Trapped Revenue: CBN Bows to Foreign Airlines’ Pressure, Releases $265m

Chinedu Eze and James Emejo

The Central Bank of Nigeria (CBN) yesterday released $265 million to foreign airlines operating in the country for the remittance of a part of their revenues trapped in the country.

A number of foreign airlines had raised the alarm over their inability to remit their revenues in Nigeria said to be around $450 million. Last week, Emirates Airlines announced that it would suspend all flights to Nigeria from September 1, 2022 over its stuck $95 million.
The Nigerian government bowed to the foreign airlines’ pressure yesterday.

A breakdown of the figure indicates that $230 million was released as special foreign exchange intervention while another sum of $35 million was released through Retail SMIS auction.
Confirming the development, CBN Director, Corporate Communications Department, Mr. Osita Nwanisobi, in a statement said the apex bank’s governor, Mr. Godwin Emefiele and his team were concerned about the development and what it portends for the sector and travellers, as well as the country in the comity of nations.

He pointed out that the central bank was not against any company repatriating its funds from the country, adding that what the bank stood for was an orderly exit for those that might be interested in doing so.

The statement added that with the latest development, it is expected that operators and travellers would heave a huge sigh of relief as some airlines had threatened to withdraw their services in the face of unremitted funds for outstanding sale of tickets.

Reacting to the payment by CBN, the President of the National Association of Nigeria Travel Agencies (NANTA), Mrs. Susan Akporoaye told THISDAY that travel agents were excited by what CBN had done and expressed optimism that the airlines would review their decision to suspend operation.

She also said that the airlines would have to react to the action of the CBN and explained that the trapped fund did not mean that CBN was holding the revenues of the airlines; that what it meant was that airlines have their revenues in Naira in their bank accounts so when CBN pays them Dollars their Naira account would be debited and the Dollars send to their home countries.

“I am excited. The CBN has announced that it would pay the money, but the airlines will announce their own reaction. The money is specifically for the airlines. The airlines will go to their banks. It is bank-to-bank transactions. The banks will send the money to the airlines. Once they do the transfer, their account in Naira will be debited. The money is there in their accounts in Naira but they want it to be converted to Dollars. The banks will transfer the Dollars and debit the airlines’ Naira account”

In June, the International Air Transport Association (IATA) drew the attention of the world to the inability of Nigeria to release about $450 million Dollars then, which was 25 per cent and the highest of the total amount of the trapped funds held by largely African countries, which were adversely affected by the global economic downturn.

Emirates said then that it was owed over $95 million in Nigeria, which it could not repatriate due to scarcity of Dollars and it was indicated that other foreign airlines might increase their fares to Nigeria and subsequently withdraw their service to Africa’s most populous nation.
Yesterday in a meeting with travel agencies, British Airways indicated that it would suspend flight operations to Nigeria by December 2022 and urged that travel agencies should not sell British Airways tickets beyond December.

The UK based mega carrier has been operating to Nigeria for 85 years.
Emirates, in a statement last week, announced that it was suspending all its flights from September 1, 2022, saying, “Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective 1 September 2022, to limit further losses and impact on our operational costs that continue to accumulate in the market. We sincerely regret the inconvenience caused to our customers, however the circumstances are beyond our control at this stage. We will be working to help impacted customers make alternative travel arrangements wherever possible,” the airline said.

The airline further hinted that if there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, it would re-evaluate its decision.
“We remain keen to serve Nigeria, and our operations provide much needed connectivity for Nigerian travellers, providing access to trade and tourism opportunities to Dubai, and to our broader network of over 130 destinations,” the airline added.

On Monday, during the facility tour of the new international terminal at the Murtala Muhammed Airport, Lagos, the Minister of Information and Culture, Lai Mohammed told newsmen that appropriate authorities in the federal government were looking into the issue of the trapped fund and expressed optimism that action would be taken soon.

IATA’s Regional Vice President for Africa and the Middle East, Kamil Alawadhi, had stated, “IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July. This is airline money and its repatriation is protected by international agreements in which Nigeria participates.” IATA’s many warnings that failure to restore timely repatriation will hurt Nigeria with reduced air connectivity are proving true with the withdrawal of Emirates from the market.

“Airlines cannot be expected to fly if they cannot realise the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence, and impacts jobs and people’s livelihoods. It’s time for the Government of Nigeria to prioritise the release of airline funds before more damage is done,” it said.