09 Nov

Aviation as a catalyst for growth in Africa

While Africa has one of the biggest populations in the world, its aviation industry is still small, representing only 2% of the global market. Despite all the major challenges ahead, this is an industry that has very big potential for future growth in Africa.

One of the reasons why African countries seem unable to attract a large amount of foreign investments, is that there is no direct airline connection to reach them. As a result, business travel and costs of doing business become prohibitive. Foreign investors are less likely to travel to distant and not easily accessible places, even if there are great opportunities. As a result, aviation in Africa should be considered a priority sector by the respective African governments so that it can boost the economic development of their countries.

Aviation as a pillar for economic growth 

Being the biggest pan-African airline, Ethiopian Airlines has greatly contributed in making the Addis Ababa Bole Airport an aviation hub and a gateway to Africa. Similarly, for Kenya Airways, the Jomo Kenyatta International Airport in Nairobi is a springboard to access not only the east African region, but also the central and western part of Africa. As for South African Airways, from its Johannesburg base at OR Tambo International Airport, it covers most of the southern African region. Except for South Africa, where its economic growth stagnated in 2016 and eventually fell into recession in the first quarter of 2017, Ethiopia and Kenya grew at a very fast rate of 7.5% and 5.8% in 2016
respectively. In the north, Casablanca, Algiers and Tunis are the major gateways for Europe to access both the Maghreb region and the western African region.

As for the Middle East countries, Cairo is the major gateway to access the major African cities in the northern, eastern and western regions. All these aviation hubs in Morocco, Algeria, Tunisia and Egypt have contributed to the high growth rate of passenger traffic, increasing by 94%, 95%, 75% and 108% respectively from 2005 until 2015, according to data from the World Bank. Aviation is the critical link that not only connects Africa to the world, but also builds bridges among the various African countries. It is only when there are better airline connections, enabling the movement of goods and people, that business activities can flourish. With lower business travel costs, countries can then better attract foreign investors and create better business opportunities.

According to the United Nations Conference on Trade and Development (UNCTAD), the top-five African countries that had the biggest stock of foreign direct investment (FDI) in 2016, are South Africa, Egypt, Nigeria, Morocco and Angola, with US$136.8bn, $102.3bn, $94.2bn, $54.8bn and $49.5bn respectively. Of the five countries, only South Africa, Egypt and Morocco have a major national carrier.

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