The scarcity of foreign currencies, particularly the United States dollars has led to the withholding of foreign airlines’ funds by many African countries according to IATA’s Regional Vice President Africa & Middle East, Kamil Al-Awadhi
In summary, the blocking of over $800 million in airlines funds by Nigeria, Ethiopia, Zimbabwe, Eritrea and Algeria, and some other African nations shows that these nations are in a serious shortage of foreign currencies occasioned by the economic downturn that has hit many nations as a result of COVID-19 pandemic and other economic difficulties.
Nigeria faces a dollar shortage because the country spends more U.S. dollars on imports than it receives on exports. Since the US dollar is to price many goods globally and is used in many international trade transactions, a dollar shortage can limit a country’s ability to grow or trade effectively.
Kamil Al-Awadhi who spoke to Aviation Metric on the sidelines of the ongoing 78th IATA Annual General Meeting (AGM) taking place in Doha, Qatar attributed blocked funds in some African countries to the usage of funds for the provision of infrastructure in those countries and the fact that these nations, “Are running out of hard cash or hard currencies”.
His words, “The reason for this is that infrastructure is collapsing in these countries. The other is when the country runs out of hard cash or hard currency. Countries never completely run out of hard cash but it has to be careful of how it spends money on medicines for their people and on other things. It needs to spend but there is actually nothing they are exporting to get generate more foreign currency. There is a bounce to this. Aviation brings in raw, hard cash”.
Reminded that after the COVID-19 pandemic, a lot of African governments ran to the International Monetary Fund (IMF) because the fiscal situation is bad in Ghana, Ethiopia, and some other countries, and whether the nations should still hold on to the money for sometimes, the IATA chief said they were trying to get the governments to see the advantages of not doing that, saying the action hurts.
He further described the action to hold back carriers’ funds as a quick win of grabbing money that belongs to somebody else.
“It is one quick win but they lose down the roads because the whole industry is losing with over 300, 000 losing their jobs. How is that good for the country?
“If you start blocking funds, you are damaging your aviation industry and so on; you stopped funds coming into the country. How do you think they pay for their fuel? They pay for their fuel in Ghana, Nigeria in dollars”, he added.
Speaking on the liberalization of air transport in the country under the Africa Union (AU) propelled Single African Air Transport Market (SAATM), Al-Awadhi disclosed that last year he had visited Africa and held discussions with key strategic countries like Ethiopia, Kenya, Egypt, and South Africa to discuss, among others, ways in which the decision touted to hold important economic boosts could be implemented.
He said IATA had done a GAP analysis on the different African countries’ aviation sectors and had also held talks with aviation organisations like African Airlines Association (AFRAA), African Civil Aviation Commission (AFCAC), and the International Civil Aviation Organisation ( ICAO), and the AU.
“If all goes well then we will have a meeting in September with these organization representatives and seven African airlines and I am certain that there will be progress,” he said.
He said he did not want to reveal further information but is hopeful that this meeting could signal the start of the opening of African skies and air services liberalisation.
IATA has been a strong advocate of the Single African Air Transport Market or SAATM as it is known – a flagship project of the African Union Agenda 2063 – aimed at creating a single unified air transport market in Africa.
The SAATM was created to expedite the full implementation of the Yamoussoukro Decision
The economic benefits in terms of gross domestic profit could reach (US) $2.7 billion for the continent and $1.5 billion in increased trade and promises 300,000 jobs.
At the briefing, Alawadhi presented figures about the current state of aviation recovery in Africa and the Middle East. He said according to IATA analysis Africa had recovered 52% from pre-crisis levels.
He said while domestic aviation had almost recovered completely on the continent – regional traffic “is just not there”.
In contrast, the Middle East is well on its way to recovery.
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