At the onset of COVID-19, Nigeria’s air connectivity was severely damaged as aviation took its biggest hit in history. In April 2020, Nigeria lost over 75% of its international route connectivity compared to 2019, and passenger demand still hasn’t recovered to pre-pandemic levels. But COVID-19 is not the only threat to connectivity, to aviation’s recovery in Nigeria or to the country’s economic revival. Airlines’ inability to access adequate foreign exchange in Nigeria is a rapidly increasing obstacle.
Globally, $1 billion in airline funds is blocked by 20 countries worldwide. Of this, roughly $700m is tied up in 11 African countries, including $208n being held back in Nigeria. It is the most amount blocked by any single African country and the amount is rising every week.
Cash flow is key for airlines’ business sustainability – when airlines are unable to repatriate their funds, it severely impedes their operations and limits the number of markets they can serve. The consequences of reduced air connectivity include the erosion of that country’s competitiveness, diminished investor confidence and reputational harm caused by a perception that it is a high-risk place to do business.
The airline industry is a competitive business operating on thin margins. So, the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity. It is unreasonable to expect airlines to invest and operate in nations where they cannot efficiently harness revenue from their services.
We understand the economic challenges faced by countries with blocked funds including Nigeria. But there is an urgent need for robust air connectivity and that is being hampered by airlines’ difficulty in repatriating funds. Strong connectivity is an economic enabler and generates considerable economic and social benefits — something that struggling economies need more than ever. It is in everybody’s interest to ensure that airlines are paid on time, at fair exchange rates and in full.
Prior to the pandemic, aviation in Nigeria supported 241,000 jobs and contributed $1.7bn to the GDP. Imagine the social and economic trickle-down benefits for Nigeria if it could sustain thousands of livelihoods by making it possible for airlines to fly people and goods between countries and continents.
The International Air Transport Association, representing airlines, is working with the Nigerian authorities and the central bank to find solutions to resolve this crisis. We call on the government to prioritise aviation in the access to foreign exchange on the basis that air connectivity is a vital key economic catalyst for the country. At stake is Nigeria’s important economic and social standing in Africa and on the global stage. This is far too great to jeopardise by failing to safeguard its air connectivity.
Source: punchng.com