Airbus and ATR are working with the African Development Bank (AfDB) to investigate ways to improve African airlines' access to financing.
The meetings, which were held in June, will assist the Bank in its efforts to create and modify financial instruments to meet the aviation demands of the continent, expanding its air transportation industry.
The workshops covered topics such as the bank's approach to credit risk assessments, guarantee products, and the prognosis for the African aviation market. The bank is researching the viability of establishing an online marketplace for leasing aircraft. Around 45% of active fleets worldwide are financed by operating leases.
The export credit agencies, multilateral development banks, non-payment-insured financing, and sovereign support were some of the sources of funding that were covered in the discussion between bank and manufacturing company representatives.
The Covid-19 outbreak has had a significant impact on air travel in the continent. Despite having 17% of the world's population, African aviation had a market share of only about 3% before it started.
Only a few African airlines are successful because of their challenging operating conditions, which also include limited access to capital. As a result, the average African still cannot afford to go by plane. In an effort to boost their profitability, airlines raise fares in response to high operating expenses and low passenger flow. In recent years, it has been noted that intra-African airfares are 2-3 times more expensive than those in other parts of the world.
Nevertheless, a significant portion of aviation traffic passes through a small number of airports, including those in Cairo, Johannesburg, Casablanca, and Addis Abeba, despite the efforts of governments, public institutions, and corporate entities. Several more routes are thus left un- and under-served.
Despite this, it is anticipated that Africa's economies would recover from the pandemic and grow. Through 2040, 230 new turboprop aircraft and 1,230 wide, single-aisle aircraft are expected to be delivered thanks to the economic recovery. According to a recent assessment by the Economic Commission for Africa (ECA), the African Continental Free Trade Area's implementation will raise intra-African freight demand by 28% until 2030. 250 more aircraft will be needed to accommodate the anticipated growth, and these will need to be financed.
The Bank needs to continue evaluating potential interventions into the aviation markets while waiting for the feasibility study for a leasing platform to be finished by the end of 2023, according to one important conclusion from the workshops.
The leading provider of development financing in Africa is the African Development Bank Group (AfDB). It is made up of the Nigeria Trust Fund, the African Development Fund, and the African Development Bank (AfDB) (NTF).
The AfDB assists its 54 regional member states in their economic and social development on the ground in 44 African nations and through an external office in Japan.
