Foreign airlines operating in Nigeria have contested claims by the Central Bank of Nigeria (CBN) that the outstanding foreign exchange (FX) obligations have been successfully settled.

This is coming against the backdrop of lingering efforts by the CBN to clear trapped airlines earnings, which has stood in the way of the operation of some of the International Air Transport Association (IATA) members in Nigeria.

Kingsley Nwokeoma, President of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), adamantly stated that there has been no discernible change regarding the clearance of foreign airlines’ trapped funds.

“If they say they have cleared the trapped funds, they should show us figures. They should tell us how much have been cleared. The last I checked, the status quo still remains the same,” Nwokeoma told BusinessDay.

Nwokeoma’s assertion comes a day after Hakama Sidi Ali, acting director of corporate communications at CBN, announced that the financial regulator had recently finalized payments totaling $1.5 billion, effectively addressing the residual balance of the FX backlog. But she also disclosed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honored.

“Any invalid transactions were promptly referred to the relevant authorities for further scrutiny,” Mrs Ali said.

However, Bankole Bernard, chairman of the Airlines and Passengers’ Joint Committee (APJC) of the International Air Transport Association (IATA), provided a nuanced perspective, acknowledging the clearance of trapped funds while highlighting lingering challenges.

Bernard revealed that while foreign airlines were offered the option to retrieve their funds from banks using the rate of the Investors and Exporters (I&E) window, they expressed reluctance due to disparities between the current official (NAFEM) rate and the rate at which tickets were initially sold. This discrepancy poses potential financial losses for airlines, prompting them to adjust pricing strategies to mitigate the impact of exchange rate fluctuations.

The standoff between foreign airlines and the CBN over trapped funds resulted in Emirates Airlines’ suspension of flight operations in Nigeria in late 2022, marking the second instance of such action.

Asked while Emirates has not resumed operations in Nigeria if truly the FX backlog has been cleared, Bernard attributed Emirates’s decision to hold back to a diplomatic dispute between the United Arab Emirates (UAE) and the Nigerian government, exacerbated by concerns over crime and safety in Dubai.

“The crimes Nigerians are committing in Dubai has made them refuse Nigerians from coming to Dubai. These crimes affect tourism. They do not want their country to be perceived as unsafe. Emirates still has their office in Nigeria and they have staff they are paying salaries,” he told BusinessDay.

Emirates’ withdrawal from the Nigerian market reflects broader challenges within the aviation industry, with trapped earnings reaching critical levels. In October 2022, Emirates suspended its services citing the inability to repatriate earnings amounting to $85 million amidst a total trapped fund exceeding $500 million. Nigeria’s situation is emblematic of global FX challenges, with IATA reporting outstanding obligations totaling $2.27 billion, with Nigeria accounting for a significant portion.

The crux of the issue revolves around the exchange rate mechanism utilized in settling the backlog between foreign airlines and the CBN. Both parties are engaged in negotiations, seeking to minimize potential losses emanating from Nigeria’s volatile FX market.

The United States government has filed a lawsuit against Apple, accusing the tech giant of monopolizing the iPhone ecosystem and crushing competition. In the lawsuit, the department alleges the company used its control of the iPhone to illegally limit competitors and consumer preferences, and in the process squashing innovation, BBC reports.  Apple denies the claims and promises to fight the lawsuit.

Good People, like China, America maketh and America also controls. Like I wrote when the world was predicting that Facebook (yes, Meta) was in trouble and could be broken, positing that it would not happen, America will not do anything that will harm Apple in the age of Huawei.

If you decide to break Facebook apart, one part will grow and dominate others. This is possible because of the positive continuum of network effect where the biggest keeps getting bigger and also better. I explained that in a recent piece in the Harvard Business Review. You can regulate Facebook but another company will come to take over its position because in this sector, it is winner-takes-all. Yes, the best wins.  Why? The scalable advantage improves with lower marginal cost.

This is my take: U.S. will not regulate Facebook or its web companies at the level many are expecting [I expect nothing to change except cosmetics reporting of violations] because it knows that Chinese competitors which are also well-funded will go after Facebook users across the globe. And even if U.S. regulates Facebook by breaking it, the best surviving part will grow to dominate over time because of network effect where the best gets better and bigger. We just have to agree that Facebook is an ICT utilities and I was very happy when my editors in Harvard allowed me to use that against the company. You negotiate with your utilities [ electricity, water] because you have no alternatives. That is where we are with Facebook.

Yes, no one will go after breaking Apple but this lawsuit could do one thing everyone wants to see in Apple: that the iPhone belongs to the village, and not just Apple Inc. Like in the Igbo Nation where kids are named “Nwaoha’ [a child to the whole village], the success of the iPhone does imply that Apple must look at it from that angle. The iPhone is a platform for commerce and Apple must allow markets to operate.

 Yes, if  “uwa bu ahia” [the world is a marketplace], Apple must allow the iPhone, one of the main tools in the market, to operate a lot more freely!

Indeed, the restrictions on how to collect payment is unfair and causing so many problems for Apple creators and builders. I am in support of the US Government to get that freedom for the world, from Apple.

What are you building? Remember: firms win by accumulating capabilities. From Google to Amazon, from Dangote Group to Indomie Noodles’ parent company, when companies accumulate capabilities, they operate in domains that generate higher value (usually upstream) compared with where most firms operate (usually downstream). Dangote Group can deploy massive assets and technical know-how in cement production, making it harder for new entrants and rivals.

JP Morgan has a balance sheet that is a “fortress” which means it is impenetrable and cannot fail. In other words, it has accumulated asset classes and clusters of resources that this bank can operate in ways no other global bank can.

When companies accumulate capabilities, they move to become category-kings which dominate their market and territories, through asymmetric competitive advantages on factors of production they have access to and utilize.

In this video, I explain how we can begin small (at the downstream level) and then transition to the upstream where more value is found in markets. It is about visioning and pursuing the best way to fix frictions in markets.