Nigeria Aviation Industry Gets Boost as Nigeria Resolves $850M FX Backlog

Nigeria resolves 98% of $850 million FX backlog owed to international airlines, signaling progress amid FX market instability.

Nigeria has made significant progress in addressing its foreign exchange (FX) backlog owed to international airline operators, settling 98% of the $850 million owed. This move is expected to bolster optimism amid the country's struggle for FX price stability. The International Air Transport Association (IATA) confirmed the clearance, with only $19 million pending verification by the Central Bank of Nigeria (CBN).

The resolution comes after Nigeria faced challenges allowing foreign airlines to repatriate earnings due to a severe dollar shortage. At its peak in June 2023, Nigeria owed airlines up to $850 million, only settling a fraction, which prompted threats of strike action and operational cutbacks from airlines in January 2024.

IATA commended the Nigerian government and the CBN for their efforts, emphasizing the crucial role of reliable air connectivity for individuals and the economy. While the $19 million residue remains to be cleared, the progress signifies a positive outlook for Nigeria's aviation industry, which suffered significant impacts from the blocked funds.

The development aligns with the CBN's broader efforts to clear FX backlogs and stabilize exchange rates. Olayemi Cardoso, in February 2024, announced a reduction of the FX backlog to $2.2 billion, with $61.64 million disbursed to foreign airlines in January. Additionally, the CBN released $500 million to various sectors to address verified foreign exchange transactions, and by March, reported clearing all valid FX backlogs amounting to $7 billion, while increasing external reserves to $34.11 billion.