Vital unrepatriated funds from a number of African countries, amounting to $1.68 billion, are currently trapped in Africa which is hampering the development of the aviation sector on the continent, according to the International Air Transport Association (Iata).
Speaking at the African Airlines Association (Afraa) 55th Annual General Meeting in Entebbe, Uganda, Iata’s regional vice president of Africa and Middle East, Kamil Al Alwadi, said the trapped funds had hit $1.68bn at the end of September.
The Foreign Airlines’ Fund is a mechanism for countries to pay over aviation fees to other countries’ airlines or airport authorities.
The countries holding on to the foreign airline funds are Ghana, Nigeria, Ethiopia, Angola and Zimbabwe.
Iata identified trapped funds as one of the major issues plaguing aviation in Africa, describing the numbers as alarming and having a huge and devastating impact on connectivity.
He said since 2018, a significant amount of blocked funds had been repatriated from Angola, Ethiopia, Ghana, Nigeria, and Zimbabwe through working with the respective governments.
Alawadhi emphasised the severe impact on connectivity and economies, urging governments to prioritise aviation and find sustainable solutions.
"Aviation is capital intensive. Cash flow is key for airlines' business sustainability - when airlines are not able to repatriate their funds, it severely impacts their operations and their decisions on where to fly.
"But the risk of blocked funds is not just limited to airlines; the negative impact extends to the countries blocking the funds. It impacts the country's economy and its connectivity, and it hurts investor confidence and reputation. Aviation is not only an economic enabler; it is a pillar of modern economies," the Iata chief said.
Governments, he said, must prioritise aviation and find sustainable solutions in the clearing of blocked funds. He said Iata would continue to offer its support in any way they could.
He lamented the state of aviation infrastructure on the continent, stressing that the facilities came with a high price tag; user charges across the continent are 8% higher than the industry average.
He disclosed that infrastructure charges must be set at levels that were fair, justified, and reflective of a value service proposition for airlines and passengers, adding that efforts through a pan-Africa fuel campaign had resulted in charge reductions in Chad, the Ivory Coast, and Zambia over the last five years.