Yielding to international pressure, the Central Bank of Nigeria released US$265 million to foreign airlines in connection with ticket sales, Aviacionline reported, based on a resolution issued by the entity last Friday. Many companies active in the African nation were already concerned about having large sums held there due to the inability to access currency repatriation funds.
This is a relatively common situation in some African and Latin American countries, which occurs when some of the sales proceeds are blocked by local administrations on the grounds that they will be released when local economic conditions are better.
Nigeria, the continent’s most populous country and an emerging market, derives 90% of its foreign exchange from oil exploration, its main natural resource. Lately, it has been dealing with widespread theft of pipelines, a circumstance that has reduced exports by nearly half a million barrels a day.
In this context, the national administration restricted the outflow of foreign exchange. According to the International Air Transport Association (IATA), Nigeria prevented foreign airlines from repatriating about $464 million in revenue in July. The agency’s vice president for Africa and the Middle East, Kamil Alawadhi, commented at the organization’s annual meeting that solving the problem was “a key priority.”
Last week, Nigeria’s Minister of Information and Culture, Lai Mohammed, commented that the government was looking for the best solution to the problem of withheld funds during a visit to the new terminal at Murtala Muhammed International Airport in Lagos. “I can say that the relevant authorities are working hard on this issue.“, he said.
The airline’s response
Companies responded with widespread price increases, which made Nigerian users see their costs considerably higher.
The situation worsened when Emirates confirmed the suspension of its operations in the country. The company informed its clients that, despite having tried by all means to solve the problems of repatriation of funds and trying to start a dialogue with the authorities involved, there was no progress.
For its part, the local media reported that British Airways, which was the first foreign airline to operate in the country and which for 85 years has maintained uninterrupted services between the United Kingdom and Nigeria – a former British colony – informed the agencies of travel that would suspend ticket sales.
Until the funds are released, the Central Bank of Nigeria still holds about $199 million belonging to foreign airlines in its vaults. In this regard, Kamil Alawadhi assured that they will continue to work with the government to “Accelerate the release of the remaining amount so that airlines can continue to provide the connectivity Nigeria needs without disrupting or harming its economy and jobs.”