Business

Airfares Soar As Foreign Airlines Hike Exchange Rate

Published

3 years ago

March 27, 2023

International airfares on Nigerian routes have gone up further by over 20 per cent after foreign airlines raised the exchange rate for ticket sale from N462 per dollar to N551 per dollar, findings by The PUNCH have revealed.

International travellers on Nigerian routes have been paying higher airfares after carriers blocked their inventory of cheaper tickets in order to cushion the effects of the rising amount of trapped funds

The latest increase in the naira-dollar exchange rate for ticket sale by the International Air Transport Association, the Switzerland-based trade association of the world’s airlines, is expected to worsen the plight of Nigeria travellers who are already paying higher airfares.

Multiple travel companies confirmed to our correspondent on Friday that global distribution system companies had notified them of the latest increase.

They said the development was not unconnected with the difficulty faced by foreign carriers in repatriating their ticket sale proceeds out of Nigeria.

According to travel agents, the increase in the exchange rate has led to an over 20 per cent increase in international airfares.

“Virgin Atlantic which has a promo of about N800,000. This same promo is going for about N1.1m as a result of the increase in the exchange rate,” the chief executive officer of a travel agency, who chose to speak on condition of anonymity, said.

As of January this year, foreign airlines flying into Nigeria had about $743m in trapped funds in Nigeria. IATA has said Nigeria has the highest amount of foreign airlines’ trapped funds globally.

Stakeholders and travel firms have however emphasised the need for the Federal Government to direct the CBN to expedite the release of the trapped funds.

A former President of the National Association of Nigerian Travel Agents-the trade body for local travel agents-Mr Bankole Bernard, who also confirmed the latest increase in IATA’s exchange rate for ticket sales, said the Federal Government needed to honour the provisions of the Bilateral Air Services Agreement signed with foreign countries particularly as it affects the repatriation of funds.

“Today, the rate at which we are issuing tickets is N551 to a dollar. Is that the official rate? No, but that is the rate we are issuing tickets, which is moving closer to the black market rate. This means the issue of trapped funds would not have been if it had been properly managed,” he said.

“The funds became trapped because we (the government) were not ready to give foreign airlines funds at the official rate. Why didn’t you tell them the rate you would give them funds so that they can sell their tickets at a particular rate as long as it is official? After all, we have multiple exchange rates. So, what will make this one different? Then, there will not be an issue of trapped funds and people will do their business and the agony travellers are facing will not be there.”

The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, a research firm, said foreign airlines could not be blamed for the latest increase in the exchange rate.

He said, “In dollar terms, airfares have not gone up, It is still the same amount. The increase will only affect those who buy their tickets in naira. But we can’t blame foreign airlines. We need to put ourselves in their shoes. Why can’t they repatriate their funds? They are losing money by not being able to repatriate their funds. Most of their expenses are denominated in dollars, how will they pay for all these services and goods when they can’t repatriate their funds?”

IATA had a few weeks put foreign airlines’ trapped funds in Nigeria at $743,721,097 as of January 2023.

IATA disclosed this in a letter addressed to the Minister of Aviation, Hadi Sirika, and signed by its Area Manager for West and Central Africa, Dr Samson Fatokun.

IATA urged the minister to intervene and ensure the resolution of the issue of airlines’ blocked funds in Nigeria.

The letter read in part, “For over a year, Nigeria has been the country with the highest amount of airline-blocked funds in the world. Please find attached the comparative table of airlines’ blocked funds by country. Moreover, as of January 2023, airlines’ blocked funds in Nigeria have increased to $743.721.092 from $662m in January 2022 and $549m in December 2022.”

While highlighting the social-economic impact of the airline-blocked funds in Nigeria, Fatokun said the increasing backlog of blocked funds of international airlines would impact negatively the foreign direct investment in the country, at a moment the country was expecting investment in the concession of some of its major airports.

He also noted the continued delay in allowing foreign airlines to repatriate their funds violates BASA.

