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Nigeria: Less Than 10% of $700m Trapped Funds Paid – Foreign Airlines

As stakeholders in the business landscape express relief over the intervention by the Central Bank of Nigeria (CBN) in the foreign exchange market in recent times, foreign airlines operating in Nigeria have disclosed that about 90 percent of their trapped funds have not been cleared.

They spoke just as the domestic carriers hailed the CBN initiative, saying they also have their funds trapped before the CBN.

They spoke in Lagos during a stakeholders’ forum convened by the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo.

The CBN was said to have started clearing the Forex backlog to commercial banks in order to ease pressure on the foreign exchange. The intervention has seen the naira appreciating by over 20 per cent since last week in the parallel market.

Part of the backlog was the trapped funds belonging to foreign airlines operating in Nigeria amounting to over $700m according to the International Air Transport Association (IATA).

But the Chairman of International Airline Operators, Mr. Chima Kingsley who spoke at the stakeholders’ forum at the weekend said, “As of Thursday, the international banks have received dollars from the CBN. But this accounts for less than 10 per cent of the trapped funds.

“The bulk of the blocked funds are with Nigerian commercial banks. The bulk of the money has not been paid,” he said.

From the perspective of the Airline Operators of Nigeria (AON), Chairman of United Nigeria Airlines, Prof. Obiora Okonkwo said the domestic carriers also require enough forex to operate, saying their funds are also trapped in CBN.

“We are buying forex like smugglers,” he declared, adding, “We are happy with the news that the government is clearing the backlog. We also have trapped funds. For instance, my airline has $3m trapped in CBN.”

He said a Nigerian carrier has one of its aircraft parked in a maintenance, repair and overhaul (MRO) facility abroad and it has accumulated over $3m in parking fees alone because it is unable to source forex to pay for the service.

The Minister who said the CBN’s intervention would continue in a matter of weeks assured both foreign and domestic airlines that efforts are ongoing to address the forex challenge.

“The process of clearing the money has started. The President gave a marching order to the CBN,” he said.

Also speaking, Area Manager, West and Central Africa for IATA, Dr. Samson Fatokun said there was the need to reduce the Nigerian aviation sector operating cost.

According to him, the aviation industry in Nigeria needs specific sector focused support.

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