Trapped Fund And The Consequences Of Ineffective Leadership -By Jeff Okoroafor

As at July ending, the funds of over 20 foreign airlines had risen to over $464 million, and stakeholders have maintained that if the development was left unchecked, the fund could hit $1 billion before the end of 2022.

In 2016, frustrated by the low patronage occasioned by scarcity of foreign exchange and biting economic recession in Nigeria, no fewer than 14 foreign airlines closed shop to forestall further losses. Of course, the airlines were not the only companies in such mess in the aviation sector, operators of travel agencies, hotels and providers of other services also faced the same hardship. The recent decision by the United Arab Emirates, UAE, flag carrier, Emirates airlines, to suspend operation in Nigeria’s airspace effective September 1, 2022, should be a huge concern to every Nigerian. Both Turkish Airlines and British Airways have also stated that they will no longer issue tickets to passengers in naira following the foreign exchange woes facing Nigeria. This was last week. The current news making the headline today is that the United Kingdom mega carrier, British Airways, has stopped travel agents in Nigeria from selling their tickets amid the difficulty of foreign airlines to repatriate over $464 million ticket sales proceeds to their respective home countries.

There are fears that other foreign airlines whose funds are trapped in the Nigerian economy may follow soon.

Nigeria gets about 90 per cent of its United States dollar from the sale of crude oil. But the country has consistently not been able to meet its approved crude production quota on a monthly basis due to massive oil theft. This has severely impacted on the country’s foreign exchange earnings, making it tough for the Central Bank of Nigeria to make dollar accessible for repatriation by foreign airlines with operations in Nigeria.
Tackling oil theft has become impossible due to lack of political will as all the stealing have the support and involvement of security agencies, NNPC, government officials and politicians. Only in Nigeria you hear of oil theft.

This alone isn’t the problem…are you aware that many African countries that are nowhere close to Nigeria in terms of population and wealth, all have their own airlines? – Ethiopian airline, Camair( for Cameroon), South Africa Airways, Air Botswana, Rwand Air (for Rwanda), Egypt Air, Kenya Airways, Sudan Airways, even Zimbabwean Airways exist, Air Senegal is also working…these countries are cashing out but Nigeria has none. The controversial national carrier, Nigeria Air, which many thought would see the light of the day before the current administration winds down, with a new take-off date set for the first quarter of 2022, ended up gulping about N80 million, just for logo design. Nigeria, a country of over 200 million people, only have 32 airports – 5 are international airports and just 6 operate 24 hours a day. This is at a time when a state like Texas in America has 27 commercial airports and a total of 700 airports. Nigeria loses about N4.3 billion every year just because there are limited airports in the country that provides daylight services. As a result of the shrinking economy, rising foreign exchange rate and the high cost of living, Nigerians now fly into Ghana before booking another flight to their various destinations overseas because according to them, it is cheaper to do so than take a direct flight from Nigeria. Between March and June alone, capital flight reached a record of about N18.72 billion.

The exit of foreign carriers that account for 80 per cent of commercial aviation earnings to the Gross Domestic Product (GDP) will hobble the projected growth of the air transport sector and cost Nigeria $1.36 billion or N567.12 billion (at $/N417) yearly. And should the airlines demand payment in US dollars, the already saturated parallel foreign exchange market will witness a further weakened naira, as demand outweighs supply for the greenback. Already, things are also not looking up for the country’s sole carrier on the international front. Air Peace airline, last week, announced its withdrawal from the Lagos-Johannesburg route over low patronage on account of the South African Embassy’s delay in granting approval to visa applicants in Nigeria, among other operational reasons.

This is the sad reality and situation of Nigeria, and unfortunately, one good thing that will come out of the report by The International Air Transport Association (IATA) is that the Central Bank of Nigeria will find the money to sort out these airlines as soon as possible. The one thing that gets Nigeria’s government moving quickly is international disgrace that affects officials on a personal level.