Dubai-Based airline Emirates, has recently disclosed that it will suspend all flights to and from Nigeria, from September 1st, due to the inability to repatriate millions of dollars of its funds from Africa’s most populous nation.
Emirates disclosed that it has been relentlessly battling to repatriate its millions of dollars in revenue from Nigeria, which prompted them to take the difficult decision to suspend flights to and from Nigeria, in order to limit further losses, citing circumstances beyond its control.
It was reported that Nigeria had to restrict access to foreign currency for imports and for investors seeking to repatriate their profits, as the nation currently tackles a severe dollar shortage. The country is said to have about 90% of its foreign exchange from oil, but is currently struggling to produce due to crude oil theft and years of under-investment.
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Nigeria currently withholds $450 million in revenue that international air transport operating in the country has earned. The Vice President of the International Air transport association for Africa and the Middle East, Kamil Al Awadhi, displeased with this act, disclosed that talks with Nigerian officials to release the funds have been a “hectic ride”. Speaking about the trapped funds, some Nigerian officials have blamed the foreign currency shortage for the failure of the federal government to repatriate the airline’s revenue.
The International Air transport Association (IATA) disclosed that $1 billion of revenue belonging to foreign airlines is being withheld across Africa, although Nigeria is the only country where the value of blocked funds has risen.
They disclosed that the $450 million revenue withheld by the Nigerian officials is the largest amount withheld by any African nation. As every means to dialogue with the relevant authorities in Nigeria was to no avail, which was what prompted Emirates airline to take the difficult decision of suspending flights to and from Nigeria to limit further losses and impact on operational costs that continues to accumulate in the market.
Although Emirates airline has disclosed that it is ready to re-evaluate its decision of the situation over the trapped funds’ if there are changes in the coming days. Just recently, it has been reported that the trapped funds have now increased from the previous amount of $450 million to a whopping $600 million.
There are predictions that if the funds remain withheld, it may likely rise to $1 billion by December. This act by the federal government of Nigeria has sparked reactions from stakeholders across the sector, with many warning that if the blocked funds continue to pile up, it may pitch the FG against countries of foreign airlines.
Despite claims from some Nigerian officials that the trapped funds are beyond the government, due to the global scarcity of forex, several others have accused the federal government of failing to comply with the international trade agreement existing in the Bilateral air service agreements policy between Nigeria and the countries of foreign airlines.
This has forced some of these airlines to no longer sell their fares cheaply in Nigeria, as they have also stopped selling their flight tickets in Naira.