‘Open up the skies for African carriers’
BUSINESS REPORTER
African countries have to open up the skies and speed up the implementation Single African Air Transport Market (SAATM) to unlock more opportunities arising from the African Continental Free Trade Area (AfCFTA), experts have said.
The continent is projecting a spike in demand for transport such as road, rail and air under the African Continental Free Trade Area (AfCFTA) which came into force in January last year.
It is estimated that African requires an additional 254 aircrafts at a cost of US$25bn by 2030 to meet the growing demand if the AfCFTA is fully implemented.
“The persistence of owning the national flag is actually stopping jobs being created in the tourism sector,” UN Under-Secretary-General and Executive Secretary of the Economic Commission for Africa Vera Songwe told the 5th African Business Forum on Monday.
A project of the African Union, SAATM will create a single market for air transport in Africa thereby giving freedom of air transport on the continent.
Amani Abou-Zeid, Commissioner for Infrastructure and Energy at the African Union Commission said 35 member states with a combined population of 800m have joined the SAATM which will “encourage the remaining 20 to join”.
She said efficient and affordable transport and connectivity are essential to the effectiveness and success of the AfCFTA.
Transport costs in Africa, Abou-Zeid said, are the highest in the world which harms competitiveness on the international trade markets.
“Transport cost are 63% higher than developed countries and represent 30 to 50% of the total value of exports compared to 17% in developed countries. In landlocked countries transport costs are three quarters of the total value of exports,” she said.
Experts say the AfCFTA will expose the continent’s shortcomings on transport issues.
Afreximbank president Benedict Oramah said Africa has to make sure that it uses “what we have” to grow trade and “we think our transport is the way to go”.
He said air carries 30% of cargo globally and while every country on the continent has airports, the biggest constraint is equipment to carry goods.
Oramah said the bank cannot fund every airline and is working with one of the leading airlines on the continent to put in place an aircraft leasing facility.
“We will be able to lease the aircraft to other airlines,” he said. The Afreximbank chief said the bank is discussing with the airline industry so that “someone in Ghana can buy ticket in local currency” under the Pan African Payments and Settlement System.
“You will see many airlines increasing their destinations,” Oramah said.
Allan Kilavuka, Kenya Airways CEO, said Africa’s aviation is fragmented with over 300 airlines and new ones sprouting up every day which is in contrast to developed world where consolidation is the buzzword.
“The future of aviation and airlines in Africa is consolidation to make ourselves formidable since the business is expensive, margins are thin and vulnerable to external shocks. Once we consolidate, it will support actualisation of SAATM,” he said.
The KQ boss said “we don’t need to have airline in every country”.
The 5th African Business Forum was held under the theme, Investing in multimodal transport infrastructure to optimise the benefits of the African Continental Free Trade Area: a focus on air transport and tourism.
It is estimated that Africa requires US$411bn to invest in rail, road, air and vessels to take advantage of the AfCFTA.
Songwe said the AfCFTA is Africa’s Marshall Plan. She said an efficient transport system on the continent will create 160m jobs.
“Africa does not need a Marshall Plan because we have the AfCFTA. We are moving 3% of our goods by rail. Europe move 17% of cargo by rail. In Africa, this will move to 6.8% with the implementation of the AfCFTA,” Songwe said.
The estimated cost of rail wagons required as a result of AfCFTA is US$36bn, she said.
Songwe said Africa has a deficit of 2m trucks if “we are able to generate the kind of ambition the AfCFTA is promising”.
