1- Why is repatriation of funds at a standstill?
Revenues from the marketing of airline tickets in local currency are then converted into dollars to facilitate the transfer of profits recorded by international air carriers to their country of origin. An operation which certainly may seem simple on paper, but which is on the other hand very complicated to concretize in recent times in Africa. In question, the restrictions on the repatriation of capital recently imposed by some African States which, faced with an unprecedented crisis of foreign exchange reserves, are temporarily vetoing any outflow of foreign currency.
2- Which countries and companies are concerned?
At the heart of this affair which shakes the African sky, Nigeria. According to the International Air Transport Association (Iata), Abuja has been seizing, for several months, a sum of 465 million dollars (466.3 million euros) in cash from foreign airlines, including more than 85 million belonging in Emirates. Undermined by “circumstances out of control”, the Emirati carrier has decided to “suspend all flights to and from Nigeria, effective September 1, 2022, to limit losses and the impact on its operational costs”.
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In fact, this embargo on capital repatriation was also operated by Zimbabwe (100 million dollars), Algeria (96 million), Eritrea (79 million) and Ethiopia (75 million). Last May, Ethiopian Airlines and Kenya Airways were forced to suspend operations in Malawi due to a lack of cash repatriation. According to data from Iata, almost $1 billion in airline revenue is blocked in 20 countries around the world.
3- What is Iata’s position?
“Disappointed”, the International Air Transport Association renews its warnings, after those of last June, to allow the repatriation of funds blocked in the central banks of the countries concerned. On Twitter, Iata is firm: “Air carriers will not be able to provide flights if they are not in possession of the revenue related to the sale of tickets. »
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In this tense context, the organization also deplores the repercussions of the embargo on the repatriation of funds. “The loss of connections harms the economy, the confidence of investors, and has an impact on jobs and people’s lives”, castigates Iata, for whom Abuja must give a particular and priority interest in the release of capital for not make the situation worse.
4- Is there a risk of sanction?
“No,” says Young Africa a manager of an African airline, of which he directs the Paris office. “The amounts in question are not in dispute to lead to a legal remedy”, explains the air transport specialist, who does not see Nigeria or the countries concerned by the blocking of revenue from international carriers suffering sanctions.
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According to our manager, “Iata, the only instance at regulate the aviation sector, can only play a mediating role between airlines and States”. Deprived of legal mechanisms to force a country to record the repatriation of capital, the International Air Transport Association intervenes to defend the interests of airlines. A situation which is reminiscent of the previous crises between Emirates and Angola (in 2017) or even between Air France, Lufthansa and many air carriers with Venezuela (in 2012), which, hit at the time by a serious economic crisis, had blocked a sum of 4.1 billion dollars.
5- What scenarios for a rapid exit from the crisis?
In a statement given to CNN, Hadi Sirika, Nigeria’s Minister of Aviation, reaffirmed Nigeria’s “ability, willingness and fairness” to resolve such disputes. A few days later, the central bank of Nigeria (CBN) released, on August 26, the sum of 265 million dollars – while the total funds withheld in the country amount to 465 million dollars – to alleviate the crisis and avoid seeing international airlines desert Lagos and Abuja airports.
Central Bank of Nigeria releases $265 million to airlines to settle outstanding ticket sales. A breakdown of the figure indicates that the sum of $230 million was released as special FX intervention while another sum of $35 million was released through Retail SMIS auction. #CBN pic.twitter.com/DUcpfPjqOJ
— Central Bank of Nigeria (@cenbank) August 26, 2022
Enough to see Emirates resume flights to and from Nigeria? For the moment, the Dubai company, which promised to “reassess” its decision “in the event of a positive development concerning the blocked liquidities”, has not yet pronounced. For his part, our specialist in the aviation sector, for whom “a compromise will always end up materializing for this type of procedural blockage”, sees it as “an act of goodwill” likely to “unblock the situation”, despite the risk of recurrence. .
For Kamil Al-Awadhi, Iata’s regional vice-president for Africa and the Middle East, “other states that block the repatriation of profits from foreign airlines are encouraged to follow Nigeria’s example and free up revenue that they retain”. Otherwise, “airlines cannot afford to serve ces pays ».