Aviation crisis: Emefiele says one-third of global economy in recession 

The Governor of Nigeria’s Central Bank (CBN), Mr Godwin Emefiele on Monday disclosed that about one-third of the world’s economy “is currently in recession” due to the damaging effects of the Covid pandemic and the ongoing war between Russia and Ukraine 

The CBN boss, who said this while addressing Foreign Affairs and Aviation stakeholders at a meeting with the House of Representatives Speaker, Femi Gbajabiamila, also pointed out that the bank was working outside the box to mop up foreign exchange and strengthen the naira and by extension the economy through the RT 200 policy.

According to him, “the RT 200 is the policy focusing on the repatriation rates of non-oil exports proceeds into the Nigerian economy which is almost a billion dollars in the 3rd quarter of 2022.

“What is happening is a global challenge. Indeed, as I speak, I can say that the global outlook today is darkening due to a deepening global slowdown. 

“Today more than one-third of the global economy is in recession. The global community is facing rising incidents of unemployment. Indeed, most countries in the world are facing rising inflation. As a result of this year alone, the USA is expected to raise rates almost by 3.75 per cent in 2022. That has created some serious inflation pressures and depreciated the currencies of other countries.

“From the CBN, since February this year, we introduced the RT 200 programme, which is a programme introduced in order to encourage repatriation of Forex proceeds from exporters of non-oil export products. We are gratified that the programme is doing well. When we started it, the first six weeks in February and March, we were only able to see repatriation. We paid rebates on repatriation of about $62 million. In the second quarter, we saw an astronomical improvement to $622 million in export proceeds of non-oil. For the third quarter, we have seen almost close to a billion dollars,” Emefiele said.

The CBN boss was responding to the issue of $700 million in trapped funds of foreign airlines, which have threatened to stop flying Nigerian routes from October 28 if nothing was done by the government to resolve the backlog.

He declared that, contrary to IATA’s representative’s position that nothing had been done to reduce the backlog, a sum of $265 million had been earmarked for disbursement to the foreign airlines through their various banks.

According to him, “aside from the prioritisation of FX we have always accorded airlines, on the 31st of August, you spoke to me because I have to give you credit for that. That day, I made a decision to use our discretion to allocate $265 million to foreign airlines. 

“We did $110 million in spot and the rest 60 days forward. On that day we allocated to IATA $32 million through UBA, Qatar Airways got $22.8 million through Standard Chartered, Emirates got $19.6 million through Access Bank, BA got $5.5m through GTB;

“Virgin Atlantic got $4.8 million through Zenith and so on. 

“How then can they go about and begin to say they have not received their money? This is aside from the so-called 8 or 10 per cent you say you are getting Mr Fatokun (referring to the IATA representative). 

“This is extra allocation which we use our own discretion to give you and which I have told you personally that we would continue to do so as to make you guys happy so you don’t continue to blackmail this country. 

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“Out of that $120 million would be due on the 31st of October. The monies would be paid. So what else do you want me to do? I must confess there would be a delay. Gentlemen, even though I have been accused of printing Naira, but I cannot print dollars. We have to earn it or borrow it. All these things we are talking about boil down to reciprocity, and IATA cannot shy away from that,” he said.

He also called on other foreign countries to grant landing permits to Nigerian airlines to fly their routes so as to reduce the burden of accumulated funds going forward.

According to him, “IATA has the responsibility to get Nigerian airlines to fly on the basis of reciprocity.

“Everyone is calling on CBN, blocked funds, and I am doing everything I can to provide dollars for you to repatriate your money. How can you come here and begin to tell us that you were not a party to BASA and, for that reason, you are not interested in the concept of reciprocity when you know that would benefit your country and our country,” he said.

The House of Representatives Speaker, Rep Femi Gbajabiamila, who arranged meeting  had earlier told the gathering that the issue of blocked or trapped funds of foreign airlines was giving the House a great course for concern, hence the need for the forum to find lasting solutions bearing in mind the prevailing economic imperatives.

The Speaker, who also said the principle of reciprocity requires that Nigerian carriers be allowed to fly into countries whose airlines have a huge market in Nigeria, appealed to the CBN governor to seek ways of raising forex for the airlines, just as he agreed that allowing Nigerian airlines operate many of the international routes will reduce the incident of trapped funds in the future.

The Minister of Aviation, Sen. Hadi Sirika, told the gathering that “Nigeria under President Muhammadu Buhari has shown the capacity and audacity to stand up in difficult moments to do the right thing to help the country.” 

He recalled that “in 2016, when we came in there was about $480 million blocked in Nigeria. That year, we were in recession and revenues had dwindled. We just heard the CBN Governor say we either earn it or borrow it. At that moment, we had not even started borrowing. So we went to Mr President and informed him of the difficulty we were in. And he asked the CBN Governor and Minister of Finance to resolve the problem, which was done. 

“So we have demonstrated as a country to be able to respond even in difficult moments to things that are obligations upon us.”