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African Business 2020 edition

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A unique guide to business and investment in Africa. Global Africa Network is proud to launch this inaugural edition of African Business 2020 at a time of energetic planning for a prosperous future for the continent. The African Union’s Agenda 2063 is much more than a document about a hoped-for future, it contains concrete goals and deliverables. The Programme for Infrastructure Development in Africa (PIDA) and the development finance institution, the African Development Bank (AfDB) are already rolling out valuable projects that are changing the reality on the ground in vital areas of the African economy. Perhaps the most significant event of recent times is the signing by African leaders of the African Continental Free Trade Area agreement (AfCFTA) which will bring together all 55 member states of the African Union and cover a market of more than 1.2-billion people. African Business 2020 has articles on all of these recent trends, plus overviews of the key economic sectors and regional and country profiles. In 2019 Ethiopian Prime Minister Abiy Ahmed received the Nobel Peace Prize for peace-making efforts in his region. The economic dividends of peace are beginning to be felt. In 2020 South African President Cyril Ramaphosa assumed the mantle of AU Chairperson. He brings to the role considerable experience in conflict management, constitution-writing and seeking consensus. Global Africa Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform


OVERVIEW Aviation Movement towards open skies will see Africa fly. Africa’s landmass covers 20% of the world and its population represents 15% of the world’s population but the continent delivers just 2.2% of airline passengers. Sub-Saharan Africa has fewer airline seats than Brazil. Some African cities connect to one another via the capital cities of their old colonial rulers in Europe. A lack of connections is one of many problems in the aviation sector. There are also high prices (departure fees are 30% higher than the global average), poor ground infrastructure and scarcity of skills and financing. But things are changing rapidly. The International Air Transport Association (IATA) anticipates annual expansion of African air traffic of about 5% every year for the next two decades. Although the eastern corridor connecting the strongest aviation hubs – South Africa, Kenya and Ethiopia – remains the busiest lane on the continent, several other countries and airports are putting time, money and effort into developing their aviation infrastructure. The African Development Bank (AfDB), which has put -billion into African aviation over the last decade, has outlined why that kind of investment is a vital prerequisite for the continent’s future. According to the bank, a strong and efficient African aviation sector will boost productivity, employment and tourism and encourage regional integration, trade and investment. Ethiopian Airlines has shown the way. In a short space of time, this state-owned enterprise has increased its market share, found Sector Insight Boeing believes Africa needs to train 20 000 new pilots. a way to operate profitably, bought new aeroplanes and rapidly expanded its routes to the extent that in 2018 Addis Ababa replaced Dubai as the leading destination for long-haul passengers into Africa (Reuters). The airline is planning to sell a stake to a private company in the near future. The tragedy that occurred in March 2019 when an Ethiopian Airlines Boeing 737 MAX crashed, ironically served to underscore how much credibility the airline had built up over time. Although serious questions were obviously asked of the incident, there was AFRICAN BUSINESS 2020 58

OVERVIEW no glib assumption that the airline or its pilots were at fault. African success story: Ethiopian Airlines Planes: 111 Destinations: 119 Passengers, annual: 10.6-million (with partner airlines) Revenue 2017/18: .7-billion Profit 2017/18: 3-million Some work has been done on liberalising the African aviation market. The 1999 Yamousssoukro Decision allowed Ethiopian Airlines to approach other airlines to be partners and to gain access to airports, but few other airlines followed suit. The decision by the African Union (AU) in 2018 to sign the Single African Air Transport Market is a sign that there is movement towards an “open skies” policy. The agreement was signed by 22 countries, representing about 75% of the intra-African air transport market (and 600-million people). The AfDB cites the case of Morocco as a success story in liberalising the aviation sector. Competition led to increased flights into the country and yet the state airline managed to keep going. Many state-owned airlines in Africa are too small and fly too few routes to be profitable. Even South Africa’s large state-owned airline is failing, although there are complex reasons behind that story. A related issue is the ease of entering a country. Rwanda and Seychelles have achieved positive results in tourist numbers and trade by introducing a much more relaxed visa regime, essentially allowing African travellers to get a visa on arrival. The journey ahead There is an appetite for investment in the African aviation sector. Turkish Airlines flies to 50 African cities and Turkish companies are involved in an air terminal development in Ghana. Airports Company South Africa (ACSA) is similarly engaged in airport developments across the continent. From the biggest to the smallest, airports are investing in new runways (Cape Town International Airport and Jomo Kenyatta International Airport), creating new terminals (Kotoka International Airport in Accra), rolling out a metro link to the airport (Abijan) or simply upgrading (Nnamdi Azikiwe International Airport in Abuja). Rwanda and Mozambique are building ambitious new airports and in January 2019 Ethiopia raised the bar when it unveiled its expansion to the Addis Ababa Bole International Airport terminal. Funded by China and estimated to have cost about -million, the project intends to increase annual passenger capacity from seven-million to 22-million. Boeing’s research indicates that to cope with the growth of the aviation sector to 2035 in Africa, a total of 20 000 new pilots, 24 000 new technicians and 26 000 new cabin crew will be needed. The Managing Director for Boeing Sub-Saharan Africa and director of international sales in Africa, J Miguel Santos, sees this as an opportunity for training and employment. Writing in Business Day in 2018 Santos noted, “Considering that the 10 countries with the youngest populations are all in Africa, this will be a boon for youngsters seeking aviation careers.” A company such as Comair in South Africa is well-placed to deliver training. In addition to its training academy, to which more than 30 airlines send staff, Comair has interests in technology support and hospitality. Comair runs the British Airways operation in South Africa and low-cost airline Kulula, as well as other companies that help it to avoid the shocks that the airline business can sometime produce (such as sudden fuel price increases). The African Airlines Association, headquarted in Kenya, also offers training courses. ■ Online Resources African Airlines Association: African Civil Aviation Commission: Airlines Association of Southern Africa: Comair Training Academy: International Air Transport Association: International Civil Aviation Organisation: 59 AFRICAN BUSINESS 2020

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