The aviation sector in Nigeria is facing a severe aviation crisis due to a substantial backlog of blocked funds, reaching billions of dollars. According to the International Air Transport Association (IATA), Nigeria leads the list with blocked funds totaling $792 million, followed by Egypt ($348 million), Algeria ($199 million), the AFI zone ($183 million), and Ethiopia ($128 million).
The accumulation of these blocked funds has raised concerns among foreign airlines operating in Nigeria, with IATA warning that some airlines may consider withdrawing from the Nigerian market if urgent measures are not taken to clear the debt.
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In response to the escalating situation, Susan Akporiaye, President of the National Association of Nigerian Travel Agencies, disclosed that a payment of $61.64 million was recently made to foreign airlines as part of the accumulated debts. Akporiaye explained that the old debts are being settled at the prevailing exchange rate, which was around N400 to N450 per dollar at the time of ticket sales. Despite the reduction in the debt from its original amount of over $800 million, the aviation industry continues to face significant financial challenges.
One notable repercussion of this aviation crisis is the discontinuation of flights by Emirates Airlines into Nigeria. Akporiaye highlighted that the government has committed to paying off the old outstanding debt at the exchange rates prevailing during the sales period, indicating efforts to address the issue. Additionally, foreign airlines have resorted to sourcing forex at the Investors and Exporters (I&E) window to mitigate the impact of the blocked funds on their operations.
The aviation crisis underscores the importance of addressing financial challenges within the sector to maintain its viability and competitiveness. As stakeholders work towards resolving the backlog of blocked funds, it is crucial to implement measures that promote transparency, accountability, and sustainability in aviation financing. Collaborative efforts between government agencies, airlines, and industry stakeholders are essential to navigate through these challenging times and ensure the resilience of the aviation sector in Nigeria.