Nigeria’s foreign exchange woes are damaging the country’s air travel sector, as the west African nation’s forex reserves have taken a battering following a slump in global oil prices.
Oil accounts for 90 percent of Nigeria’s foreign exchange earnings.
The dollar scarcity has led to an acute shortage of jet oil used by airlines and left several local carriers struggling to pay their staff.
“The major challenge is that we have a foreign exchange issue,” Hadi Sirika, the minister of state on aviation, said in an interview on Tuesday.
“Aviation, especially in Nigeria, is completely denominated in foreign exchange,” he said, noting that everything from aircraft and spare parts to pilot training and maintenance must all be done in other currencies.
However, Sirika did say the situation is improving, as the central bank is now releasing more overseas currency to the aviation industry.
In a bid to alleviate the burden of purchasing fuel from overseas, the state-controlled Nigerian National Petroleum Corporation said on Monday it would be releasing 26 days of aviation fuel to “forestall shortage”.Underscoring the troubles of Nigeria’s aviation industry, the country’s biggest airlines, Arik, was hit by union strikes this week, amid a dispute over salary arrears and contracts.
In a short-term blow aimed at fixing some of the industry’s issues, the government also said it would close the capital Abuja’s airport for six weeks from February to repair its badly damaged runway, after airlines threatened to stop flying there.
Nigeria in 2016 entered its first recession in a quarter of a century, spurred by low oil prices and violence in the restive Niger Delta region contributed to low production.