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This has had a severe impact on connectivity within the continent.
SUMMARY
- $1.78 billion in airline funds are trapped in Africa, impacting airline operations and the markets they serve.
- Blocked funds are the second major issue for the African aviation industry, hindering sector growth and connectivity.
- Nigeria continues to hold the most funds, impacting both domestic and international airlines and affecting connectivity in the country.
As of November 2023, about $1.78 billion in airline funds remains trapped in Africa, according to the latest figures provided by the International Air Transport Association (IATA). The inability of international airlines to repatriate funds from various countries can have a long-lasting impact on the airline’s operations and the markets they serve, as already seen in specific countries.
Nearly 75% of the world’s total
Speaking at the 55th African Airlines Association (AFRAA) Annual General Assembly, IATA Regional Vice President Africa and Middle East, Kamil Al-Awadi, said that blocked funds are the second major issue plaguing the African aviation industry. This has been highlighted on several occasions and will continue to limit the sector’s growth if not addressed.
Photo: EQRoy | Shutterstock
As of September 2023, $1.68 billion of airline funds were blocked across the continent. This number has increased to about $1.74 billion in November. The total amount of blocked funds globally sits at about $2.36 billion, which means Africa has about 73.7% of the world share. Adding on to the statement, Kamil Al-Awadi said,
“The numbers are alarming, and the impact of this on connectivity is devastating.”
He added that the failure of airline operators to repatriate their funds significantly impacts their operations and choices of where to fly. The risk is not just limited to airlines but also extends to the countries blocking the funds. The economy is affected, connectivity is reduced, and the country’s reputation is smeared. IATA has urged governments to prioritize aviation and will support them in finding solutions to clear the blocked funds.
Nigeria still holds 1st place
Since 2018, there have been successful efforts to repatriate funds from Angola, Ethiopia, Ghana, Nigeria, and Zimbabwe. IATA told Simple Flying that Nigeria, Algeria, Egypt, Ethiopia, and Eritrea are the top five countries currently holding the most funds. Earlier this year, Ethiopia negotiated a deal with Nigeria to release about $100 million in blocked funds.
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Nigeria & Ethiopia Have Swapped $100 Million Of Blocked Airline Funds
Ethiopian Airlines can receive a significant amount of trapped funds through the swap deal.
On a global scale, there has been a sharp increase in blocked airline funds post-pandemic. In December 2022, the total stood at about $2 billion, a $400 million increase from April 2022. In June 2023, about $2.27 billion was blocked globally, and the number continues to increase as we round up the year.
Nigeria continues to top the list of countries with the most blocked funds. As of August, it had about $783 million trapped with the central bank, according to a September statement from IATA. While there aren’t any official figures for November, the total seems to have decreased between April and August 2023. An earlier statement in June indicated that Nigeria was holding about $812 million. While there may have been some successful efforts to repatriate funds in Nigeria, the numbers are still alarming. This has affected both domestic and international airlines. According to Legit, four domestic carriers have about $55 million trapped with the Central Bank of Nigeria (CBN). The list is as follows: Connectivity in Nigeria has also been significantly affected since Emirates suspended all flight operations to the West African country in November 2022. The primary reason was its failure to repatriate about $85 million trapped with the central bank. From January to October 2022, the Dubai-based carrier operated 365 flights between Nigeria and the UAE, carrying about 117,140 passengers. The new administration has made several efforts to restore connections with the UAE, but there is no indication of flights resuming anytime soon. Similarly, South African Airways recently suspended its services to Malawi. It listed the escalation of blocked funds, increased foreign currency shortages, and local currency devaluation as the main reasons for the suspension.What do you think about the amount of blocked funds in Africa? Please share your thoughts in the commen section.Source: LegitThe impact of blocked airline funds in 2023
