Foreign airlines trapped funds in Nigeria hikes to $743 million

The report was revealed in a letter signed by the Area Manager of West and Central Africa, Dr. Samson Fatokun and addressed to the Minister of Aviation, Hadi Sirika.

“For over a year, Nigeria has been the country with the highest amount of airline-blocked funds in the world. Please find attached the comparative table of airlines’ blocked funds by country.”

“Moreover, as of January 2023, airlines’ blocked funds in Nigeria have increased to $743.721.092 from $662m in January 2022 and $549m in December 2022,”

“Foreign airlines fly into Nigeria within the legal framework of the bilateral air service agreement (BASA) signed between their countries and the Federal Republic of Nigeria,”

“It is agreed in those BASAs that Nigeria will facilitate the repatriation of the funds of the other party’s airline. Nigeria flaunts this contractual obligation by not facilitating enough the repatriation of airlines’ funds.” part of the letter read.

The repatriating issue of trapped funds belonging to foreign airline operators has been a lingering crisis in the Nigerian aviation sector.

The matter gained prominence last year when the amount was still as low as  $289 million as of March 2022. Three months later, it increased to $450 million amid pressure from the airlines.

As part of the Bilateral Air Services Agreement (BASA) signed with the foreign airlines, instead of selling their tickets in dollars, the foreign airlines would sell their tickets in naira while the Central Bank of Nigeria (CBN) would convert the money to dollars and repatriate to the respective airline countries.

However, this plan went soar as Nigeria failed to keep up with the payments after the country experienced some economic turbulence between 2016 and 2017. This was caused by scarcity of foreign exchange due to a drop in crude oil earnings, which is Nigeria's main source of foreign exchange.

This caused a major crisis as about 30 foreign airlines operating in the country threatened to halt ticket sales until the backlog was cleared.

While responding to the IATA team, the Minister of Aviation, Hadi Sirika gave assurance that the issue would be taken up with the Presidency and the Central Bank of Nigeria.