Nigeria Tops Blocked Airline Funds Country List With Over $800m

Trapped funds in Nigeria account for 35.7% of the world's total.

According to the latest figures released by the International Air Transport Association (IATA), Nigeria remains at the top of the blocked airline funds country list with $812 million.

IATA is concerned with the rapidly rising levels of blocked funds as it substantially impacts air connectivity in the affected markets. The top five countries account for 60% of blocked funds, and following Nigeria on the list is Bangladesh with $214.1 million, Algeria with $196.3 million, Pakistan with $188.2 million, and Lebanon with $141.2 million.

Airline leaders and various stakeholders have gathered in Istanbul for the IATA Annual General Meeting (AGM) and World Air Transport Summit from the 4th to the 6th of June. They are meeting to review the post-pandemic recovery of air travel and some regulatory challenges the industry faces. The issue of blocked funds remained critical and was one of the first to be addressed.

Blocked funds in the aviation industry have risen by 47% from $1.5 billion in April 2022 to $2.27 billion in April 2023. Although the industry has almost fully recovered from the pandemic, trapped airline funds continue to rise, so responsible governments have been urged to address the situation for operations to continue efficiently.

Compared to the figures released in March 2023, the amount of trapped funds has increased by several million dollars. Nigeria's debt has increased by $69 million, while Algeria's increased by $31 million. A more positive line can be plotted for Lebanon, whose trapped funds have decreased by $5 million.

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Nigeria raises many concerns as it holds more funds than the other top five countries combined. The other countries are responsible for $739 million of trapped funds, while the West African nation's $812.2 million is over $72 million higher.

This means about 35.7% of blocked world airline funds are in Nigeria. IATA has urged the states to follow international agreements and contractual obligations to enable airlines to repatriate these funds from ticket sales, cargo storage space, and other activities. IATA Director General Willie Walsh said;

"Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation, so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation."

Repatriation issues in Nigeria emerged in March 2020 when the country experienced a severe shortage of foreign currency. The shortage continues to prevail as the industrial theft of crude oil, its most income-generating resource, continues. The demand for foreign currency outweighs the supply, so local banks cannot service repatriations.

Nigeria recently underwent a significant transition as the new president Bola Tinubu was inaugurated on May 29. He comes into power facing several socio-economic challenges requiring immediate attention. In the country's aviation sector, the issue of trapped funds and the attempted launch of Nigeria will be at the top of the list.

Each country has a reason for blocking airline funds, but the commonality is that when a country decides to trap funds, it damages its own industry and the airlines operating flights there. This takes essential economic activities like when Emirates suspended flights to Nigeria.

In April, IATA launched the new Focus Africa initiative to strengthen the socio-economic contribution of air travel in Africa. The association warned that the issue of blocked funds might jeopardize the Focus Africa project, which includes the implementation of the Single African Air Transport Market (SAATM). RwandAir CEO and IATA Chair of the Board of Governors Yvonne Makolo said;

"This is a major issue that's really restricting African airlines in terms of expansion and growth. He's mentioned Nigeria, being the top one with about $802 million. We have Algeria at $159 million and Ghana as well, at around $90 million. So we're talking about $1.6 billion and this is impacting airlines, not only within Africa, but also international airlines."

The board is currently engaged with the governments to ensure this issue is solved. It is a complex task, but resolutions are urgently needed.

What do you think of Nigeria's increase in blocked airline funds ? Let us know in the comments!

Tatenda is a passionate aviation journalist and the Africa lead for Simple Flying. He provides the latest news and insight on airlines, airports, and other aviation-related developments from all regions of Africa. He has been interested in aviation and flying from a very young age.