Foreign airlines have over $177 Million trapped in Zimbabwe
International airlines flying into Harare’s Mugabe International Airport are out of pocket, with millions of dollars unable to be repatriated from the country. International airlines are among the many foreign companies waiting to repatriate around US$2.5 billion reportedly stuck in Zimbabwe.
Shortage of hard currency in Zimbabwe sparks a big problem for airlines
According to the South African news outlet, News24, Zimbabwe owes almost $178 million to foreign airlines. That’s money those airlines have either sent into the country or collected as revenues there. Zimbabwe banned trading in foreign currencies in 2019 amid sweeping reforms of its banking and financial sectors. The country introduced a new local currency that promptly devalued significantly against hard currencies like the US dollar.
The ban of foreign currencies created a widespread shortage and hoarding. The problem for Zimbabwean authorities is that foreign airlines don’t want to repatriate untradable Zimbabwean currency. They want their money in hard currencies. But there is none available – so it is kind of a circular problem.
Sixteen airlines fly into Mugabe International Airport from 14 countries. Many of those carriers are African – South African Airways, South African AirLink, Rwandair, Ethiopian Airlines, Kenya Airways, and Air Tanzania. Others come from further afield – Qatar Airways and Emirates, for example. A couple of adventurous airlines plan to launch flights into Harare this year – among them Lufthansa and Botswana’s Mack Air.
Emirates is the leading airline creditor
According to News24, Zimbabwe owes Emirates over $51 million. South African Airways is owed around $7 million, and AirLink is owed about one million. South African Airways will happily take all the money it can get these days. Three years ago, a more solvent Emirates confirmed it had as much as $150 million stuck inside Zimbabwe.
“Our greatest threat in the last couple of years has been the devaluation of currencies and repatriation of funds. This has been massive for us,” said Senior Vice-President of Commercial Operations in Africa for Emirates, Orhan Abbas, at the time. “We’ve lost a lot of money on those two areas.”
Based on New24’s figures, Emirates has managed to pull $100 million out of Zimbabwe since then but remains significantly exposed. Despite this, the Chief Executive Officer of the Airports Company of Zimbabwe, Tawanda Gusha, has been spruiking the appeal of flying into Harare lately.
High hopes for Harare International Airport
Zimbabwe media have recently reported keen interest from foreign carriers to fly into the city, sparking local optimism Harare will turn into an aviation hub. Citing the imminent launch of flights by Lufthansa and Mack Air, Mr Gusha said;
“This is a milestone that demonstrates what Zimbabwe has become in terms of an attractive destination.”
The Zimbabwe Broadcasting Corporation reports, “global airlines continue to flock to Harare, launching direct flights as they seek to reposition themselves… with Zimbabwe becoming a destination of choice on the continent.”
Perhaps those global airlines have a better strategy than Emirates or South African Airways for getting their funds out of the country.
Meanwhile, local airline Air Zimbabwe recently told another Zimbabwean media outlet that the airline would receive an unspecified number of new planes in 2022. Air Zimbabwe Chief Executive Officer Tafadzwa Zaza said the new aircraft would allow the airline to increase passenger and charter operations on domestic, regional, and intercontinental routes.
“Key to our focus for the year ahead, barring any unforeseen disruptive new variants, is route expansion with a plan for one intercontinental and two regional destinations while frequencies on current domestic and regional schedules will also be increased,” he said.
