Key highlights
- Engr. Femi Adeniji, an aviation expert, suggests that the Nigerian government negotiate repayment plans with affected foreign airlines to resolve the issue of trapped funds.
- Adeniji recommends that the government provide incentives such as tax breaks and grants to the affected airlines to eliminate the negative impression the crisis has had on Nigeria.
- Adeniji challenges the Nigerian government to address the country’s foreign exchange system, reduce bureaucracy, and eliminate corruption in the aviation industry to prevent funds from being trapped in the future.
As the trapped funds of foreign airlines continue to accumulate in Nigeria, aviation expert Engr. Femi Adeniji has proffered solutions to the Federal Government on how the issue could be resolved.
Adeniji, who is an aircraft engineer and the CEO of Florida-based NIGAME Aircraft Consultancy Incorporation, advised the Federal Government to quickly start negotiating repayment plan options with the affected airlines.
Incentives to foreign airlines
Speaking to Nairametrics during an exclusive interview, Adeniji said that the issue had negatively affected the image of Nigeria in the comity of nations. He added that one of the ways to remedy the situation, asides from repatriating the funds, is to consider providing incentives to these airlines so they can continue to operate in the country.
He suggested that the government could provide such incentives as tax breaks, grants and others to the affected airlines, maintaining that these would eliminate the negative impression the crisis has had on Nigeria.
Need to address Nigeria’s FX challenges
Adenji challenged the Federal Government to address the country’s foreign exchange system, reduce bureaucracy and eliminate corruption in the country’s aviation industry, saying these vices led to the funds being trapped.
Already, the International Air Transport Association (IATA) said the trapped funds of foreign airlines in Nigeria had increased to $743,731,027 million, thereby becoming the highest in the world.
IATA lamented that the sums had increased to $743,721,027 million within two months in 2023, from $662 million in January 2023 and $549 million in December 2022.
- “One possible solution to this problem is for the Nigerian Government to work with the affected airlines to find a mutually beneficial resolution, which could involve negotiating repayment plans, which allow the airlines to gradually recover their funds over time.
- “This issue of trapped funds has been a longstanding problem and it is yet to be resolved. As of 2021, the funds had reached $743 million and this has been a major source of frustration for foreign airlines operating in Nigeria it has also had a negative impact on the Nigerian aviation industry.
- “One possible solution to this problem is for the Nigerian Government to work with the affected airlines to find a mutually beneficial resolution, which could involve negotiating repayment plans that allow the airlines to gradually recover their funds over time.
- “The government can have a payment plan with the promissory note. The government can also consider providing incentives to these airlines to continue to operate in Nigeria, such as tax breaks, and grants. These would eliminate the negativity,” Adeniyi said.
Impacts of trapped foreign airlines’ funds
The trapped funds compelled Emirates Airlines, one of the United Arab Emirates (UAE) carriers from operating in Nigeria to suspend operations in October 2022.
At the time the airline suspended operations in the country, it claimed its trapped funds had reached $85 million.
Just over the weekend, the airline ruled out its return to Nigeria in the meantime, saying the Central Bank of Nigeria (CBN), was yet to make available 50 per cent of the amount approved for clearing within the backlog of its trapped fund.
A press statement made available to journalists warned that unless there was a committed strategy by the Federal Government to deliver concrete action for the fund repatriation, air services for Nigerian travellers would continue to dwindle.
According to Emirate, the government was yet to ensure concrete actions to ensure the repatriation of trapped funds despite several solutions suggested by the airline. Part of the statement said:
- “It has been five months since Emirates suspended operations to and from Nigeria, and during this time we have seen little progress in the clearing of our backlog of funds.
- “As of today, Emirates still has a substantial balance of blocked funds that is yet to be repatriated, and the progressive clearing of our backlog remains beset with constant delays. Today, around 50 per cent of the amount approved for clearing within our backlog is still overdue for repatriation.”