New revelations from the International Air Transport Association (IATA) highlight a staggering $1.68 billion of airlines' funds blocked in Africa out of a total of $2.36 billion globally. Kamil Alawadhi, the Regional Vice-President for Africa and the Middle East at IATA expressed concern over these figures, emphasizing the devastating impact of this blockage on connectivity.
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Addressing the 55th AFRAA Annual General Meeting in Entebbe, Uganda on November 18, 2023, Alawadhi stressed the critical nature of cash flow for the sustainability of airlines' operations. The inability to repatriate these funds severely hampers their operational capabilities and decisions regarding flight destinations. He underscored that the repercussions of blocked funds extend beyond airlines and pose negative implications for the countries enforcing such blockades.
Alawadhi highlighted that the consequences reach beyond the aviation sector, impacting the overall economy, connectivity, investor confidence, and national reputation. Emphasizing the pivotal role of aviation as an economic driver, he called upon African governments to prioritize the industry and work towards sustainable solutions for unblocking these funds. He assured that IATA stands ready to extend its support in any possible way.
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The impact of blocked funds is evident in Nigeria, where elevated airfares have persisted due to the blockade of funds, compelling airlines to adjust prices for sales made outside the country. Approximately $1 billion is tied up in 12 African countries, with Nigeria, Zimbabwe, Algeria, and Eritrea standing out as some of the most affected nations.
In contrast, Ghana has maintained a positive operational environment for international airlines serving the Kotoka International Airport due to the collaborative relationship between the government and airlines. This stands in stark contrast to neighboring Nigeria, where a number of international airlines have hinted at reducing their flight frequencies owing to the continued blockage of airline funds.
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Cathrine Wesley, Country Manager of Emirates Airlines, highlighted the excellent relationship between Emirates Ghana and the Ghanaian government, which has facilitated smooth operations without encountering the challenges faced by airlines in other African nations. Wesley's remarks underscore the importance of fostering conducive environments for airlines to operate without impediments related to blocked funds.
The data and testimonies shed light on the urgent need for efficient mechanisms to address the blockage of airline funds in Africa, not only for the sustenance of airlines but also for the broader economic and connectivity benefits associated with the aviation sector. Resolving this issue is pivotal for maintaining the region's competitiveness, fostering investor confidence, and bolstering sustainable economic growth.
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