…Identifies Infrastructure Deficit As A Challenge
Yemisi Izuora
The President African Development Bank (AfDB) Dr. Akinwumi Adesina has observed that the aviation industry in Africa is structurally lopsided and as such prospects of growth is dim.
Adesina who spoke at the International Civil Aviation Organization, ICAO, third International World Aviation Forum, IWAF3, in Abuja noted that aside the structure imbalances, finance is critical to the sectors survival.
According to him, African aviation needs financing of about $150 billion value in aircraft acquisition alone.
The AfDB president also said the way the present Africa’s aviation architecture is constructed, its difficult for the industry to growth adding that african countries must make air interconnectivity seamless.
“Africa needs to procure about 970 jets and 700 turboprops over the next 20 years. Financing needs will exceed $150 billion! African aviation needs fleet modernization, efficiencies, better connectivity and much improved quality of services for an exponential growth in the number of passengers” he said.
Accord to him, “the fact is, Africa faces much higher costs for aircraft purchases due to the relatively small size of most airlines, weak balance sheets for corporate loans, a lack of access to export credit agreements, higher insurance costs, inability of commercial banks to provide long term financing, and very high interest rates when they do.”
“Africa also does not have any aircraft leasing markets, and therefore has to lease planes at much higher costs, sometimes 100 percent higher than developed economies. There is a compelling need to address market failures in aircraft financing” he noted.
“Availability of aviation infrastructure varies across Africa. North, East and Southern Africa have established hubs in Cairo, Addis Ababa, Nairobi and Johannesburg. West Africa on the other hand, lacks a major and effective hub, something Nigeria, Côte d’Ivoire and Togo should help build. As the largest economy in Africa, Nigeria should lead the effort and be the integrator for regional air travel” said.
Adesina also said “Africa faces huge infrastructure challenges which affect the aviation industry, including airfields (runways, taxiways and aprons), high cost of jet fuel due to a poor supply infrastructure, poor airfield ground lighting which limits the time for operations, further affecting safety and airline economics. In many instances, African pilots have ingeniously learnt how to land airplanes at night without electricity, even with flash lights! Therefore, we must do all possible to light up and power Africa.”
“Africa must implement the 1990 Yamoussoukro agreement for open skies. While 20 countries have signed on, the 27-year old accord still faces implementation challenges. Rigid bilateral air service agreements have made it difficult to liberalize the regional aviation markets. We must make regional aviation markets competitive and drive down costs, raise efficiencies and improve connectivity and convenience” he emphasized.
The Bank President also emphasized the Bank’s strong support for Nigeria and expressed confidence in the ability of Nigeria to deliver on its policy commitments.
“The hosting of this global forum here in Abuja is a clear mark of confidence in Nigeria. Let me use this opportunity to commend you and the government on the Economic Recovery and Growth Program, to build a more resilient economy,” Adesina said.
“As you know, we provided $600 million to support the government to address its budget deficit challenges and stand ready to continue to fully support the government as it embarks on efforts to diversify the economy and raise the revenue profiles and productivity of the non-oil sectors.”
He commended the Government of Nigeria for its efforts to improve the state of aviation in Nigeria. The aviation sector plays an important in opening up doors to investors, he added.
Air transport promotes trade, investments and tourism, and boosts economic growth. Today, Africa’s aviation industry adds US $73 billion to the continent’s annual GDP and employs about 7 million people – an average 130,000 people per country in Africa, according to the Bank President.
The aviation industry is projected to grow by 5 per cent annually for the next 20 years. From serving 120 million passengers in 2015, the industry will triple and serve over 300 million passengers by 2035, Adesina observed.
“That’s the good news,” he said, adding that regrettably Africa’s aviation growth is held back by very restrictive regulatory environments which limit market size, profitability, and drive up costs.
“Aircraft departure fees alone in Africa are 30 per cent above the global average, while taxes, fees and charges are 8 per cent higher. Given lower per capita incomes in Africa, high fares essentially tax the poor out of the air! We may have an open sky policy, but then end up with empty skies!”
The AfDB President called for the development of airport terminal capacity to expand passenger growth, develop regional aviation hubs to improve connectivity, and upgrade air navigational services and air traffic control to improve safety.
“Modern and cheaper technologies such as the satellite based air navigation services now preclude the need for ground infrastructure, and make it possible to serve remote areas with radars. We must also develop within Africa, aircraft maintenance services and strengthen regional and sub-regional aviation safety agencies,” he noted.
The AfDB has invested $20 billion in infrastructure over the past 10 years, with over $1 billion in the aviation sector. The Bank’s investments include building modern airports and terminal extensions in Senegal, Morocco, Kenya, Ghana, Egypt, Cabo Verde and improving airport navigation systems in the Democratic Republic of Congo.
The AfDB supported aircraft fleet expansion programs for Ethiopia and Côte d’Ivoire. The Bank also supported regional efforts for improving aviation safety and capacity building.
Adesina congratulated Nigeria on the International Civil Aviation Organization (ICAO) certification of two airports in Abuja and Lagos as a consequence of meeting global standards, noting that the feat makes Nigeria the only country with two ICAO-certified airports in West and Central Africa.
The objective of the Bank is to support the ICAO safety and security standards certification of 20 African airports by 2019, Adesina said.
The African Development Bank will soon be going to its Board with a new aviation sector framework to support the revitalization of the aviation industry in Africa, he said.
The Bank, Adesina explained, is working with other partners on establishing facilities to de-risk financing for aircraft acquisition, upgrading of airports, expansion of regional navigational and air safety, and deregulation of the aviation industry to be more competitive and efficient.
The African Development Bank (AfDB) is partnering with the Nigerian Government, the African Union Commission (AUC), and the New Partnership for Africa’s Development (NEPAD) Agency to co-host the third ICAO World Aviation Forum from November 20-22 in Abuja.
