with the idea that the government’s inability to urgently resolve the crisis could have a negative effect on the entire Nigerian traveling public and the travel agency.
Responding to the likely effects of the withholding of trapped funds from international airlines, Akporiaye said, “Regarding the increase in trapped funds from foreign airlines, as long as we continue to sell, the amount will continue to increase, this there is no doubt. This is definitely a situation that will explode in our face if nothing drastic is done very soon. And once you get to that point, no one can blame foreign carriers anymore.
“So the amount will continue to increase as long as we continue to issue tickets and that’s why there have been restrictions that have been imposed by foreign carriers, all forms of restrictions just to make sure that the cost does not go over something they can afford eg we can no longer issue a ticket that is not from Nigeria in Naira you have to go to the airline website and use your dollar card and issue it what do i mean by ticket that is not from nigeria like if someone is coming from london to nigeria and back to london this ticket has been restricted for sale the only way to sell that ticket is that that ticket has to be sold from the UK market or through the airline’s website so those are the things the airlines have put in place to make sure it doesn’t go over what they can handle.
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Lamenting how the measures taken by airlines to cushion the effects of trapped funds have affected the business of travel agents in the country, Akporiaye said: “Of course, with all the restrictions of these airlines, our members do not are not just feeling the heat but we are being baked in the heat the heat is getting unbearable we have been feeling the heat for a long time right now the heat that the travel agencies in Nigeria are feeling because of these blocked funds from foreign airlines is became unbearable.
“Just as foreign carriers have imposed some restrictions, we as travel agents have also made some adjustments to our operations just to survive this process. So I take this opportunity again to ask the government to remember the crisis that arose as a result of COVID, my members are still trying to manage these crises, we are still trying to manage the debts my members have incurred during this period, we are trying to pay.
“So all that’s happening and we’ve got this crisis again, what I feel about this is that the government needs to put airline funds on their priority list, they can’t be on a list non-priority, I believe the reason it is like this and it piled up is because it was not on the government’s priority list.
Corroborating the positions of many stakeholders, another well-respected travel expert who said he was not authorized to speak on the matter said: “The amount of funds trapped from foreign airlines exceeds 600 million dollars. Unfortunately, the repatriation of this huge sum is not the priority of the Minister of Finance nor that of the Governor of CBN, politics is on their mind. It is therefore up to the airlines to take all measures to reduce their risk and exposure in this market or lose a substantial part of the funds due to an erosion of value.
“They will reduce flights, they will only issue point-to-point tickets and travelers will only have to buy tickets for onward destinations when they arrive at airline hubs or arrange to buy dollar or euro banknotes.”
When the Nigerian Tribune contacted the head of CBN’s corporate department, he only said that foreign airline funds were not trapped at the country’s apex bank when he abruptly hung up his phone.