Aviation & Economy

Three kilometers of road in Nouakchott can at best take someone up to same three kilometers of travel distance within Nouakchott. Conversely, three kilometers of runway in Nouakchott could take someone anywhere in the world. Thus, the barrier of distance to tourism, trade and business development gets eliminated in a shorter time-frame through the runway. This power of air transport to help transform Africa's economy is not in doubt, because it has already assisted in the transformation of developed economies such as the US and Europe. And agreeably, Namibia's Transport Minister, Hon. Erkki Nghimtina, who spoke in Dar es Salaam recently, wants Africa to make air transport the preferred mode of transport given its benefits.

Among airlines and aviation development enthusiasts, it is widely believed that the major challenge of air transport development in Africa is the lack of 'political support' to fire-up Africa's air transport industry. 'Political support' connotes all forms of government responsiveness to drive (aviation) development. It is government's commitment to eschew inappropriate actions and provide necessary backing for (the aviation) industry to grow. This comes in forms of fiscal and policy responsibility, and provision of generally conducive environment for sustainable industry growth and development.

The dearth of political support has lingered in Africa mainly for reasons ranging from uninformed leadership, recurring changes in leadership of Ministers, etc. to outright choice by some leaders to remain unresponsive to the needs of the industry due to other demanding issues. But the good news now is that governments in Africa seem again to be better aware of the importance of air transport to economic transformation. For instance, after withdholding political support to the full implementation of the Yamoussoukro Decision (YD) which aims to liberalize aviation development in Africa, it is heartwarming that African governments from Southern, Eastern and Western Africa are rallying round the YD anew and seeking to work cooperatively starting from the regions. And, besides open declarations at recent high-level aviation meetings, governments at State and regional levels have taken practical action to boost air transport. However, the challenge is still that such actions are yet not enough to make meaningful impact on air transport transformation in Africa.

Motivating Trends

Increased political support has become vital now for the industry. What is interesting is that not more than 20 per cent of Africa's over 1 billion population uses air transport. This makes the continent a huge market for the present and the future and an emerging economy to reckon with, which demands governments and policy decision-makers to pay extra attention to the task of developing air transport in Africa.

The vibrancy of Africa's emerging aviation market is evident in hubs in Cairo, Marrakech, Johannesburg, Lagos, Dakar, Addis Ababa, Lome, among others. These hubs have remarkably grown in the last five years and, like several others on the continent, are projected to grow strongly over the next 20 years. The World Bank is positive of continuing growth in Africa's economies. The International Civil Aviation Organization (ICAO) sees growth in the aviation industry, even as other longer-term projections by IATA and major aircraft manufacturers see growth and demand stretching out beyond 2025. The IMF sees a growth of 5.5 per cent in 2011 for Africa, and 6 per cent growth for 2012.

Interestingly, according to Ms. Susan Kurland, Assistant Secretary for Aviation and International Affairs of the US Department of Transport (DoT), Africa is the priority of the US President Barak Obama, and she calls out to African leaders to lead development efforts by providing greater practical (political) support to aviation development.

Political Support In Africa

Africa's economies generally show strong growth trend with several countries projecting above 6 per cent growth rate. Though poverty pervades Africa, more people in the continent are now moving into the middle-class. This is a sign of strong potential growth for air transport. In this circumstance, the responsiveness of African governments to emerging growth opportunities in air transport need to be intensified. Looking at two representative States in Africa, Kenya and Ghana, it becomes clearer the extent of political support given to air transport by African governments.

In Kenya, which has current growth rate of 5.6 per cent, for instance, the budgetary allocation to transport is still much lower than several other sectors despite the need to prop up air transport because of its catalytic role in economy and because of its capital-intensive demands.

Kenya's 2010/2011 approved gross expenditure for the Ministry of Transport was about 10.39 billion KSh (about US$109 million), according to official budget figures from Kenya. The figure for tourism was 2.7billion KSh (about US$2 million). Combined, these were below that for the Ministry of Roads, which stood at 90 billion KSh (about US$9billion) and Ministry of Education at 143 billion KSh (about US$15 billion). Kenya's main regional trading partners including Uganda, Rwanda and Tanzania will experience strong economic growth of about 6 to 7 per cent in 2011/2012. The growth in East Africa, representative of several other parts of Africa, apart from strife-torn North Africa, provides good market for regional air transport operation if well harnessed and if stronger political support is provided.

