IATA Cautions FG as Airlines Trapped Funds Rises to $802m

The International Air Transport Association latest report has revealed that the total amount of foreign airlines’ trapped funds in Nigeria has risen to $802m and warned the Nigerian government that the situation could hamper air connectivity, economic growth, and the development of the country’s aviation sector.

The Director-General, IATA, Willie Walsh, spoke on Monday while launching “Focus Africa”, a new initiative aimed at strengthening aviation’s contribution to Africa’s economic and social development. The project will also improve connectivity, safety, and reliability for passengers and shippers.

“Airlines may be forced to reduce their service in the countries blocking funds; this is a very important issue to airlines and IATA. It is capable of affecting the growth of African aviation,” Walsh noted.

Earlier, IATA Chairperson-designate and RwandAir Chief Executive Officer, Yvone Makolo, had listed Nigeria as the country with the highest blocked funds in Africa and the world.

According to her, the total amount of blocked funds in Africa is $1.6bn, out of which Nigeria has $802m.

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She listed Algeria as the country with the highest blocked funds in Africa.

The Regional Vice President for Africa & Middle East, IATA, Kamil Al Awadhi, lamented that 66 per cent of blocked funds were in Africa.

He listed blocked funds as a big issue that could affect the Single African Air Transport Market project and hamper the growth potential of Africa’s aviation sector.

“Blocked funds is one of the biggest issues that will affect aviation. There has been a 10 per cent increase in blocked funds recently. The total amount of blocked funds is huge. This is one of the things we need to address to move forward,” the IATA VP added.

Al Awadhi said IATA had had several engagements with the Nigerian government on the blocked funds, noting that the association would continue discussions with the incoming government due to be inaugurated in May.

Last month, the Minister of Aviation, Hadi Sirika, said the government would expedite the repatriation of blocked funds.

Earlier on Monday, while launching “Focus Africa”, the IATA DG, Walsh, said the initiative would align private and public stakeholders to deliver measurable progress in six areas.

“Africa accounts for 18 per cent of the global population, but just 2.1% of air transport activities (combined cargo and passenger). Closing that gap, so that Africa can benefit from the connectivity, jobs and growth that aviation enables, is what Focus Africa is all about,” he said.

Infrastructure constraints, high costs, lack of connectivity, regulatory impediments, slow adoption of global standards and skills shortages affect the customer experience and are all contributory factors to African airlines’ viability and sustainability.

The association said the continent’s carriers suffered cumulative losses of $3.5bn for the 2020-2022 financial years. Moreover, it estimates further losses of $213m in 2023.

According to IATA, sustainably connecting the African continent internally and to global markets with air transport is critical for bringing people together and creating economic and social development opportunities.

It will also support the realisation of the United Nation’s Sustainable Development Goals for Africa of lifting 50 million people out of poverty by 2030.

In particular, trade and tourism rely on aviation and have immense unrealized potential to create jobs, alleviate poverty, and generate prosperity across the continent.

Africa has a solid foundation to support the case for improving aviation’s contribution to its development. Pre-COVID aviation supported 7.7 million jobs and $63 billion in economic activity in Africa. Projections are for demand to triple over the next two decades.

“Africa stands out as the region with the greatest potential and opportunity for aviation. The Focus Africa initiative renews IATA’s commitment to supporting aviation on the continent. As the incoming Chair of the IATA Board of Governors, and the first from Africa since 1993, I look forward to ensuring that this initiative gets off to a great start and delivers benefits that are measurable,” IATA’s chair, Makolo added.

“The limiting factors on Africa’s aviation sector are fixable. The potential for growth is clear. And the economic boost that a more successful African aviation sector will deliver has been witnessed in many economies already. With Focus Africa, stakeholders are uniting to deliver on six critical focus areas that will make a positive difference. We’ll measure success and will need to hold each other accountable for the results,” said Walsh.

The six focus areas of the Africa Focus initiative are: safety, infrastructure, connectivity, finance and distribution, sustainability, and future skill.