Africa’s aviation sector records revenue loss of $8.2b in 2021, but AfCFTA offers opportunity – Lisinge
The impact of the COVID-19 pandemic has been felt in the aviation sector in Africa. The sector recorded revenue loss of $8.2 billion in 2021. The loss is approximately 47.2 per cent of the full year 2019 airlines revenue, however the African Continental Free Trade Area (AfCFTA) offers opportunities for the transport sector.
In a webinar held last week, Robert Lisinge, Chief of Energy, Infrastructure and Services Section at the Economic Commission for Africa (ECA) said the re-start of operations on intercontinental routes by African airlines reached 77.8 per cent in August 2021 compared to 2019: Egyptair, Ethiopian Airlines, Royal Air Maroc and Rwandair now operate to about 90 per cent of their pre-COVID intercontinental destinations.
He also said rising oil prices are likely to increase cost of transport, indicating that FedEx has raised the rate for shipping from Hong Kong to Africa from 55 cents a pound to $1.20 a pound.
Lisinge said the transport sector contributes significantly to economies in Africa. The sector contributes more than 5 per cent of value addition in over 20 countries, he said.
He also indicated that significant transport share in services imported and exported is at least 20 per cent in 44 and 15 countries respectively.
The Africa Continental Free Trade Area (AfCFTA) presents an enormous opportunity for Africa’s economy. Citing a study by the ECA, Lisinge said the cost of equipment required by different transport modes to cope with the AfCFTA is estimated at $411 billion.
The AfCFTA came into force on January 1, 2021, it is aimed at creating the world’s largest single market with a population size of 1.3 billion people and a combined Gross Domestic Product estimated at $3.4 trillion.
The ECA study found that the AfCFTA would lead to a general increase in demand for intra-African freight of around 28 per cent. It noted that in 2019, intra-African demand for freight transport was heavily skewed in favour of road transport (76.7 per cent), with the share for rail transport being close to zero (0.3 per cent). Policies to expand rail networks combined with AfCFTA implementation policies are expected to change this distribution, it indicated.
However, Lisinge, pointed out that fluctuations in transportation and construction prices may hamper renewal of Africa’s transport fleet and upgrading of critical infrastructure links.
“According to ECA’s latest estimates, intra-African trade in transport services has the potential to increase by nearly 50 per cent. In absolute terms, over 25 per cent of intra-African trade gains in services would go to transport alone; and nearly 40 per cent of the increase in Africa’s services production would be in transport,” he said.
He raised concerns about the importation of used vehicles in Africa and how that is impacting the continent.
Lisinge recommends regulation to prevent influx of used vehicles that are not roadworthy.
“The anticipated increase in imported used vehicles may compound Africa’s road safety and environmental challenge. Road deaths are disproportionately high in Africa. The cost of crashes is estimated at between one and 5 per cent of GDP,” he said.
To address the issues, Lisinge recommended the following: African countries should mobilise resources for the transport sector given its importance to national economies; Stabilise transport services and construction prices; Implement priority Programme for Infrastructure Development in Africa (PIDA) projects to optimize benefits of AfCFTA; Implement the Inter-Governmental Agreement on the Trans-African Highways and finance road safety; Sign the Solemn Commitment to the Single African Air Transport Market (SAATM); and fully implement the Yamoussoukro Decision on the liberalization of air transport.
Sign and ratify the Luxembourg Rail Protocol to attract private sector investment in rolling stock and support the civil aviation industry, he said.
By Emmanuel K. Dogbevi
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