African airports grapple with financing gaps
Thursday March 30 2017
Aviation experts say the involvement of governments in airports has locked out funding for key projects.
Marcel Langeslag, from aviation consulting group Naco, told the Africa Aviation summit in Kigali that several airports in Africa are government-owned, and because “not all governments have the capacity and resources to run and, improve airports, they should be autonomous.”
Uganda, Tanzania and Rwanda unveiled airport projects worth $9.9 billion at a recent Global African Investment Summit held in Kigali.
Tanzania plans to upgrade the Arusha airport to handle large cargo and passenger planes at a cost of $40 million.
However, it lacks the required funding.
The country is also looking for $125 million to rehabilitate Lindi Airport in the southwest, and needs $30 million for the rehabilitation and upgrade of Lake Manyara Airport in Serengeti National Park.
“Some investors want to undertake airport projects in Africa, but they are stopped by governments,” said Lieve Noppen, the COO of Noppen Group, an airports consultancy.
A recent report by ForwardKeys, a company that predicts travel patterns and records bookings, indicates that, in 2016, Ethiopia’s travel sector has grown by 9.6 per cent, and Tanzania by 10.6 per cent. The report shows that Mauritius grew by 11.6 per cent. Kenya went up by 14.9 per cent. The East African region registered a 11.4 per cent growth.
But, while the traffic numbers look good, governments are still cash strapped to expand or even build new airports to match increased traffic.
Last year Kenya abandoned plans to build a new terminal at Jomo Kenyatta International Airport due to financial pressures.
The $650 million terminal project was expected to handle 20 million passengers a year.
Despite the financial challenges, the $100 million Tamale airport upgrade project in Ghana is close to completion.
No revenue control
Regional aviation authority officials attributed the failure to get financing to airports to not having control over the revenues they collect.
“Airports are making money, but most of it is spent on other things. For instance, in Tanzania, airport revenues are collected by the revenue authority and taken straight to the Treasury. The airport gets back a little from what it collects,” said Redemptus Peter Bugomola, director of safety regulation at the Tanzania Civil Aviation Authority.