The Senate, on Wednesday, passed a resolution calling on the Central Bank of Nigeria to release $717,478,606 in airline funds that are currently trapped in the country.
Additionally, the upper chamber urged the CBN to allocate $25m to airlines operating in Nigeria at its fortnightly dollar auction.
The resolutions were made after considering a motion titled “Current Issues on airlines blocked funds in Nigeria” sponsored by Sen. Biodun Olujimi (PDP-Ekiti) during plenary.
Olujimi who is the chairman of the Senate Committee on Aviation was represented by Vice Chairman of the Committee, Sen. Bala Na’Allah (APC-Kebbi ) who presented the motion on his behalf.
The upper chamber has urged the Federal Government to take immediate action to reverse the trend of increasing airlines blocked funds in Nigeria. The Senate called on the President, Major General Muhammadu Buhari (retd.), to direct the CBN Governor, Mr. Godwin Emefiele, to release the blocked funds to the affected airlines.
Additionally, the upper chamber appealed to airlines operating in the country to refrain from withdrawing their services while efforts are underway to resolve the issue.
Senator Na’Allah, who moved the motion, stated that since January 2021, Nigeria has been the most challenged country in the world for airlines to repatriate their funds to support their operations.
In February, Nigeria alone accounted for 44% of the total airlines blocked funds in the world. As of March, the total amount of airlines blocked funds in Nigeria was $717,478,606, which includes matured bids that the CBN has not yet delivered, bids that are yet to mature, and cash balances in airlines’ accounts for repatriation.
He furthered that of the total amount of airlines blocked funds in Nigeria, matured bids that the CBN has not yet delivered accounted for $186.5 million, which is 26% of the total blocked funds. Three stakeholders, IATA, Qatar Airways, and Ethiopian Airlines, accounted for 57% of the total blocked funds.
A review of the airlines’ blocked funds in Nigeria over the last six months indicates an average month-on-month increase of $49.3 million.
The consequences of these blocked funds are that cheap tickets are not available in Nigeria because taxes and inflation will have eroded the profit when the funds are kept for a long period of time.
As a result of the blocked funds, tickets in Nigeria have become very expensive and limited. Neighbouring countries are able to get cheaper tickets because they make prompt payments due to the prompt repatriation of funds.
Senators supported the motion and voted to approve the prayers when they were put to a voice vote by Senate President Ahmed Lawan.