Two international airlines have suspended flights to Nigerian airports over a decision by the West African country’s government to stop the repatriation of airline profits outside the country.
United Airlines is ending its flights between Lagos and Houston, and Iberia has also cancelled its flights to Nigeria.
President Muhammadu Buhari introduced the restrictions last year in attempts to combat the country’s economic crisis.
The effect on aviation has highlighted how the economic crisis in Nigeria is affecting the entire continent’s economy, with the country being one of Africa’s fastest-growing economies.
Nigeria has so far blocked the repatriation of $591 million of airline funds from the country. It is in good company with three other African countries – Sudan ($360m ), Egypt ($291m), and Somalia ($237m) – as well as Venezuela ($3,780m).
The five countries have incurred the wrath of the International Air Transport Association (IATA) over the fund blockade.
“Air connectivity is vital to all economies. The airline industry is a competitive business operating on thin margins. So, the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity. It is not reasonable to expect airlines to invest and operate in nations where they cannot efficiently collect payment for their services,” said Tony Tyler, IATA’s Director General and CEO.
IATA monitors blocked funds globally, the sum of which exceeds $5 billion.
With regard to Nigeria, repatriation issues arose in the second half of 2015 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations. Nigerian authorities are engaged with the airlines and are, together with the industry, seeking possible measures to make the funds available.
“Blocked funds are a problem in a diverse group of countries, some of them undergoing significant economic challenges particularly with a fall-off in oil revenues. But one thing all five nations have in common is the urgent need for robust air connectivity that is being hampered by airlines’ difficulty in repatriating funds. Strong connectivity is an economic enabler and generates considerable economic and social benefits – something that struggling economies need more than ever. It is in everybody’s interest to ensure that airlines are paid on-time, at fair exchange rates and in full,” Tyler said.
