Nigeria settles 98% of $850m debt to international airlines

AFRICAN BUSINESS AND ECONOMYJune 5, 2024 at 8:22 AM UTC

TLDR

Nigeria resolves 98% of $850 million airline backlog due to dollar shortage, $19 million pending verification by Central Bank.
Backlog peaked at $850 million in June 2023, with $61 million settled by January 2024, causing airline disruptions.
Central Bank's payments part of $7 billion forex backlog strategy to stabilize exchange rate.

Nigeria has resolved 98% of its $850 million backlog owed to international airline operators, leaving $19 million pending verification by its Central Bank, as confirmed by the International Air Transport Association (IATA).

This backlog resulted from an acute dollar shortage, which prevented foreign airlines from repatriating their earnings, peaking at $850 million in June 2023. By January 2024, only $61 million had been settled, leading to threats of strikes and reduced operations by some airlines.

The Central Bank of Nigeria’s recent payments are part of a broader strategy to address over $7 billion in foreign exchange backlogs, aiming to stabilize the country's exchange rate.

Key Takeaways

Nigeria's progress in clearing the FX backlog is a positive sign for the country’s aviation industry, which was severely impacted by the blocked funds. This development aligns with the CBN's broader efforts to clear a $7 billion FX backlog and stabilize the exchange rate. In February 2024, Governor Olayemi Cardoso announced that the FX backlog had decreased to $2.2 billion. In January 2024, the CBN disbursed $61.64 million to foreign airlines through various deposit money banks and released $500 million to various sectors to address the backlog of verified foreign exchange transactions. These actions indicate a concerted effort to alleviate financial strain and improve liquidity, benefiting the aviation industry and other sectors reliant on foreign exchange.

Nigeria

Foreign Exchange

Forex Crisis

IATA

Airlines

Economy

Exchange Rate

US Dollar