In what is the latest episode underscoring an ongoing liquidity crisis in Nigeria, especially concerning availability of dollars, the International Air Transport Association (IATA) recently complained that airlines have $464 million in revenues that they could not repatriate out of Nigeria. This is amplifying a crisis that had led to flight ticket hikes and the threat to the aviation sector of the potential exit of big employers.
“Airlines can’t be expected to fly if they can’t realize revenue from ticket sales. Loss of connectivity harms the economy, hurts investor confidence, impacts jobs and people’s lives,” the group warned in a short Twitter thread that immediately went viral. IATA cited the decision by Dubai-based Emirates to suspend flights to Nigeria from September as cause for alarm.
On Aug. 26, the Central Bank of Nigeria said it has made $265 million available for release to the airlines. The money appears to have been raised from the bank’s foreign exchange reserves and an auction to importers. IATA, the global trade group for airlines, welcomed the gesture. There is an implied belief that the rest of the withheld funds will be released.
At commercial banks in Lagos and Abuja, customers are facing restrictions on how many dollars they can withdraw in cash from personal accounts over the counter. Most bank-issued debit cards denominated in the Nigerian naira are increasingly unusable for international transactions on Amazon and other websites, with monthly spending limits crashing to near zero from around $4,000 in 2015, the year of president Muhammadu Buhari’s first term.
Analysts cite Nigeria’s insufficient oil revenues due to production shortages linked to theft along pipelines as one of the immediate causes for the dollar scarcity. Low output means Nigeria has not taken advantage of the doubling of oil prices to above $100 (for the Bonny Light variant) over the last two years.
The production issues have meant that efforts by the central bank governor, Godwin Emefiele, to crack down on currency speculators have borne little fruit.
Emirates suspended flights to Nigeria because it couldn’t repatriate $85 million. As Nigeria’s dollar scarcity persists, the threat of other airlines following its lead may not go away despite the central bank’s intervention.
As part of a “temporary adjustment in operations,” British Airways has reportedly told its sales agents in Nigeria to suspend new bookings. “They just disable your naira card from working on their website,” one agent told Quartz. On rumors that the airline may pause operations, a spokesperson for the company said in an email that flights “continue to operate as scheduled.” They declined to say how temporary the change in operations would last.