CBN makes $300m available to airlines as part of drive to ease aviation sector woes

AIRLINES operating in Nigeria have been granted a sum of $300m by the Central Bank of Nigeria (CBN) as part of government plans to ease their foreign exchange problems that have hampered operations over recent months.

 

Due to the collapse in global crude oil prices, there has been a chronic scarcity of dollars within the Nigerian economy, making business extremely difficult for domestic and foreign airlines. They have been unable to remit cash raised from ticket sales, which has affected their ability to meet their international obligations like obtaining insurance, buying parts and paying foreign airport costs.

 

In response to the crisis, the CBN approved a Special Secondary Market Intervention Retail Sales (SMIS) foreign exchange window for airlines and manufacturers. Under this programme, yesterday, $300m of the $600m the airlines have stuck in the country was released to them.

 

Of late, some of the airlines have either stopped coming into Nigeria or are threatening to stop because of the inability to remit their money out of the country. Yesterday, minister of state for aviation Hadi Sirika, said the $300 was the first tranche of the cash and the balance would soon be released.

 

He added: “Government through the CBN has made available $300m out of the $600m of the airlines’ funds stuck in Nigeria to pay them to demonstrate its commitment to the sector and with devaluation, $600m could be $1bn.  With government intervention they have been given $300m and gradually we will clear everything and once that happens, they are not going anywhere.

 

“I think it is a response to how the industry is doing globally, especially Nigeria with recession, our inability to get the airlines to repatriate their currency that they earn through sales of tickets. Aviation is dollar denominated, you buy aircraft in dollars, you service in dollars, you train your crew in dollars, you do everything in dollars and we simply do not have the dollars to pay these airlines."

 

Mr Sirika added that Nigeria has a population of 177m serving west and central Africa which is a 600m people market, double that of US, half of India, equal to Europe and the airlines know that so will stay here.  He added that the government has been talking to airlines, such as Egypt Air, British Airways and Turkish Air, which fly in Nigeria with undesirable aircraft while they put better aircraft on other routes.