Nigeria's economy is losing billions of dollars in taxes each year due to cross-border ticket sales, resulting in more than 40 percent of the local market being taken over by foreign entities, LEADERSHIP has discovered.
The ongoing cross-border sale of airline tickets is causing Nigeria to lose considerable tax income annually. This problem mainly occurs because numerous Nigerian travelers, due to high prices and restrictions imposed by foreign airlines, buy their tickets via agents or online platforms located outside Nigeria. Consequently, these transactions remain outside Nigeria's tax framework, resulting in significant loss of government revenue.
The revenue generated from ticket sales is frequently retained overseas, leading to substantial financial losses for local travel agencies and adversely affecting Nigeria's economy.
Nevertheless, travel professionals have urged the national government to safeguard and maintain the local market and promote equitable competition.
They asked why flight prices from Nigeria stay expensive even with what should be a "home advantage."
Commenting on the matter, the National Association of Nigerian Travel Agencies (NANTA) labeled cross-border trade as the primary risk to the Nigerian travel sector.
The president of NANTA, Yinka Folami, mentioned during a conversation with LEADERSHIP that it is improper for international traders to skip local representatives and sell directly to Nigerian travelers.
He claims it leads to capital outflow, joblessness, and a decline in market influence within the nation.
"You find yourself in a scenario where a travel agent, like myself, is based in Asia or Europe, and they offer a more competitive price for Nigerian passengers. For instance, a ticket from Lagos to London is my area of expertise. However, they have a better rate than I do, and I am an experienced professional in this market," he said.
What is the point of that? It accomplishes nothing. We continue to communicate with everyone. I have strong connections with the airlines, and I keep informing them, it's pointless.
He also characterized the trade as the greatest danger to the Nigerian Travel Market, referring to it as "unfaithfulness" and "a sin" against the local market.
He elaborated more on how unscrupulous international traders circumvent local agents to sell directly to Nigerian travelers.
"British Airways received praise for upgrading its systems to focus on Point of Commencement (POC), successfully eliminating cross-border misuse on their platform," he stated.
Another travel specialist, Daisi Olotu, who disapproved of cross-border ticket trading, urged the government to take action against those engaged in the illegal trade.
Olotu, the managing director of Dees Travels and Tours Limited, stated that Nigeria's economy is suffering significant tax losses due to the unlawful activity.
Cross-border sales are actually promoting fraud, as we are losing a significant amount of money because of this. The Nigerian government is also suffering financial losses; this is considered capital flight. Anyone selling tickets to Nigerians in dollars, we are unsure how they transfer the funds; they send the money through unofficial channels.
Some of these travel agencies committing this act have been forced to leave certain West African countries. However, in Nigeria, we accept all of it. The government is not prepared to address the illegal activities.
Olotu called on the government to enforce the registration of travel agencies functioning within the industry to prevent unlawful activities.
The Nigerian government is losing significant funds due to taxes. The money they spend on these tickets is effectively taken away through the back door. The government needs to take real action. Any travel agency wishing to operate in Nigeria should conduct proper due diligence.
However, he mentioned that the Nigerian Civil Aviation Authority (NCAA) is establishing systems to determine the number of travel agencies in Nigeria.
As per his statement, Nigeria needs to strengthen its regulations similar to those of the United Arab Emirates (UAE) and others.
The NCAA is currently working to confirm the number of travel agencies functioning in Nigeria, but that's not all. For example, in Dubai, it is mandatory to have an Emirati as one of the company's directors to operate a travel agency, whereas in Nigeria, they do not strictly follow these regulations.
"Nigeria is losing a significant amount of money; thus, the government needs to take all necessary measures to halt this. They should maintain a list of every foreign travel agency in Nigeria. Regrettably, some of these agencies are not even registered with NANTA, yet they are functioning, operating under the radar. By operating under the radar, I mean that they are difficult to track, but they are actively moving money out of the country's economy. The government must take action to stop this, otherwise Nigeria will keep suffering," he said.
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