Festus Keyamo, Minister of Aviation and Aerospace Development, has confirmed that the Central Bank of Nigeria (CBN) has settled the airline industry’s backlog which amounts to approximately $160 million.
He however clarified that airlines’ trapped funds are in two categories.
Speaking on Arise TV on Monday, April 8, 2024, Keyamo stated that there are two different backlogs of airline funds trapped in Nigeria, but only those which fell under the purview of the federal government and the CBN were completely settled.
He said the other funds are trapped in commercial banks and they are neither the responsibility of the central bank or the federal government.
“The problem with the repatriation of funds in the airline sector is that they were two sets of funds that were trapped. They were the funds that were trapped by the CBN. I think they call them forward sales or so that the airlines have bided for but the CBN was unable to meet the obligations.
“The airlines bid for it and the CBN approved the bid, but were unable to provide the funds for it. That one amounted to about $160 million. That is the government obligation and we have cleared it.
“So when the government said they have cleared their obligations, they are referring to the ones that CBN has responsibility for. They have cleared those ones.
“The other ones are for the commercial banks where they sell their tickets and their funds are trapped in commercial banks. The commercial banks cannot raise the FX to fund and transfer to them. That is not the government’s responsibility.
“But regarding the government, CBN has cleared 100% of all the trapped funds in the airline sector,” Keyamo said.
Following the CBN’s announcement of the settlement of the airline industry’s backlog in the country, the International Air Transport Association (IATA) said about $700 million of Nigerian airline sector’s funds remained in Nigerian banks.
Earlier in January, the apex bank said it had fulfilled its pledge to clear the backlog of foreign exchange owed to foreign airlines in the country after the payment of all verified claims by airlines with an additional $64.44 million to the concerned airlines.
In September 2023, President Bola Tinubu directed the CBN to engage in quarterly reconciliatory meetings with foreign airlines to address the backlog issue.
This directive comes amid criticisms from IATA over multiple charges imposed on airlines operating in Nigeria and the country’s responsiveness to the foreign airlines’ inability to repatriate their funds.
The issue of foreign airlines’ trapped funds reflects broader challenges in the country’s foreign exchange market.
The resolution of this matter is pivotal for maintaining the confidence of international businesses in Nigeria’s economy and ensuring the smooth operation of foreign airlines in the country, experts say.