For Ghana, the GDP is expected to grow by 7 per cent (without oil recently discovered in Ghana), and 12.3 per cent (with oil), according to Dr. Kwebena Duffuor, Ghana's Minister of Finance & Economic Planning. The services sector - which includes aviation - grew by 6.1 per cent above agriculture as one of the highest contributors to Ghana's GDP. This growth trend is fertile for aviation development in the region. Though Ghana does not have robust local airlines, Ghana's Deputy Minister of Transport, Mrs. Dzifa Attivor, says Ghana has opened its doors to other African States to explore the aviation market in Ghana. This political commitment is echoed by neighbouring Nigeria whose Civil Aviation  Authority's  Director  General, Dr. Harold Demuren, calls for the creation of a domestic market in West Africa. In Ghana also, the government wants to make its tourism destinations - which feature the paragliding festival - to be a preferred choice in Africa. Ghana has gone as far as promoting its tourism in China, Europe and America. However, the proposed increase in passenger tax for international and domestic passengers may be one policy that can clog Ghana's air transport growth; same for Southern and Eastern Africa where governments are inclined to raise aviation taxes.

Interestingly, Kenya's budget theme for 2010/2011 is "Towards Inclusive and Sustainable Rapid Economic Growth", and that of Ghana is "Stimulating Growth For Development and Job Creation," both suggest government interest to drive development in the economies. What is not very evident however, may be that extra drive to transform air transport as a change agent for economies. This is a common phenomenon among African States, which can be corrected through greater understanding, support and utilization of air transport for national and regional growth.

Some key areas needing political support include but are not limited to the following.

Policy & Regulation

The prime aspect of air transport that requires stronger political support is policy and regulation. Policy decisions must be cognizant of prevailing economic and industry conditions, while their implications should be viewed beyond the parochial needs of individual States or regions. Aviation laws in parts of Africa should be reviewed in consonance with development needs.

Policy permitting market access in Africa, for instance, is crucial. Now that the Yamoussoukro Decision is being rekindled, African States should review their relationship with other States and regions by decelerating bilateral air services agreements and embracing multi-State cross-regional and intra-regional agreements that make way for swift aviation and economic integration in Africa. By this, States will benefit in various ways. Common African Aviation Policy, for instance, will enhance other aspects of aviation development and effective response to challenges from other blocs such as EU's blacklist for airlines and emissions trading scheme, among others.

Also, fiscal and economic policies in addition to immigration policies need be re-oriented across Africa to create environments for aviation establishments to thrive. To date, not up to 20 African States have ratified the Cape Town Convention to afford their airlines easier aircraft financing. This Convention should be a priority for African States moving forward. Relevant policies will enable the continent raise its paltry 3 per cent share of global air traffic to over 10 to 15 per cent over the next 10 or 15 years.

Infrastructure Development

Considering that aviation infrastructure is capital-intensive, airports and air navigation facilities, among others, require government

Funding to bring them up to attractive standards especially if government wants to privatize or commercialize them. Government also needs to pave way for smooth participation of private investors in aviation. The growth of about 1 per cent in cargo among Africa's 154 airports as noted in Airport Council International's August 2011 traffic report should cause soul-searching among political leaders who can influence better growth in Africa's aviation industry. In Kenya, Tanzania and Nigeria, for instance, airport expansion projects are stalled, and like in several other instances require enabling policies to attract needed funding.

Human Capital Policies on development of future aviation experts cannot be ignored in Africa. States need, therefore, to key in to Africa's air transport training framework currently being fine-tuned by ICAO and aviation development groupings in Africa. Specific policies could also mitigate the challenge of poaching, besides encouraging local training by aviation and related operators.

Safety & Security

Safety is chorused as aviation's number one priority. Political/government support is important to boost regional safety initiatives in Africa and autonomy for CAAs. Security challenges now make aviation security another critical area of need for government support. Only few States have been able to respond effectively to emerging security/terrorism challenges, and governments must push for greater cooperation in strengthening aviation security net in Africa.

Lessons From Emerging Markets

Emerging economies such as India and China have fast-tracked their air transport development efforts, with China projecting to build about 45 airports in the next five years which will increase its airports from current 175 to 220. Mr. Li Jiaxing, Head of China's Civil Aviation Authority, was quoted as saying that China plans to spend about $228 billion on aviation industry during the next five years. Further, India's growing air transport market is currently one of the fastest in the world. Some USD10 billion has been spent in the past five years on airport modernisation in India, and a further USD20 billion-30 billion of investment is expected in the following 10 years, says Centre for Asia Pacific Aviation.

Even though there are concerns of over-investment in China's aviation sector presently, the culture of government responsiveness to the needs of air transport is what African governments must emulate. These successes should spur individual African States to use their available resources to boost aviation development, while working towards more concerted regional and, progressively Africa-wide, development.