Nigeria, Egypt release blocked funds to airlines

Nigeria and Egypt have released all funds belonging to foreign airlines flying into their countries. The funds, running into hundreds of millions of dollars, had been block by certain African countries following a slump in the prices of commodities, aming other things, which caused dollar shortages for the affected countries.

The International Air Transport Association had been speaking with countries blocking global airlines from repatriating their funds and has recorded considerable success.

“These countries were overly dependent on natural resources for a substantial portion of their revenue, and they were dependent on imported products to sustain their own economies,” Skirt quoted Raphael Kuuchi, IATA vice president for Africa to have said. “For many countries the question was: Do I import food for my citizens, or do I give my money to airlines?”

Nigeria and Egypt have now cleared all blocked funds, while Angola has reduced the amount it owes to airlines to around $250 million, from $580 million.

“There is definitely still a lot of work to be done. During my last visit to Angola, I received assurance that the government was going to clear the remainder of the blocked funds by the end of August,” said Kuuchi. “From just under $1 billion, today we stand at around $500 million in funds blocked across Africa.”

The airlines still have $180 million locked up in Sudan, $100 million in Zimbabwe, $40 million each in Algeria and Ethiopia, $29 million in Libya, and $11 million in both Mozambique and the Central African Republic.

Cash-strapped South African Airways is said to be owed some $60 million by Zimbabwe, while London-listed Fastjet is due around $1.75 million.

“Some airlines have gone ahead and cut back, because they could not continue to sustain operations without getting funds out of the country. But governments are now realizing that air transport is critical to their economies,” said Kuuchi.

Kuuchi added that education and diplomacy have worked well in getting back some of the funds.

“We had to point out that even their own airlines flying into foreign airports incur costs in foreign currency,” said Kuuchi. “If they have to maintain aircraft outside their country, they need foreign currency. If they need spare parts, they need foreign currency.”

The issue of blocked funds was also highlighted at IATA’s Annual General Meeting held in Sydney in June.

“The connectivity provided by aviation is vital to economic growth and development,” said Alexandre de Juniac, IATA’s Director General and CEO. “But airlines need to have confidence that they will be able to repatriate their revenues in order to bring these benefits to markets.”