Keyamo: Access to Funds Biggest Problem for African Airlines

The Minister of Aviation and Aerospace Development, Festus Keyamo, has pointed out that getting affordable funding and renewing fleets are the biggest problems facing Africa's aviation sector. He mentioned that the demand for air travel in Africa is still high.

Mr Keyamo spoke on Tuesday during the first African Air Transport Conference in Lomé, Togo. Aviation leaders gathered to talk about how to enhance air travel and strengthen the industry in Africa.

"The real problem of Africa is fleet renewal, access to financing. That’s the real problem of Africa," the minister said.

He explained that airlines in Africa struggle to compete because they do not have access to the cheap financing that airlines in other regions enjoy. "The traffic is there, the desire to travel is there, the private airlines are also coming up now," he added.

Mr Keyamo mentioned that while airlines in other areas can get money for aircraft purchases at interest rates between three and six percent, African airlines face borrowing costs around 30 percent. "How do they get aircraft at competitive rates when other parts of the world are getting aircraft and financing their aircraft fleet at three percent, five percent or six percent? Our banks here are giving us 30 percent and we want to compete in the same market. It’s not possible," he said.

He connected the financing issues to the fact that many African airlines still use older planes. He explained that new aircraft are often used in more profitable markets first before arriving in Africa much later.

"Most of the aircraft that come to Africa are old aircraft. We all complain about them, but the issues are deeper than a minister simply saying don’t bring this aircraft," he said. "If you don’t bring it, where will we get the newer ones from?"

The minister said that many aircraft flying in Africa have already spent years with airlines in markets where financing costs are lower and profits are higher. By the time these planes reach Africa, many are over 15 years old.

Mr Keyamo praised ongoing efforts by the African Development Bank and the African Export-Import Bank to help with fleet renewal across Africa. He argued that Africa needs to lessen its reliance on foreign aircraft lessors and come up with financing solutions that fit its situation.

"Africa has to help itself," he noted. The minister added that better financing options would allow airlines to buy newer aircraft, grow their operations and improve travel connections across the continent.