Financing Airport Infrastructure in Africa.
Africa is said to present the fastest Growing Aviation environment for the the Future but this is not possible without Guided Investment. Sourcing for these needed investment has been the problem in Africa. To tap Into the potential available in the Continent, there is a need to tap Into this huge opportunities available.
To finance airport infrastructure in the continent,it must be done in the most cost-effective way. "We are, therefore, open to the private sector as we realise we have to increase the capacity into our airports. Public-Private Partnerships (PPSs ) play an important role," said by Fundi Sithebe, ACSA chief operating officer, on Friday 26th of April, during a panel discussion on financing airport infrastructure in Africa at AviaDev Africa Conference 2019 in Cape Town.
According to Airport Council International,it projects that Aviation in Africa grew to 6.3% between 2016-2017, 195 million passengers in 2017. A study shows that Aviation adds $80 billion in GDP and 7 million jobs in 2017 to Africa economy. According to projections from the International Air Transport Association, the African continent will become one of the fastest growing aviation regions within the next 20 years, with an average annual expansion rate of almost 5 per cent. With this, the future appears to be promising for aviation industry in Africa.
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The availability of efficient airports in Africa is the key to influence an investor’s decision on whether or not to invest in African Aviation industry since air transport enables faster commute.
Stakeholders and investors expect an efficient Airport should have Spacious terminals, Parking aprons for aircraft, Check-in desks, Boarding gates, Good Runways, Improved and efficient technology (CCTV installations), Modern Baggage Carousels and Efficient Ground Handling services
In dealing with these developments, it is imperative that airport managers in Africa consider the upgrading and expansion of their Airports.
Trends such as Liberalization of air transport services which brings Changing traffic patterns due to changing flight routes and Increase in passenger traffic. Also, Airport Infrastructure Requirement for new aircraft calling for runway improvements and expansion. E g: A380 should be considered .
The modernization of airports in Africa is central to enhancing the passenger experience and providing efficient and sustainable facilities. Quality aviation infrastructure in Africa should enable more efficient access and mobility; improve safety, reliability and resilience; respond to the diversified needs of providers, users and consumers; enhance environmental performance; and ultimately support the on-going transformation to a more sustainable aviation sector in the Continent.
Stakeholders and private sector investors will consider profitability and want to be sure their investment will bring the benefits expected.
The International Civil Aviation Organisation (ICAO) President, Dr Bernard Olumuyiwa Aliu said at the 59th Airports Council International (ACI), African Regional Conference in Lagos that Financial institutions are not funding aviation infrastructure in many African countries, including Nigeria.
No alt text provided for this image
He said global investors were seeking stable policy, regulatory and enabling environment where there is fidelity with agreements on airport infrastructure funding and the tenure of such projects for the investor to recoup his money.
He further said “No investor or financial institution wants to project their proposed returns based on eventuality, only to see those goal posts being moved by a government half-way through a project after they have made their financial commitment.”
He said until issues of uncertainties about investment in aviation infrastructure were resolved, African countries must work out models that are sustainable in closing the gap in airport facilities.
He said:” The priority is for airport operators, in coordination with states, to demonstrate where financing is required. This can be accomplished through gap-analyses of forecast demand, future capacity need and current infrastructure deficiencies.”
He called on African countries to look beyond cost recovery measures in the management of airports terminals, by considering other ways of enhancing revenue, other than flight activities.
The Investors Challenges are Governmental Influence and Currency Mismatch, Currency Risk, Operational Risk, National and political Risk, Passengers Volume and Public-Private Partnership (PPP)
Innovative Strategies to Finance Airport Infrastructure in Africa should include Low Cost Carrier Terminals, Privatization and Public Private Partnerships, Alternative Funding Sources and Flexibility
How to get funding?
The Trade and Development Bank has financed a number of aviation infrastructure projects ranging from short term aircraft purchase pre-delivery payment financing to medium and long term financing of infrastructure projects in Eastern and Southern Africa. More recently, the Bank has also financed airport renovation and development. Also, African Development Bank may finance the acquisition of single aisle aircraft.
Conclusion
Air transport was originally financed by public subsidies. The industry has now grown to the point where it is expected to be a self-supporting sector. As a result, today’s Airport Managers in Africa need a wide range of financial skills in order to function effectively as well as access to adequate funding in order to meet continually changing demands.
