Forex Crisis: FG haven’t paid foreign airlines their trapped $800m–IATA

 

Maureen Aguta

 

Despite the claim by the Federal Government that it has commenced the payment of some of the foreign airlines’ trapped funds in Nigeria, it has been disclosed that no carrier has received any amount of money from the government.

It can also be said that the total trapped fund of foreign airlines in the country is over $800 million, up from $700 million about two months ago, reports Daily Independent.

It was also learnt that none of the commercial banks in Nigeria has received any foreign exchange from the Central Bank of Nigeria (CBN) for this purpose as at Tuesday afternoon.

Rather, it was gathered that instead of the Federal Government through the CBN to pay some forex into the accounts of the local commercial banks, it went ahead to credit the accounts of some foreign banks.

The banks, according to information gathered by this paper, include City Bank (America), Standard Chartered Bank (England) and Stanbic IBTC (South Africa).

The International Air Trans­port Association (IATA) also disclosed that 99 per cent of the over 25 foreign airlines flying into Nigeria are yet to get any amount of money from Nigeria.

It was further learnt that Nigeria still remains the country with the highest trapped funds of foreign airlines in the world, in spite of the appeal by IATA.

Also, the foreign airlines have continued to close the lower inventories against the travel agencies in Nigeria in a bid to curb their trapped funds in the country.

Confirming the development, Dr. Samson Fatokun, Area Manager, West and Central Africa, IATA, said that the Nigerian government was yet to pay any of the commercial banks in Nigeria.

He said that this failure was having unpleasant effect on the operating foreign airlines in Ni­geria.

He explained that while the government had gone ahead to pay a few foreign banks, most of the blocked funds of foreign airlines are domiciled with Nigerian commercial banks.

He also maintained that whatever was paid the foreign banks was less than 10 per cent of the total debts of the foreign airlines.

He said: “What the govern­ment did is that they sent some payments to the international banks, City Bank, Standard Chat­tered and Stanbic IBTC, but those ones have very small amount of the airlines blocked funds. Most of the blocked funds are with the Nigerian commercial banks.

“So, what they cleared with those ones is less than 10 percent of the total amount of the trapped funds and many airlines don’t bank with those banks. So, many of the foreign airlines have not received anything. 99 per cent of the airlines have not received anything from the government.

“The airlines don’t bank with those international banks, but bank with the commercial banks and none of the Nigerian banks has received anything from the CBN as at this time I am talking to you.”

Fatokun could not, however, confirm the exact amount of money owed the foreign airlines by the government, but said it was not less than $800 million.

Besides, one of the representatives of foreign airlines in Nigeria, who didn’t want his name in print, debunked the claim of the Federal Government on the trapped fund payment.

According to the source, as of Tuesday, the airline and other foreign airlines had not received any of the trapped stuck in Nigeria.

The source said: “My airline or any other airline I know of is yet to receive any amount of money from the federal government as of this afternoon. All the airlines I spoke with, none of them have received any amount of money yet.”

He, however, could not con­firm how much was owed the airline, saying, “The debt is not static”, but said that as at two months ago, the foreign airlines were owed over $700 million.

“There are two sides to this money. First, there is the direct money the government owes as an airline from ticket sales that you have at the bank. There is oth­er money that is owed you when the ticket is sold through the Bill­ing Settlement Plan (BSP), which is under IATA. That is where the bulk of the money is.

“That is why you see travel agencies always complaining because the airlines are closing lower inventories to them. All the tickets sold by the travel agencies go to BSP,” the source said.

Also, Engr. Femi Adeniji, the Chief Executive Officer (CEO), NIGAME Aircraft Consultancy Incorporation, based in Florida, United States, regretted that the trapped fund crisis had negatively affected the image of Nigeria in the comity of nations.

Adeniji further challenged the federal government to address the country’s foreign exchange system, reduce bureaucracy and eliminate corruption in the coun­try’s aviation industry, saying that these vices led to the funds being trapped.

The trapped funds issues had compelled Emirates Airlines, one of the United Arab Emirates (UAE) carriers, from operating into Nigeria to suspend opera­tions in October 2022.

As at the time the airline sus­pended operations into the coun­try, it claimed its trapped funds had reached $85 million.

The CBN, last week, said it had begun settlement of the over $10 billion foreign exchange backlogs of commercial banks and foreign airline operators.

The apex bank also assured that it had enough volume of banknotes to go around even in the approaching festive period, calling off allegations of scarcity of cash in the banking sector.