Airline unable to repatriate money from several African countries experiencing dollar shortages

Sebastian Mikosz CEO Kenya Airways. PHOTO:WILBERFORCE OKWIRI

Difficulties in repatriating money earned from ticket sales in some African countries is taking a toll on Kenya Airways’ cash flow.

The airline on Tuesday said there are billions of shillings locked in countries such as Zimbabwe and Angola, which are experiencing foreign exchange constraints.

Money from ticket sales in such markets may sit idle in bank accounts as a result of dollar shortages or regulatory obstacles.

Kenya Airways (KQ) Chief Executive Sebastian Mikosz said at an investor briefing that the airline had made a decision to stop accepting payments in local currencies in some of the troublesome countries, and was instead asking customers to pay using credit cards to bypass local payment systems.

He cited Zimbabwe as one of the markets where it has experienced major problems in the recent past with Angola, Sudan, Mozambique and Nigeria also experiencing forex shortages.

While Mr Mikosz did not give the exact amount that remains blocked, he said it is running into millions of dollars, which could translate to billions in Kenya Shilling.

“Every week we have a look at the funds blocked outside of Kenya and are frustrated because it is affecting our operations,” he said.

“This is a fluctuating amount but it runs in dozens of millions of dollars. There are markets such as Angola where we had long-running problems where there has been some improvements. There are others such as Zimbabwe where we see absolutely no progress.”

“It is unfair because an airline does not have a way of addressing this other than stopping the sale locally and only accept international cards so that the money can come to us directly, rather than going through the local system, which is something that we have done in some of the countries,” he added.

In a statement last year, the International Air Transport Association (IATA) said Angola held the largest amount of funds owed to the airline industry at $386 million (Sh38.6 billion), although it was an improvement from upwards of $500 million previously blocked.

Others in the region were Sudan at $170 million and Zimbabwe at $76 million.

Mikosz said despite not receiving the money owed, the airline still needed to invest in those routes.

Administrative burden

“Despite the blocked funds in these countries, we have an administrative burden in each country and we do not want to deal with individual countries but from a centralised point when making these decisions,” he said.

“There are major demands when we request for the money to be repatriated… of course, we know that this is to retain the money in that country. That is something affecting the airline. It is detrimental to the business, we could do more but we are not. This is something that is hurting the business.”