Sunday, August 14, 2022

Emirates cuts Nigerian flights as CBN withholds $85 million revenues over forex crisis

Nigeria’s forex crisis has advanced on all fronts as the naira continues to fall against the dollar, sending prices soaring and spiking the cost of living.

• July 30, 2022
Emirates Airlines and Emefiele

Emirates Airlines has announced a reduction in flight operations to Nigeria from August 15, citing the Central Bank’s continued withholding of $85 million from its ticket sales in Nigeria

The airline disclosed the development in a letter written to Nigeria’s aviation minister Senator Hadi Sirika, dated July 22 2022 and is signed by Sheik Majid Al Mualla, the DSVP International Affairs.

“As of July 2022, Emirates has US$ 85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than $US 10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate,” the letter said. “With effect from 15 August 2022, Emirates will be forced to reduce flights from Dubai to Lagos from 11 per week to 7 per week.”

Mr Al Mualla notes that the airline had made efforts to work with the Godwin Emefiele-led Central Bank of Nigeria (CBN) to find a solution to this issue, however no positive response was received. He also noted meetings had been held between Emirates’ own bank in Nigeria and International Air Transport Association (IATA) to discuss improving Forex allocation, but efforts have been met with limited success.

Mr Al Mualla’s letter follows a similar complaint from the IATA in June, where a top official disclosed that Nigeria has withheld $450 million in revenue from international carriers operating in the country.

The downsizing of Emirates operations in Nigeria will put further pressure on the naira as Nigerians will scramble for dollars to pay for the available flights when the policy kicks in next month. 

CBN’s tactics to arrest its Forex crunch could become a huge downer for potential investors looking to do business in Nigeria.

When reached for comments, the Central Bank’s Director of Corporate Communications Osita Nwanisobi said a response would be given. Follow up messages and calls had not been returned at the time of filing this report. 

On Friday, Mr Nwanisobi had reiterated the central bank’s commitment to resolving the foreign exchange issues plaguing the country and as such had been working to manage both the demand and supply side challenges. His comments came after officers of the Economic and Financial Crimes Commission (EFCC) raided Bureaux De Change (BDC) operators in Abuja.

Some foreign airlines operating in Nigeria had announced in April that flight tickets would only be purchased in U.S. dollars to aid the repatriation of airline funds stuck in Nigeria and other foreign exchange fluctuations.

Nigeria’s forex crisis has advanced on all fronts as the naira continues to fall against the dollar, sending prices soaring and spiking the cost of living. 

On Wednesday, the naira crashed further in the parallel market, trading for N710 against the U.S. dollar despite Mr Emefiele’s supposed attempts to defend it. The Senate has summoned the Central Bank governor to answer for the currency’s free fall.

Crude oil, Nigeria’s top forex earner, will not provide succour despite rising global prices in 2022. The World Bank projected that Nigeria will not benefit fiscally as it continues to struggle under the weight of heavy subsidy payments.

The projections come as President Muhammadu Buhari’s regime depleted Nigeria’s Excess Crude Account (ECA) from over $2 billion left by former President Goodluck Jonathan in 2015 to $376,655 in July, 2022.

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