Turkish Airlines, Emirate Airlines, British Airways, and a host of foreign airlines might leave Nigeria very soon if funds trapped in the country are not released soon.
In its media briefing held on Friday, the International Air Transport Association (IATA) raised an alarm over the total amount owed by countries in Africa and the Middle East, apportioning over 70 percent of the total debt owed by Africa to Nigeria.
Kamil Alawadhi, Regional Vice President, Africa and Middle East, speaking at the press briefing, said, “Nigeria alone accounts for almost half of blocked or trapped funds valued at US$2.57 billion.”
Nigeria’s debt or trapped funds belonging to these foreign airlines is $792 million, just $66 million short of the total trapped funds owed by Egypt ($348 million), Algeria ($199 million), the XAF zone ($183 million), and Ethiopia ($128 million).
Some would say this situation calls for the Federal Government to declare a state of emergency in the aviation sector to save the country and especially the sector from being blacklisted as a no-fly area in the future.
Alawadhi said that Nigeria and 19 other African countries account for $1.94 billion of the total trapped funds, with Nigeria responsible for almost half of that amount at $792 million.
The IATA boss worried about this disturbing picture listed some of the negative impact this may have for the aviation industry in the country and the reputation damage it is causing the country as the Federal Government intensifies efforts to attract foreign investment.
He explained that this would reduce the airline capacity in Nigeria, reduce connectivity to Nigeria, and intensify negative perceptions about the Nigerian business environment.
Other reasons mentioned are that it will result in even higher ticket prices for those planning to travel out of the country. Currently, ticket prices for both domestic and international routes have hit record highs, and these prices might further increase next year.
It will discourage investors in the Nigerian economy, a situation that has been exacerbated by the planned exit of Procter & Gamble and other multinationals.
The IATA boss added that it will negatively impact foreign direct investment and possibly close down the travel agency business.
He reiterated the importance of cash flow as an engine of growth in the airline industry. According to Alawadhi, “when airlines are unable to repatriate their funds, it severely impedes their operations and limits the number of markets they can serve.”
“The consequences of reduced air connectivity include the erosion of that country’s competitiveness, diminished investor confidence, and reputational harm caused by a perception that it is a high-risk place to do business,” he noted.
He pleaded with the government, especially the Nigerian government, “to prioritise aviation in accessing foreign exchange on the basis that air connectivity is a vital key economic catalyst for the country.”