The Nigerian government, through the country's central bank, has reportedly released about $61.64 million belonging to foreign airlines through various banks. This move is part of the government's objective to clear the backlog of pending matured foreign exchange in Deposit Money Banks (DMBs).
Blocked Funds: A Major Challenge
The issue of blocked funds in Nigeria and other African countries remains a major challenge and impediment to the development of aviation in Africa. The International Air Transport Association (IATA) continuously urges the Nigerian government to work on releasing the funds belonging to foreign airlines to avoid the negative impacts this has on connectivity in the West African country.
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A Positive Step Forward
Although it is only a tiny fraction of the last published figures, releasing over $60 million of blocked airline funds is a positive step toward resolving this issue. According to a statement by the Acting Director of Corporate Communications of the Central Bank of Nigeria (CBN), Hakam Sidi-Ali, the move also supports the financial institution's efforts to reduce its remaining liability to the airlines.
Impact on Nigeria's Economy
The clearance of this backlog is expected to give Nigeria's local currency, the Naira (₦), a considerable boost against other major currencies while also increasing investor confidence in the country. The central bank has also redeemed outstanding forward liabilities of up to $2 billion over the past three months.
Conclusion
The release of blocked funds and outstanding liabilities is expected to boost the Naira and increase investor confidence in Nigeria's economy. This underscores the CBN’s commitment to the resolution of pending obligations and a functional foreign exchange market. These payments signify CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate.