Africa’s growth potential is staggering, and barriers preventing expansion are beginning to fall
Back in March, PricewaterhouseCoopers forecast the UK’s GDP to grow by 1.5 per cent this year. According to the African Development Bank (AfDB), Ghana’s economy is expected to grow 8.5 per cent, Cote d’Ivoire’s by 7.9 per cent and Senegal’s by 7.0 per cent. Meanwhile, buoyed by higher prices for gold and cotton, Burkina Faso is expected to see economic growth of 6.6 per cent in 2018.
Increasing trade in everything from oil to peanuts and phosphates to cocoa inevitably means more business travellers journeying to, from and within Africa. That, in turn, accelerates supplier investment in and beyond the continent.
Marriott International, for example, has this year opened a 200-room property in Malian capital Bamako and a Marriott-branded hotel in Accra, Ghana, while Hyatt has announced plans to double its presence in Africa by 2020. Radisson has signed a new hotel in Zambian capital Lusaka; there is a new Crowne Plaza in Nairobi; Melia is opening in Maputo, Mozambique.
Ethiopian Airlines, which is rapidly turning Addis Ababa into a hub to rival the Middle Eastern gateways – a four-a-week service from Manchester starts in December – now serves 58 destinations within Africa and has recently forged a codeshare agreement with Air Cote d’Ivoire to provide seamless connections with its Abidjan services to Newark Liberty.
In Europe, Lufthansa-owned Brussels Airlines has one of the most extensive African networks, serving 24 destinations; Eurowings serves Windhoek from Cologne-Bonn; Air France launched a new Paris CDG-Nairobi service in March, offering three flights a week; and low-cost carrier Joon introduced a thrice-weekly service from CDG to Cape Town in April. Air France KLM now serves more than 20 African destinations, while subsidiary Transavia operates to around 15 points. British Airways serves ten sub-Saharan destinations.
According to IATA, although African airlines traffic increased by 7.5 per cent in 2017 compared to 2016, capacity rose at less than half the rate of demand (3.6 per cent), and intra-African air travel is beset by protectionism and infrastructure failings.
However, progress is being made with the African Union’s plans for a Single African Air Transport Market (SAATM) gradually gaining support. So far, 23 African states have signed up to the initiative, but “signing up” is not the same as implementation.
“The SAATM has the potential for remarkable transformation that will build prosperity while connecting the African continent,” Raphael Kuuchi, IATA’s vice president for Africa, said earlier this year. “Every ‘open’ air service arrangement has boosted traffic, lifted economies and created jobs, and we expect no less in Africa on the back of the SAATM agreement.
“An IATA survey suggests that if just 12 key African countries opened their markets and increased connectivity, an extra 155,000 jobs and US$1.3 billion in annual GDP would be created in those countries.”
Kuuchi went on to warn: “The benefits of a connected continent will only be realised through effective implementation of SAATM – first by the countries already committed and also by the remaining 32 AU member nations still to come on board.
“SAATM is a decisive step towards greater intra-African connectivity and delivers the framework on which to achieve it. Now it’s time to get down to the work of implementation. Connectivity will lead to greater prosperity. Governments must act on their commitments and allow economies to fly high on the wings of aviation.”
There have been some very positive developments. In Cote d’Ivoire, discussions on the benefits of connectivity in Africa, blocked funds, taxes on passengers and fuel, and capacity building and safety took place during a recent meeting between an IATA delegation and chief executive of Air Cote d’Ivoire, Rene Decurey. The IATA delegates also met with the newly appointed chief executive of NAS Ivoire Hassan El-Houry, and toured the airport terminal facilities in Abidjan to see the recent investment made.
However, travel challenges are not restricted to the aviation sector – ground transport presents its own problems. Frank Palapies, chief operating officer, Africa & Middle East, with Wings Travel Management – which has wholly-owned operations in Nigeria and Angola – says: “We have a global yield management team which works in close conjunction with each of our clients to establish their required needs specific to ground transportation and security.
“With the support of Wings’ people on the ground in-country, we are able to establish if the specific supplier is aligned with industry accreditation and requirements, to ensure we work in conjunction with reliable, reputable and international suppliers that have a local footprint.”
Felix Attua-Afari, Blue Cube Travel’s Accra-based director for Ghana, takes another tack. “We would typically source a provider depending on which suppliers the major hotels are using,” he says.
“When asked to provide ground transportation, we first approach the provider used by the Movenpick or Marriott hotels, for example. By adopting this approach, we can ensure that providers tend to be trusted suppliers. We feel a good starting point is to source suppliers that have a good track record with the major hotels, but if we are uncertain about the calibre of the provider, then we physically inspect vehicles ourselves to make sure that they are of a suitable standard.”
On prospects for business travel to Africa in general, and West Africa in particular, Attua-Afari says: “There is an ever-increasing volume of business travel into the region, helped over the past few years by the fast-developing oil and gas industry. There is also a burgeoning construction industry, with people investing across borders.
“There are Nigerians, for example, who are investing heavily in Ghana real estate. This has increased the need for travel within the region and this trend will continue over the next few years. Certain developers bring in their own construction crew from all over Europe, which influences the number of people travelling to the region.”
He goes on: “European trade is very important to African countries. The emergence of China on the scene has in a way overshadowed the presence of European investors. However, European trade and investment remains a very important part of the FDI [foreign direct investment] portfolio of most countries within the west African region.
“This is especially so when it comes to the construction industry where companies building high-end properties in many cities would rather procure most of their materials from European suppliers and not from China, despite the fact that the products from China are often cheaper. Certain companies bring in building experts from Europe to help ensure that the finished product is of a much higher standard. The movement of these workers also contributes to an increased volume of travel to the region from all over Europe.”
Energy sector boost
Away from the construction sector, Wings’ Palapies says: “Historically, oil and natural minerals have been key components in growth and the slump in the energy sector over the last couple of years has had a knock-on effect. However, oil prices are rising, and are seeing an increase in business travel.”
Blue Cube’s Attua-Afari readily admits that not everything is rosy. “One of the critical factors holding this region back is the issue of corruption. There are a lot of investors worldwide with a keen interest in investing in the region but unable to do so due to the issue of corruption,” he says.
“Governments within the region must make a greater effort at fixing this problem in order to unleash the full potential of their countries. If the corruption issue can be resolved, there is no doubt that there will be increased investment and investor confidence which will speed up the rate of development within the region.”
He adds: “In turn, this will increase the GDP of the African countries and improve the lives of people in general by way of a fairer distribution of wealth, rather than it being concentrated among only a few at the top.”
From the corporate travel perspective, outstanding issues are being resolved, and prospects and potential are enormous. The future’s bright for Africa.