Sirika later promised that the Federal Government would ensure the backlogs of unremitted funds were paid.

He was not specific on when this would be done. The Central Bank of Nigeria had a few months ago released part of the trapped funds. Since then, however, the central bank appears not to be looking in the direction of the foreign carriers as the amount of trapped funds rises on daily basis.

The President of the Association of Foreign Airlines and Representatives, Mr Kingsley Nwokoma, said IATA reviews exchange rates periodically, adding that the current increase might have passed through necessary steps.

According to him, foreign carriers have been finding it difficult to repatriate their funds, noting that this has made doing business in Nigeria very difficult.
PUNCH

Business

Naira Records Highest Depreciation Against US Dollar

Published

15 hours ago

January 10, 2026

Editor

The Naira recorded the highest depreciation against the United States dollar at the official foreign exchange on Friday to end the week on a negative note.

Central Bank of Nigeria data showed that the Naira extended its dip on Friday to N1,423.17 against the dollar, down from N1,419.72 traded on Thursday.

This represents a N3.45 depreciation against the dollar on a day-to-day basis, the highest in the week under review and in 2026 so far.

Meanwhile, at the black market, the naira remained at N1,490 per dollar on Friday, the same rate recorded on Thursday.

In the other week, the Naira recorded three gains and two losses against the US dollar and other currencies.

The development comes amid the continued rise in the country’s external reserves, which hit $45.67 billion as of January 8, 2026.

Business

KPMG Flags Five Major ‘Errors’ In Nigerian Tax Laws

Published

1 day ago

January 9, 2026

Editor

Fresh apprehension has surfaced over Nigeria’s newly implemented tax framework after KPMG Nigeria highlighted what it described as “errors, inconsistencies, gaps, and omissions” in the new tax laws that took effect on January 1, 2026. The professional services firm in a recent statement cautioned that failure to address these issues could weaken the overall objectives of the tax reforms.

Nigeria’s tax overhaul is built around four major legislations: the Nigeinpieces of legislation:ria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (NRS) Establishment Act, and the Joint Revenue Board (JRB) Establishment Act. The laws were signed by President Bola Ahmed Tinubu in June 2025 and formally commenced in 2026. However, the reforms have continued to attract controversy since they were first introduced in October 2024.

Despite the concerns, government officials have consistently described the reforms as essential to improving Nigeria’s low tax-to-GDP ratio and modernisingpieces of legislation:modernizing the country’s tax system in line with evolving economic conditions.

In a detailed review, KPMG outlined several areas of concern.

Capital gains, inflation modernizing inflation and market response

KPMG flagged Sections 39 and 40 of the Nigeria Tax Act, which require capital gains to be calculated as the difference between sale proceeds and the tax-written-down value of assets, without adjusting for inflation. According to the firm, this approach is problematic given Nigeria’s prolonged high-inflation environment.

Data from the National Bureau of Statistics shows that headline inflation has remained in double digits for eight consecutive years, averaging over 18 percent between 2022 and 2025. Over the same period, asset prices have been significantly influenced by currency depreciation and general price increases.

Market data also reflects investor sensitivity to tax policy changes. Although the NGX All-Share Index gained more than 50 percent over the year and market capitalisation inflation,capitalization approached N99.4 trillion, equities experienced sharp sell-offs in late 2025. In November alone, market value reportedly declined by about N6.5 trillion amid uncertainty surrounding the new capital gains tax regime.

KPMG warned that taxing nominal gains in such an environment could result in investors paying tax on inflation-driven increases rather than real economic gains. The firm recommended introducing a cost indexation mechanism to adjust asset values for inflation, noting that this would reduce distortions while still enabling the government to earn revenue from genuine capital appreciation.

Indirect transfers and foreign investment concerns

Attention was also drawn to Section 47 of the Nigeria Tax Act, which subjects gains from indirect transfers by non-residents to Nigerian tax where the transactions affect ownership of Nigerian companies or assets.

