The International Air Transport Association (IATA) has announced that the Central Bank of Nigeria (CBN) has successfully cleared $831 million in trapped funds belonging to foreign airlines since June last year. This development has reduced the total amount of trapped funds globally to approximately $1.8 billion.
Geneva-based IATA reported that from a peak of around $850 million in Nigeria last June, only $19 million remains outstanding. This residual amount is currently awaiting CBN verification through commercial banks. Willie Walsh, Director-General of IATA, shared these updates in a statement released on Sunday.
“At its peak in June 2023, Nigeria’s blocked funds amounted to $850 million, significantly affecting airline operations and finances in the country. Carriers faced difficulties in repatriating revenues in US dollars, and the high volume of blocked funds led some airlines to reduce their operations and one carrier to temporarily cease operations in Nigeria, which severely impacted the country’s aviation industry,” Walsh explained. “However, as of April 2024, 98 per cent 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.”
Walsh commended the Nigerian government and the CBN for their diligent efforts in resolving this issue. “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 prioritizing aviation,” he added.
Additionally, IATA reported a significant decrease in airline funds blocked from repatriation globally. This reduction is primarily due to the clearance of blocked funds in Nigeria and similar efforts in Egypt. However, IATA noted that airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira.
The situation remains more severe in Pakistan and Bangladesh, with $731 million still blocked. Pakistan is currently withholding $411 million and Bangladesh $320 million. IATA urged these countries to release the funds immediately to ensure the continuation of essential air connectivity.
“Pakistan and Bangladesh must release the $731m in blocked funds immediately to ensure airlines can continue providing essential air connectivity. In Bangladesh, the solution is in the hands of the Central Bank, which must prioritize aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays,” the statement read.
