Trapped funds: Senate asks CBN to release $717m to foreign airlines

The senate, on Wednesday, asked the Central Bank of Nigeria (CBN) to release the $717.4 million foreign airlines’ funds trapped in the country.

The red chamber also called on the CBN to allocate $25 million to airlines operating in Nigeria at its fourth-nightly dollar auction.

These resolutions were reached sequel to the consideration of a motion, titled, ‘current issues on airlines blocked funds in Nigeria’, sponsored by Biodun Olujimi, head of the aviation committee; on Wednesday at plenary.

The motion was presented by Bala Na’Allah, vice chairman of the committee, on behalf of Olujimi. 

In March 2023, the International Air Transport Association (IATA) said foreign airlines’ revenue blocked from repatriation by the Nigerian government had increased to $743 million from $662 million in January 2023.

This was despite the CBN’s release of $120 million to the airlines to offset part of their funds trapped in the country last year.

At the plenary, the upper chamber called on the federal government to urgently reverse the current trend of increasing airlines’ blocked funds in Nigeria.

The committee also asked President Muhammadu Buhari to direct Godwin Emefiele, CBN governor, to pay up the blocked funds to the affected airlines.

The senate further appealed to the airlines operating in the country not to withdraw their services while efforts were ongoing to resolve the issue.

“Since January 2021, Nigeria has been the most challenged country in the world for the airlines to repatriate their funds to support their operation,” Na’Allah said. 

“In February Nigeria alone accounted for 44 percent of total airlines blocked funds in the entire world.

“The total airlines blocked funds in Nigeria as at March amounted to $717,478,606 comprising matured bids that the CBN was yet to deliver, bids yet to mature, and cash balances in airlines’ accounts for repatriation.

“The matured bids not delivered by CBN amounted to $186.5 million accounting for 26 percent of total blocked funds, while three stakeholders — IATA, Qatar Airways, and Ethiopian Airlines — accounted for 57 percent of total blocked funds.

“A review of airlines’ blocked funds in Nigeria in the last six months shows an average month-on-month increase of $49.3 million.

“The consequences of these blocked funds are: Cheap tickets are not available in Nigeria because taxes and inflation will have eroded the profit when the funds are kept for a very long time.

“This makes tickets very expensive and limited because neighbouring countries get the cheap tickets because of prompt payments due to prompt repatriation of funds.”

Therefore, the committee collectively supported the motion and voted to approve the prayers when they were put to voice vote by Senate President Ahmed Lawan.