Air transport in Africa: often not an option, but the only choice

A report published by the Konrad-Adenauer-Stiftung Institute a few months ago on the assessment of the early experiences of trading under the AfCFTA, pointed out how critical is to reduce transport costs for the shipment of products to other African markets, especially agricultural goods, for trade under the AfCFTA to take off. In analysing the experiences of some African countries within the framework of the AfCFTA Guided Trade Initiative, the report mentioned the case of Rwanda, where the government provided support to local exporters by facilitating the aggregation of shipment so to access to lower air freight rates for the export of some agricultural products (tea and coffee) to Ghana. The report concluded by highlighting how important is to reduce freight and logistics costs for African exporters – especially the smaller ones – so that they can benefit from greater economies of scale. But why air transport? Isn't it the most expensive form of transport?

Africa is home to 16 landlocked countries (without access to the sea) with weak connectivity capacity due to the availability of a few roads that link them to foreign markets. In the absence of ports, roads and, often, railways, in many cases the air transport becomes the only available option for many African countries to ship their products beyond their borders. But being air transport the most expensive mode of transport, using it for shipments of low-value cargo, like agricultural products (that cannot bear high transport costs), can raise considerably the final price of these goods on the destination markets, making them extremely costly. Hence, the importance of finding solutions to reduce the costs of this transport mode. One of these solutions is to consolidate shipments, which allows for better utilization of available space in the airplane cargo hold, leading to lower shipping rates.

A group of six Rwandan companies, with the support of the government, sent on 25 September 2024 another shipment of consolidated agricultural products to Ghana via air using the same formula. This time, the national carrier (RwandAir) transported, in addition to low-value goods (400 kilos of tea and 400 kilos of coffee), also small quantities of relatively high-value products like honey (50 litres) and avocado oil (100 litres), that were consolidated in the same shipment. To further reduce the shipment costs, a single consolidated export license was issued by the National Agricultural Export Development Board (NAEB) to cover all the goods. This is certainly a good initiative, which would deserve to be replicated by other African States to reduce costs of air transport. But the big question is: is it enough to make competitive the cost of goods shipped via air in Africa?

Because of its geography, and its high number of landlocked countries, air transport plays in Africa a role much more important than in other continents. As a reminder, Africa is divided internally by 110 land borders for a total lenght of 83,500 km, which is more than twice the size of the circumference of the planet Earth. The African Union, aware of this situation, launched the Single African Air Transport Market (SAATM) as a flagship project included in the African Union Agenda 2063 that aims at reducing the cost of this transport mode by creating a single unified market for air transport services in Africa, in the hope to incentivise the use of air transport not only for passenger movements, but also for cargo. Still today, according to UNECA, only 0.9 percent of African goods are traded within the continent through the air transport, against 76.6 percent that moves by road, 22.1 percent by sea transport, and 0.3 percent by rail. However, small figures do not only reveal weaknesses, but also potential (for growth).

This is why the air transport liberalization is also one the objectives of the Abuja Treaty (Art. 61), which considers it as fundamental step for boosting the Continent’s economic integration agenda. Yet, since 1988, when the process began (with the adoption by African Ministers responsible for civil aviation of the Yamoussoukro Declaration), very little has changed. The initial roadmap set in the Declaration to achieve full liberalisation of air services within 8 years, by deregulating and opening such services to transnational competition, was a complete failure. A new Declaration then followed in 1999 (entered into force in August 2002), to re-launch this process.

By creating a unified air transport market, the SAATM aims to improve connectivity between African countries, to unlock not only trade, but also tourism, attracting at the same time investment in the aviation sector. However, still in 2024, progress has been minimal, despite a Decision was taken in 2015 by the Assembly of Heads of States and Government that urged the AU members to accelerate the establishment of the SAATM within the indicative deadline of 1st January 2017, by opening their respective air transport markets ‘immediately and without conditions’. Has this liberalization been achieved? Mostly not. And still now, more than 35 years after the first Yamoussoukro Declaration, great part of African countries keep restricting their air services markets to protect the share held by their air carriers, in most cases represented by public or State-owned airline companies. Obviously, this situation drives up the costs of air freight transport, dissuading African companies to use this mode of transport, which in most cases – as described above – is the only option (or one of the few options) available to export to other nations.

But here is the trick: if the shipment is arranged by extra-African airline companies and headed to a country outside the continent, the situation completely changes. By operating in an environment where air transport is more liberalized and deregulated, costs are much lower for these companies. This obviously encourages these traders to sell to foreign markets rather than to other African nations.

For how long this situation will go ahead? Despite the growing recognition of the importance of air transport in driving economic integration in Africa and in developing an efficient and cost-effective air transport industry in the continent, the liberalisation of the sector is proceeding slowly. This is mainly due to the lack of adoption, at regional and national levels, of the implementation legislation aimed at deregulating the sector. Solutions to reduce costs like those adopted by Rwanda are welcome, but they are only a first step towards the solution. African countries are called to urgently liberalize air transport, trying to look beyond the interests of their national carriers, to consider the general benefit of their national industry, that needs an incentive to trade more with Africa. And one key incentive for redirecting part of the African external trade within its boundaries, is to reduce the cost differential between extra-continental and intra-continental (air) transport.