About $450 million belonging to foreign airlines operating in Nigeria has been seized by the Central Bank of Nigeria (CBN), preventing the international companies from repatriating the funds back to their base.
The International Air Transport Association (IATA) made the disclosure in its report for the month of May, stating that effort to retrieve the funds have proved abortive, with the Nigerian government resisting every attempt.
Nigeria accounted for 45% of the $1 billion foreign airlines’ revenue IATA reported withheld globally. This is almost twice the size of the $271 million in the hands of other African countries, Algeria, Ethiopia, and Zimbabwe combined.
IATA disclosed that the withheld fund in Nigeria rose by 12.5% month-on-month, and could encourage foreign airlines to find a way around the regulatory bottlenecks in other to get their money out of the country.
The global airline body also stated that the way Nigerian government handls the repatriation of capital by foreign airlines could have a long term negative impact on the country’s aviation sector.
According to the report made public by Reuters, foreign airlines describe discussion with the Nigerian government as “hectic”, giving no room for the possibility of their funds being released to them.
It was gathered that the depleting foreign exchange reserves is the reason for the seizure, as the central bank is using the funds to meet demands for forex, as revenue from the oil sector is not enough to cater to request.
The Nigerian government is channeling the foreign airlines revenues to finance importation of essential goods and services, amongst other needs. The demand for forex has weighed on the Naira, increasing the cost of $1 to N420.50 in the official market, while the black market reports N617/$1.
With the rising cost of dollar, and the oil industry failing to generate needed FX, the aviation sector has been a major source of forex for the Central Bank of Nigeria, to the detriment of the foreign airlines.