AIRLINES operating within Nigeria have been given a vital lifeline by the Central Bank of Nigeria (CBN) after it approved a Special Secondary Market Intervention Retail Sales (SMIS) foreign exchange window for them and manufacturers.
Over the last year, Nigeria has suffered from a dearth of foreign exchange due to the collapse in global oil prices, hitting airlines hard. Due to a combination of aviation fuel scarcity, limited foreign exchange, a collapse in passenger numbers and high maintenance costs as they bring their facilities up to international standards, most Nigerian airlines have been unable to afford their usual annual insurance packages.
This has led several of them to ground their fleets, with the likes of Arik Air, Aero Contractors and First Nation all suspending operations at one time or the other over recent months, citing difficulties in procuring foreign exchange. Yesterday, Hadi Sirika, the minister of state for aviation came to their aid, stating that the important one-off-stop-shop would fast track easy clearance of the backlog of matured foreign exchange obligations.
He added that the measure would also benefit the airlines with regards to the procurement of raw materials and machinery. This decision by the CBN to intervene in the Inter-Bank Forex market through forward settlement is expected to engender market confidence, ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.
Mr Sirika said: “The import of this peculiar exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market which provides that all, SMIS bids shall be submitted to the CBN through the FXPDs. Consequently, CBN shall receive bids from all the Authorised Dealers.
“The CBN will also not apply the relevant provisions under clause 2.4.3 (i) of the Guidelines which provide that spot Forex sold to any particular end-user shall not exceed 1 percent of the overall available funds on offer at each SMIS session.”
According to Mr Sirika, the special intervention by CBN is a great relief for airline operators in the country who have complained bitterly about their inability to access the required foreign exchange to settle their backlog of obligations and which has adversely affected their operations. He added that the aviation sector is so critical to the nation’s security and global image that it cannot be overlooked or toyed with, pointing out that the apex bank had taken the right decision that would not only strengthen existing airlines but also inspire confidence in aspiring operators in Nigeria’s aviation industry.
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