Foreign airlines are threatening to leave Nigeria shortly due to $700 million in debt, the Association says.
There are still worries that some foreign airlines may leave Nigeria if they are unable to fully repatriate their estimated $700 million in funds, even after the Central Bank of Nigeria (CBN) recently released $61.64 million to foreign airlines operating in Nigeria.
The alarm was sounded yesterday by the Association of Foreign Airlines and Representatives in Nigeria (AFARN), which also called the $61 million that was released “a drop in the ocean” and said it would not address the ongoing problems.
It further stated that other airlines might follow Emirates Airlines and Ethiad in leaving the nation if the situation with the trapped funds was not resolved, according to Daily Sun.
The International Air Transport Association (IATA) reported last year that foreign airlines are presently holding $1.68 billion in assets that are stuck in Africa.
Speaking at the 55th Annual General Meeting (AGM) of the African Airlines Association (AFRAA) in Entebbe, Uganda, Kamil Al Alwadi, regional vice president of IATA for Africa and the Middle East, stated that at the end of September 2023, the trapped fund had reached $1.68 billion.
Nigeria makes up more than $750 million of the foreign airline funds that are being held by Ghana, Nigeria, Ethiopia, Angola, and Zimbabwe. IATA described the numbers as alarming and said that trapped funds have a huge and devastating impact on connectivity, making it one of the main problems affecting aviation in Africa.
Unfortunately, as a result of a wasteful civil service system, a decline in exports, and a collapsing local currency (the naira), Nigeria is currently experiencing one of its worst cases of foreign exchange scarcity.
Dr. Kingsley Nwokoma, the president of AFARN, told reporters during a meeting at Lagos’ Murtala Muhammed Airport (MMA) that the amount of money released by the central bank pales in comparison to what Nigeria owes foreign airlines that operate there. According to him, Nigeria’s reputation has suffered as a result of the Federal Government’s breach of the Bilateral Air Service Agreement (BASA) with the nations these airlines originated from.
According to him, the majority of foreign airlines that operate in the nation currently use revenue from their overseas operations to fund their domestic operations.
“The government should have a plan to pay a portion of the money every quarter, but we’re not saying the government should pay all of it.
The fear is that if it continues like this, some of the airlines may go. The last conversation we had with the Minister of Aviation and Aerospace Development, Festus Keyamo, seemed good. He sounded serious about the payment and they have done $61 million thus far.
“Nigeria is just a very strange country. Some are still saying that the airlines should not be asking for any money from Nigeria. What is BASA? BASA is signed by countries and not airlines. We signed our commitment to the BASA and we are not doing anything about it.
“If all countries are defaulting like Nigeria, there will not be any airline that comes into the country again. The aviation industry is predicated on the U.S dollars. You pay your catering, handling, hotel and a lot of things in dollars and if you don’t pay, your crew would be sent out.
“The foreign airlines are not talking about it because they felt it is a little drop. It is not something to be too excited about. If we have had about $300m now or half of what the airlines are being owed, then, you can say there is hope. The government should sit with the foreign airlines just like how you sign your BASA agreements and agree on quarterly payment of these funds. The government should please keep to that agreement. By then, we will be making progress,” he said.