This provision comes at a time of subdued foreign investment. Figures from the United Nations Conference on Trade and Development indicate that foreign direct investment inflows into Nigeria remain below pre-2019 levels, reflecting ongoing investor caution.

While similar rules exist in other countries, KPMG noted that they are often supported by detailed guidance and clear thresholds. The firm advised Nigerian tax authorities to issue comprehensive administrative guidelines to clarify scope, thresholds,capitalizationthresholds, and reporting obligations inorder to reduce disputes and limit potential negative effects on foreign investment.

Foreign exchange deductions and business impact

Another issue identified relates to Section 24 of the Act, which restricts businesses from deducting foreign-currencyforeign currency expenses beyond their naira equivalent at the official Central Bank of Nigeria exchange rate.

In reality, limited access to official foreign exchange forces many companies to source FX at higher parallel market rates. Under the current rule, the additional cost becomes non-deductible, effectively increasing taxable profits and overall tax liabilities.

KPMG observed that although the provision aims to discourage FX speculation, it does not adequately reflect supply constraints. The firm recommended allowing deductions based on actual costs incurred, provided transactions are properly documented, to avoid penalisingforeign currencypenalizing businesses for factors outside their control.

VAT-related expense disallowances

Section 21(p) of the Nigeria Tax Act also came under scrutiny for disallowing deductions on expenses where VAT was not charged, even if the costs were entirely business-related.

Given Nigeria’s large informal sector and persistent VAT compliance gaps, analysts argue that the rule unfairly shifts part of the VAT enforcement burden onto compliant taxpayers. KPMG advised that the provision be removed or significantly amended, stressing that expense deductibility should be based on whether costs were wholly and necessarily incurred for business, while VAT compliance should be enforced directly on defaulting suppliers.

Non-resident taxation uncertainties

KPMG further highlighted ambiguities around the compliance obligations of non-resident companies. While the Nigeria Tax Act recognizespenalizingrecognizes withholding tax as the finalthe final tax for certain nonresident payments in the absence of a permanent establishment or significant economic presence, the Nigeria Tax Administration Act does not clearly exempt such entities from registration and filing requirements.

Nigeria’s network of double taxation treaties, including agreements with the UK, South Africa, Canada, and France, generally supports the principle that final withholding tax extinguishes further obligations. Experts warn that inconsistencies between the laws could create uncertainty and discourage foreign participation.

KPMG recommended harmonizing the relevant provisions of the NTA and NTAA, with explicit exemptions for non-resident companies whose tax obligations have been fully settled through withholding tax. The firm noted that such alignment would ease compliance and enhance Nigeria’s appeal for cross-border transactions.

As Nigeria undertakes its most extensive tax reform in decades, KPMG concluded that the success of the overhaul will depend on clarity, consistency, and alignment with international best practices. Without timely amendments, businesses may face higher costs, foreign investors could remain cautious, and capital markets may continue to experience volatility.

Recall that KPMG concerns come after a lawmaker, Abdulsamman Dasuki, raised alarm over alleged alterations to the gazetted tax laws.
(DAILY POST)

Business

Naira Records First Depreciation Against US Dollar In 2026

Published

1 day ago

January 9, 2026

Editor

The Naira recorded its first depreciation against the United States dollar in the official foreign exchange market on Thursday, the first time in 2026 so far.

The Central Bank of Nigeria’s data showed that it weakened on Thursday after days of gains to N 1,419.72 per dollar, down from N 1,418.26 on Wednesday.

This means that for the first time this year, the Naira dipped by N1.46 against the dollar on a day-to-day basis.

Similarly, the Naira also depreciated by N10 at the black market to N1,490 on Thursday, down from the N1,480 recorded the previous day.

This comes despite the continued rise in the country’s foreign reserves to $45.64 billion as of Wednesday, 7th January 2026.

DAILY POST reports that the Naira recorded a seven-day bullish run at the official foreign exchange before Thursday’s decline.