The International Air Transport Association (IATA) has bemoaned the trapping of over $1bn belonging to foreign airlines in African countries.
Nigeria, the association disclosed accounts for almost half of the amount trapped in Africa which was put at a whopping $450m.
These developments were announced at the 78th Annual General Assembly of the association which kicked off in Doha, Qatar June 19, 2022.
Mr. Kamil Alawadhi, IATA Regional Vice President for Africa and Middle East (AME), consequently made a fervent call for the African States to expedite the release of airlines’ funds still trapped in their jurisdictions.
Mr. Alawadhi lamented that “blocked funds remain an issue in Africa,” while singling out Nigeria for having the highest amount of blocked funds at $450m. He called on the country to take action to address this challenge. Nigeria has many airlines flying to it from within and outside Africa.
“Nigeria alone is holding back $450 million. It is the most amount blocked by any single African country, and the amount is rising every week,” Mr. Alawadhi lamented.
He added that the top countries in Africa with blocked funds as of May 2022 also include Zimbabwe with $100m blocked funds, Algeria with $96m blocked funds, as well as Eritrea which has blocked $79m, and Ethiopia trapping $75m of airlines’ funds.
Whereas globally, there is a total of $1.6 billion in funds blocked by 20 countries as of April, he noted that 67% of blocked funds are trapped in 12 countries in Africa.
Mr. Alawadhi explained that “cash flow is key for airlines’ business sustainability,” adding that “when airlines are unable to repatriate their funds, it severely impedes their operations and limits the number of markets they can serve.”
The challenge of blocked funds is a strong discouragement for foreign airlines doing business in Africa. The disturbing issue of blocked funds has been adduced to several reasons including mismanagement and other economic challenges.
Similarly, Mr. Alawadhi further emphasized the need to enhance air connectivity in Africa. According to him, “a financially viable air transport sector supports jobs and must be a driving force for Africa and the Middle East’s economic recovery from COVID-19.”
He said reduced air connectivity erodes a country’s competitiveness, and diminishes investor confidence, as he called on governments “to prioritize aviation in the access to foreign exchange on the basis that air connectivity is a vital key economic catalyst for the country.”
