Emirates Airline announced Thursday that it has suspended operation in Nigeria, more than a month after it made public its struggles to repatriate $85 million trapped fund.
A statement issued by the airline said its inability to repatriate the fund has forced it to take the regrettable action.
“Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria and have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution. Regrettable there has been no progress,” Emirates said in a statement.
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Last month, the United Arab Emirates (UAE)-based company made what seems to be a final push to get Nigerian authorities to find a solution to the problem – it set August 15 deadline to reduce its flights from Dubai to Lagos from 11 per week to 7 per week. However, Emirates said there has been no progress in reaching Nigerian authorities for a solution.
In response to the development, Nigeria’s aviation ministry says it is “working hard” to release trapped funds.
Aviation Minister Hadi Sirika told CNN that it is not the first time Nigeria was withholding funds belonging to foreign airlines but there are efforts to see that the funds are released.
“In the past, Nigeria has demonstrated the capacity and the willingness and fairness to resolve this type of issue. It happened when we took over power in 2015: There were lots of blocked funds, about $600 million at that time. It was at a time when the country was in a recession and there were dwindling revenues coming to the country, yet we honored our obligation to pay out all those blocked funds,” he said.
“Unfortunately, due to many factors and reasons, the monies piled back up. Government is working hard to ensure that these monies are released, not only for Emirates but all airlines affected,” Sirika further said, adding that “mechanisms will be put in place to ensure that this does not occur in the future.”
Emirates $85 million, which has been rising by over $10 million monthly according to a letter the company sent to Sirika, is part of the $450 million belonging to foreign airlines that has been trapped in Nigeria for long.
The International Air Transport Association (IATA) said in June that efforts to repatriate the fund for its affected members have been futile. IATA’s Vice President for Africa and the Middle East, Kamal Al Awadhi, had described talks with Nigerian officials to release the funds as a “hectic ride”.
The difficulty in repatriating the fund has been attributed to the overwhelming shortage of foreign exchange in Nigeria. Africa’s largest economy has been grappling with the effects, which have seen its currency, the naira, freefalling against the dollar.
There is concern that the situation is going to further hurt the Nigeria’s aviation sector that is currently reeling on the mercy of high cost aviation fuel which has made airline fares largely unaffordable. There is also concern that more airlines, whose funds are also being held, will tow the path of Emirates.
Al Awadhi said “this is going to damage the country down the road.”
It’s part of the imbalances we have created across sectors, people leave the country more than those entering, so on the balance, that alone creates dollar deficit. Nigeria is hurting in all areas, even the citizens blaming the government are also hurting Nigeria, but once you point it out, you see everyone becoming defensive.
We cannot be a country that only knows how to take without knowing how to give. If we want foreign investments, we must also have the means to facilitate repatriation of funds when the time comes, it cannot be one-sided.
How can we have enough dollars for Emirates when we have more people going to Dubai with dollars but not returning with more dollars? That is one of the equations to be solved. If there is balance in demand and supply for naira, the minister won’t be speaking plenty English to address repatriation for airlines; but everything has become a struggle in our case.
We are making provisions for dollars in so many areas we obviously lack capacity to fund presently, from petrol to medical tourism, from education to vacations, whether people buy from black market or official rate, it’s the same shortfall, as long as demands are higher than supply.
We have to decide on how we want to advance.