VIDEO. IATA predicts that the air transport market in Africa will grow by almost 5% through 2037.  In order to cope with increasing demand the sector needs to invest.  While the traditional way of funding in the transport section has been relying on the Government budgets, this panel discussion at AviaDev in South Africa explores different options for financing.  ADB SAFEGATE´s  Director of Africa; Alexander Herring participates in the panel in his capacity as Private Sector Liaison Officer (PSLO) of the World Bank Group (WBG).

Airport Traffic Expansion

Koen Brinkman, Director Airport Strategy & Studies, NACO  moderated the panel discussion on airport financing on AviaDev conference in Cape Town, South Africa. Before introducing the participants, coming from various parts of the industry, Koen Brinkman talked about Air traffic growth in general and of course the growth in the African continent in specific.

Global demand for air traffic is increasing rapidly. ACI estimates that in 2018 the total passenger traffic in the world amounted to almost 9 billion passengers, up by 6%  compared to the previous year.  Looking forwards the growth is expected to continue in the coming decades with a robust growth rate of roughly 4%.

Also the African continent is characterized by a strong growth in air traffic since the beginning of the century. In 2017 passenger traffic reached almost 200 million with an average growth rate of 4% since year 2000.  The economy is expected to grow robustly with almost 4% in the coming decade. Africas´s population is expected to increase by 40% to 1,7 billion in the coming 10 years and as a result IATA, in one of their forecasts predicted that the air transport market  in Africa will grow by almost 5%  through 2037 which basically means that air traffic is expected to double in the continent every 15 years.

Financing airport infrastructure in Africa

The participants from left to right are: Koen Brinkman, Director Airport Strategy & Studies, NACO. Fundi Sithebe, COO, Airports Company South Africa ACSA. Nicolas Deviller, Deputy CEO, Ravinala airports (Madagascar). ADP International Project Director. Alexander Herring, Managing Director, ADB SAFEGSATE South Africa/Private Sector Liaison Officer, World Bank Group. Olivier Baric, Director Africa, EGIS Airport Operation. Moritz Breickmann, Investment Director, AIIM (African Infrastructure Investment Managers).

Where does the money come from?

In general, this kind  of growth is beneficial for airports owners, operators, airlines and passengers as it brings increased revenues, connectivity and social economic benefits. I also means that we continuously need to make sure that our infrastructure is able to grow in line with the demand. If not, growth in demand in combination with capacity challenges will lead to delays, congestion and a decreased passenger  experience.

In order to cope with increasing demand we need to invest in airport infrastructure. The traditional way of funding in the transport section has been relying on the Government budgets.  Almost 60% of the investments are done by the national budgets. Government budgets have increasingly limited resources to devote to increased capital expenditures for infrastructure projects because of many competing priorities and sometimes restrictions on their ability to raise depths and raise financing. Therefor alternative sources of financing needs to be explored, weather it is commercial loans, private sector participation or hybrid forms.

In this session from AviaDev the panel discusses financing of airport infrastructure and explores the different options for financing airport infrastructure projects.

ADB SAFEGATE´s  Director of Africa; Alexander Herring participates in the panel in his capacity as Private Sector Liaison Officer (PSLO) of the World Bank Group (WBG).

ADB SAFEGATE provides integrated solutions that raise efficiency, improve safety, boost environmental sustainability and reduce operational costs for airports, airlines and ANSPs. The company works with airports and airlines to solve operational bottlenecks from approach to departure. Solutions encompass airfield lighting, tower-based traffic control systems, intelligent docking automation and services, as well as applying advanced IT and analytics to deliver industry-leading Total Airport Management. With more than 1,200 employees, ADB SAFEGATE serves more than 2,500 airports in more than 175 countries, from the busiest and largest like Atlanta, Beijing, Dubai, Heathrow, Frankfurt, Istanbul and Changi to fast-growing airports across Asia and Africa. 

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