According to data from the Central Bank of Nigeria, foreign airlines repatriated N795.48 billion from Nigeria in six months. According to the apex bank balance of payments aggregate data, airlines withdrew (as debit) US$1.76 billion (converted to Naira at N451/$) in the first and second quarters of 2023.
The total balance of payments account from air travel was US$19.39 million (N8.75 billion). Amounts on the debit side of the balance of payments include amounts spent on air tickets by passengers (N779.61 billion), cargo (US$10.22 billion) and others (N5.65 billion).
According to an explanation on the website for the Apex bank entitled ‘Note D’, the balance of payments is the “systematic economic and financial transaction between residents and non-residents of an economic area over a specified period of time.
The National Statistics Office added the following in a document entitled “International Trade and Balance of Payments Statistics”; remittances, short-term and long-term capital movements, and transfers of foreign exchange reserves between the reporting country and other countries.
Nevertheless, foreign airlines repeatedly complain that they are unable to repatriate funds in full. In November 2023, these airlines announced that approximately 90 percent of the $783 million in withheld funds had not been paid.
Foreign Aviation Representatives Association President Kingsley Nwekoma said this at a stakeholder forum with Minister of Aerospace Development, Festus Keyamo.
He said that “the majority of the blocked funds can be traced to commercial banks in Nigeria.The majority of the funds are yet to be paid.”
In December 2023, the International Air Transport Association announced that the country is hoarding a $790m ticket revenue.
IATA Africa and Middle East regional vice president, Kamil Allawady said Nigeria had the most funds for blocked airlines, with $792 million, followed by Egypt ($348 million), Algeria ($199 million), AFI zone ($183 million) and Ethiopia ($128 million).
In the Punch report, he commented on the challenges in deploying funds: “The first step to resolving these blocked funds is for both parties to get involved.” Without the involvement of the parties, it is very difficult to move forward.
He could not reach Nigeria’s CBN governor. “He said he would contact me if there was a solution. It’s not promising, but I spoke to the Minister of Aviation and he was very understanding and said he was new to this position, or perhaps he is impressed with the situation he has inherited and will help solve the problem.”
These blocked funds are part of the central bank. Nigeria has an estimated $7 billion in outstanding foreign currency debt under forward foreign exchange contracts with commercial banks.
In January 2024, the Apex bank announced it had paid $2 billion to clear some of this outstanding balance. Of this amount, $61.64 million was paid to foreign airlines.
CBN Acting Director of Corporate Communications Hakama Sidi Alia said in a statement: “This demonstrates the continued efforts of the CBN. These payments are intended to liquidate all remaining valid forward contracts to alleviate the current pressure on the country’s domestic exchange rate.”
“This initiative by the CBN is expected to significantly strengthen the naira’s acceptance of the world’s major currencies and further boost investor confidence in the Nigerian economy.”
Reacting to this statement, the Nigerian Travel Agency Susan Akpolyai, president of the National Association, said: “The old debt will be settled at the current rate at the time the tickets are sold, with an exchange rate of approximately $1 = 400/450 Naira. The debt, which was initially more than $800 million, has been reduced.”
“Due to this particular issue, Emirates has suspended its flights to Nigeria. The government is committed to liquidating the old outstanding debt at prevailing interest rates during the sale period.”
Experts have partially linked these withheld funds to why Nigerian routes are very expensive.