Africa is said to present the fastest Growing Aviation environment for the the Future but this is not possible without Guided Investment. Sourcing for these needed investment has been the problem in Africa. To tap Into the potential available in the Continent, there is a need to tap Into this huge opportunities available.
To finance airport infrastructure in the continent,it must be done in the most cost-effective way. "We are, therefore, open to the private sector as we realise we have to increase the capacity into our airports. Public-Private Partnerships (PPSs ) play an important role," said by Fundi Sithebe, ACSA chief operating officer, on Friday 26th of April, during a panel discussion on financing airport infrastructure in Africa at AviaDev Africa Conference 2019 in Cape Town.
According to Airport Council International,it projects that Aviation in Africa grew to 6.3% between 2016-2017, 195 million passengers in 2017. A study shows that Aviation adds $80 billion in GDP and 7 million jobs in 2017 to Africa economy. According to projections from the International Air Transport Association, the African continent will become one of the fastest growing aviation regions within the next 20 years, with an average annual expansion rate of almost 5 per cent. With this, the future appears to be promising for aviation industry in Africa.
No alt text provided for this image
The availability of efficient airports in Africa is the key to influence an investor’s decision on whether or not to invest in African Aviation industry since air transport enables faster commute.
Stakeholders and investors expect an efficient Airport should have Spacious terminals, Parking aprons for aircraft, Check-in desks, Boarding gates, Good Runways, Improved and efficient technology (CCTV installations), Modern Baggage Carousels and Efficient Ground Handling services
In dealing with these developments, it is imperative that airport managers in Africa consider the upgrading and expansion of their Airports.
Trends such as Liberalization of air transport services which brings Changing traffic patterns due to changing flight routes and Increase in passenger traffic. Also, Airport Infrastructure Requirement for new aircraft calling for runway improvements and expansion. E g: A380 should be considered .
The modernization of airports in Africa is central to enhancing the passenger experience and providing efficient and sustainable facilities. Quality aviation infrastructure in Africa should enable more efficient access and mobility; improve safety, reliability and resilience; respond to the diversified needs of providers, users and consumers; enhance environmental performance; and ultimately support the on-going transformation to a more sustainable aviation sector in the Continent.
Stakeholders and private sector investors will consider profitability and want to be sure their investment will bring the benefits expected.
The International Civil Aviation Organisation (ICAO) President, Dr Bernard Olumuyiwa Aliu said at the 59th Airports Council International (ACI), African Regional Conference in Lagos that Financial institutions are not funding aviation infrastructure in many African countries, including Nigeria.
No alt text provided for this image
He said global investors were seeking stable policy, regulatory and enabling environment where there is fidelity with agreements on airport infrastructure funding and the tenure of such projects for the investor to recoup his money.
He further said “No investor or financial institution wants to project their proposed returns based on eventuality, only to see those goal posts being moved by a government half-way through a project after they have made their financial commitment.”
He said until issues of uncertainties about investment in aviation infrastructure were resolved, African countries must work out models that are sustainable in closing the gap in airport facilities.
He said:” The priority is for airport operators, in coordination with states, to demonstrate where financing is required. This can be accomplished through gap-analyses of forecast demand, future capacity need and current infrastructure deficiencies.”
He called on African countries to look beyond cost recovery measures in the management of airports terminals, by considering other ways of enhancing revenue, other than flight activities.
The Investors Challenges are Governmental Influence and Currency Mismatch, Currency Risk, Operational Risk, National and political Risk, Passengers Volume and Public-Private Partnership (PPP)
Innovative Strategies to Finance Airport Infrastructure in Africa should include Low Cost Carrier Terminals, Privatization and Public Private Partnerships, Alternative Funding Sources and Flexibility
How to get funding?
The Trade and Development Bank has financed a number of aviation infrastructure projects ranging from short term aircraft purchase pre-delivery payment financing to medium and long term financing of infrastructure projects in Eastern and Southern Africa. More recently, the Bank has also financed airport renovation and development. Also, African Development Bank may finance the acquisition of single aisle aircraft.
Conclusion
Air transport was originally financed by public subsidies. The industry has now grown to the point where it is expected to be a self-supporting sector. As a result, today’s Airport Managers in Africa need a wide range of financial skills in order to function effectively as well as access to adequate funding in order to meet continually changing demands.
