Africa’s Aviation Sector Faces $1.68 Billion Fund Lockdown: IATA Urges Government Action

The International Air Transport Association (IATA) disclosed that as of September $1.68 billion of airlines’ funds are locked in Africa.

The impact of this financial entanglement is viewed as detrimental to connectivity, raising significant concerns about the sustainability of the aviation sector on the continent.

Kamil Alawadhi, the Regional Vice-President for Africa and the Middle East at IATA, addressed this issue during the African Airlines Association 55th Annual General Assembly in Uganda.

Alawadhi emphasized the association’s ongoing efforts to provide value to its members in navigating the challenging financial landscape.

Nigeria accounts for a substantial portion of these blocked funds, totaling $783 million, with only about 10% cleared despite recent efforts.

The Central Bank of Nigeria (CBN) has initiated steps to clear the forex backlog, but challenges persist in disbursing the funds effectively.

Alawadhi stressed the urgency of liberating blocked airline funds and advised governments on best practices to clear backlogs.

He highlighted the broader repercussions, extending beyond the airlines to negatively impact the economies of the countries involved.

The consequences include reduced connectivity, diminished investor confidence, and damage to the countries’ reputations.

Recognizing aviation as a pivotal economic enabler, Alawadhi urged governments to prioritize sustainable solutions for clearing blocked funds, particularly as the industry seeks to recover from pandemic-induced losses.

IATA cautioned against imposing additional financial burdens on the sector, such as higher fees, levies, carbon taxes, or new taxes on air transport, trade, or tourism, which could exacerbate existing challenges.

As Africa’s aviation industry grapples with ongoing financial constraints, finding solutions to unlock these funds becomes crucial for sustained recovery and growth.

The IATA’s call for coordinated efforts to address this issue underscores the importance of a collaborative approach between governments and the aviation sector in navigating the complexities of the current economic landscape.