The issue of blocked funds in billions of US dollars has been on the table for sometime now but there is relief for African airlines as the International Air Transport Association (IATA) has reported a 28% decrease in the amount of airline funds blocked from repatriation by governments.
The total blocked funds at the end of April stood at approximately $1.8 billion, a reduction of $708 million (28%) since December 2023.
The main driver of the reduction was a significant clearance of funds blocked in Nigeria. Egypt also approved the clearance of its significant accumulation of blocked funds. However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira.
IATA Regional Vice President for the Middle East and Africa, Kamil Alawadhiwith Katherine Kaczynska, IATA Director communications during the African media briefing in Dubai
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 to Nigeria, which severely impacted the country’s aviation industry.
However, as of April 2024, 98% 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.
“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,” said IATA director General Willie Walsh.
IATA reiterated the call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.
“The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements. Even more importantly, it is a pre-requisite for airlines—who operate on thin margins—to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,” said Walsh.
Eight countries are responsible for 87% of blocked funds Eight countries account for 87% of the total blocked funds, amounting to $1.6 billion.
