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August 16, 2017

The International Air Transport Association (IATA) has presented a compelling case for the importance of aviation, which every African leader should have to see. 

IATA originally published research done in 2011 to determine the economic impact of the African airline industry on economic growth. They are now in the process of refreshing those studies for the key regions in Africa. In August we published a review of the IATA report for South Africa. Now they have completed their report for Nigeria and are taking it on a roadshow for the Nigerian government and aviation industry. 

IATA’s message is simple but profoundly important. It says that more jobs could be created and additional economic growth achieved in Nigeria if the nation used the “transformative power of aviation as a strategic pillar to further strengthen and enhance its economic recovery and national development.”

The latest report reveals that air transport in Nigeria supports more than 650,800 jobs, including tourism-related employment, while contributing US$8.2 billion to the country’s GDP. Over the next ten years, passenger volumes are forecast to grow more than 7% annually, exceeding the global average by a healthy margin. IATA points out that “for Nigeria this means an additional 7.9 million passengers will take to the sky every year, creating a significant opportunity to accelerate economic growth, boost prosperity and support development.”

The sad reality is that Nigeria’s passenger traffic has been in free fall. Oscar Onyema, CEO of the Nigerian Stock Exchange, says that from more than 15 million passengers in 2014, Nigerian air passenger traffic declined to six million in 2016. He explained that the past decade has seen the Nigerian aviation industry experience numerous institutional challenges, leading to the exit of many air operators.

It is these institutional challenges that are the undoing of the industry – and, as IATA points out, in dragging down the industry, they drag down the entire economy.

The industry is a delicate one. It is skills and capital intensive and requires confidence if the large investments it requires are to be made. This is particularly true if there is a competitive market with small margins and thus small profits. And without decent profits, there can be no reasonable return on investment. So, it will just stay away. Yet government across Africa just does not seem to grasp this. It continually creates the institutional challenges to which Onyema refers, whether it’s the onerous Part 93 regulations besetting South African corporate aviation, or subsidies of national flag carriers which make it impossible for private sector carriers to compete.

Without an effective bizjet industry, investors are not even going to come to a country to see if it is a good destination for money. And without competition from private sector carriers there will be no growth in the African airline industry. So, trade connectivity will suffer and tourism will be inhibited by high prices and shoddy and dangerous airlines.

Africa keeps shooting itself in the foot.

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