Written by Kola Sidibe
The recent inauguration of the new Luanda International Airport in Angola is a testament to the immense potential of Africa’s aviation industry. This state-of-the-art facility, which is set to begin passenger flights in early 2024, symbolizes the dawn of a new era in African aviation. While currently representing only 2.1% of global air transport activities, the African aviation industry plays a pivotal role in fostering economic growth and social development.
Photo: Marrakech Airport (Rene Passet/ Flickr)
With plenty of room for growth and a vast continent for which greater connectivity via air travel is essential, here are reasons why investors should consider seizing the opportunities within this burgeoning sector:
1. Untapped Market Potential
Africa's aviation sector holds immense untapped potential for growth and expansion. With its vast landmass and burgeoning population, the continent's air travel activities are currently underrepresented on the global stage. Investing in the African aviation industry provides a chance to tap into a market that is poised for substantial development. Aviation traffic on the continent is expected to double by 2040 and anticipated to reach 7.4% of the global total.
2. Rising Middle Class and Urbanization
The continent is experiencing a wave of urbanization (see our previous article on Africa’s rapidly urbanizing future) and a growing middle class. Some estimates indicate that the middle class population in Africa could increase to 1.1 billion (42% of the total population) by 2060. As more individuals ascend to the middle-income bracket, the desire and ability to engage in air travel are on the rise. This demographic shift creates a substantial market for aviation services, ranging from domestic flights to international travel.
3. Strategic Geographic Location
Situated strategically between major global economies, Africa's geographic location positions it as a hub for international travel and cargo transportation. Investing in aviation infrastructure can transform the continent into a vital transit point, facilitating seamless global connectivity.
4. Focus Africa Initiative
Initiatives like the "Focus Africa" program, spearheaded by the International Air Transport Association (IATA), underscore a commitment to enhancing connectivity, safety, and reliability within the continent. Investors can contribute to and benefit from the development of a more integrated and efficient aviation network.
5. Economic Contribution and Job Creation
Already supporting 7.7 million jobs and contributing $63 billion to the African economy, the aviation sector is a key economic driver. Further investments in infrastructure and technology can boost economic growth, create additional employment opportunities, and foster skill development within the aviation industry.
6. Tourism Potential
Africa's diverse landscapes, cultures, and attractions make it a prime destination for tourism. The industry is expected to add $168 billion to the continent’s economy over the coming decade, and investing in aviation infrastructure can unlock the tourism potential of the continent, attracting both domestic and international tourists and contributing to the economic development of local communities.
7. Technology Leapfrogging
With the opportunity to build new infrastructure, the African aviation industry has the potential for technology leapfrogging. Unencumbered by legacy systems, the sector can adopt the latest technologies and innovations, making it a fertile ground for cutting-edge advancements.
8. Support for Sustainable Development Goals (SDGs)
Investing in the African aviation industry aligns with broader sustainable development goals. The sector has the potential to contribute significantly to poverty alleviation, economic development, and improved infrastructure, directly supporting the UN's SDGs for the continent.
9. Governmental Support and Policy Reforms
African governments, recognizing the strategic importance of aviation, are implementing policy reforms and infrastructure development to attract investments. For instance:
Rwanda is investing in aviation infrastructure and aiming to become an aviation hub, leading to the growth of RwandAir.
Ethiopia’s government has supported Ethiopian Airlines through infrastructure development and policy reforms, making it one of Africa’s largest airlines.
Morocco implemented the “Open Skies” policy with the European Union, increasing air traffic and tourism, and invested in airport infrastructure.
South Africa has deregulated the aviation industry to attract foreign investment and supported South African Airways through financial aid and strategic guidance.
These actions demonstrate the significant impact of governmental support and policy reforms on the aviation sector’s growth in Africa.
Final note
Investing in the African aviation industry offers a unique opportunity to participate in the growth of an emerging market, contribute to regional development, and align with global efforts towards sustainable and inclusive economic progress. As Africa's skies beckon to a future of connectivity and prosperity, savvy investors have the chance to be at the forefront of this transformative journey.
Are you interested in making inroads on the continent or seeking the next great investment opportunity? Get in touch with us today to find out how we can help.