How FG paid $850 million FX backlog belonging to EU airlines

• The European Union has confirmed that Nigeria has paid the outstanding $850 million owed to EU airlines
• The EU ambassador to Nigeria and ECOWAS, Samuel Isopi, confirmed it, saying that the move has restored investors’ confidence
• She also praised the decision of the Central Bank of Nigeria (CBN) to remove FX restrictions on banned items

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The EU confirmed on Tuesday, July 2, 2024, that the Nigerian government has cleared an outstanding $850 million debt owed to European airlines.

The EU Ambassador to Nigeria and ECOWAS, Samuel Isopi, disclosed this at Abuja's 9th edition of the Nigeria-EU business forum.

European Union confirms FG cleared $50 million FX backlog of EU airlines Credit: COROIMAGE
Source: Getty Images

The move has restored investors’ confidence

Isopi said that a crucial condition for any foreign investor is the ability to repatriate profits, which has been a concern recently. The airline industry was the most affected.

According to her, the funds amounted to $850 million, with a substantial amount owed to EU airlines. She stated that more than 98% of the arrears have been cleared.

Isopi praised the Nigerian government's decision to remove FX restrictions on the import of 43 items previously excluded from accessing FX from the official market, saying that the move will boost investors’ confidence.

According to reports, she described the business forum as a platform for dialogue and engagement between the public and the private sector and highlighted the importance of the government's role in supporting business, the private sector, and private investments.

Nigeria was one of the most indebted countries to airlines globally, and many foreign airlines threatened to withdraw their services due to an accumulated FX backlog.

CBN clears $7 billion FX backlog

In March 2023, the Central Bank of Nigeria announced that it cleared about $7 billion in FX backlog belonging to airlines and other sectors.

Analysts have blamed the backlog for slow investment and withdrawal of many foreign firms from Nigeria.

According to them, the backlog made it challenging for airlines and companies to meet FX obligations in their home countries.

Following paying the FX backlogs to foreign airlines, the operators unlocked cheaper airfares for passengers flying from Nigeria.

The airlines crashed their airfares, especially on the lucrative Lagos-London route below those that Nigerian airline Air Peace charged.

Experts disclosed the impact on the travel business

Henry Uche, a travel agent and CEO of Goodwinds Travels and Tours, said the industry had some breather after the Nigerian government cleared the backlog.

“It was challenging for us in the travel business because our clients always wanted cheaper, elusive tickets. The foreign airlines always gave the excuse of being owed by Nigeria as the reason for the high cost of airfare.“Now we have tickets half the price of what the airlines used to charge before FG cleared the backlog.”

Airlines confirm reduction in aviation fuel price

Legit.ng previously reported that Nigerians are set to experience airfare crashes as airline operators in Nigeria confirmed a reduction in aviation fuel prices.

The development comes as the Dangote refinery began production of aviation fuel, also known as JetA1.

The airlines met with the Dangote group to discuss challenges causing the rise in commodity prices, which in turn led to a hike in airfares.

Source: Legit.ng