Blocked Airline Funds Risks Damaging African Connectivity

About $1 billion of foreign currency funds is being blocked by governments in Africa, according to IATA estimates.

Credit: David Casey/Routes
Kamil Al-Awadhi (centre), IATA regional VP for Africa and the Middle East

An estimated $1 billion of international airline revenues are being blocked from repatriation by 12 countries across Africa, threatening the recovery of travel and tourism in the continent.

Kamil Al-Awadhi, Regional Vice President for Africa and the Middle East, said five African countries account for about $800 million of the total, with Nigeria the biggest offender.

According to IATA forecasts, Nigeria is blocking around $450 million of airline funds from the sale of tickets, cargo space, and other activities. The trapped funds are proceeds of ticket sales made in local currency but blocked due to the nonavailability of foreign exchange to recoup it.

Speaking at the 78th IATA AGM in Doha, Qatar, Al-Awadhi urged the Central Bank of Nigeria to work with the industry to resolve the issues that are preventing airlines from repatriating funds, otherwise fares to and from the country will continue to rise.

“It is not helping the average Nigerian to travel because the prices are ridiculous,” he said. “They’re almost two to three times more expensive than any other region.

“It will become too costly for people to travel in and out of Nigeria—and this is when everything will collapse. We want to make sure that the Nigerian authorities understand this before the collapse. Because it will collapse.”

Al-Awadhi said unless the situation is resolved, Nigeria’s economy will be damaged. He explained that another round of talks with authorities is scheduled to help free up the blocked funds. “Hopefully we can get some sort of solution where it starts going down,” he said.

IATA estimates that about $100 million is being blocked by Zimbabwe, $96 million by Algeria, $79 million by Eritrea and $75 million by Ethiopia. However, Al-Awadhi said these countries were working to address the issue and the amount was reducing by about 2-3% each month.

Looking at passenger traffic, Al-Awadhi said in Africa the recovery is being hindered by the slower return of regional traffic. Although domestic traffic recovered to 99% in May 2022 compared with May 2019 levels, inter-regional international traffic is still 33% down.

“The immediate alarm bell that we need to address is the intra-Africa connectivity,” Al-Awadhi said, adding that governments and the industry must prioritize implementing parts of the Single African Air Transport Market.