FROM MAGAZINE - Will SAATM Launch Reshape Africa’s Cargo Evolution?

At the African Union Summit held in January at Addis Ababa in Ethiopia, an open skies initiative known as the Single African Air Transport Market (SAATM) was launched paving the way for the African continent to open up its skies to improve intra-African air connectivity and thus making continental free trade work,  Roy Ezze reports.

Africa is undertaking an ambitious drive to transform its economy, creating more effective integration of States and regions, and realigning various economic sectors to ensure the achievement of the continent’s economic goal. The African Union’s (AU) Agenda 2063 is a continental programme that aims to achieve a monumental shift in the improvement of Africa’s economy over the coming decades.

The recent launch of the Single African Air Transport Market (SAATM) marked the new beginning of Africa’s quest for air transport and aviation development. The SAATM ushers in the full implementation of the age-long Yamoussoukro Decision (YD) and create a liberalised air transport market in Africa for the benefits of African airlines and states. The YD was recently reviewed and updated by the African Civil Aviation Commission (AFCAC) to align with current industry trends including competition rules, etc.  The reviewed African Civil Aviation Policy (AFCAP) which is the guiding policy of the renewed YD is expected to be adopted by all African states to replace their existing bilateral aviation policies. The AFCAP will serve as protection to states and operators against unfair treatment in the market.

The SAATM is one of the flagship projects of the AU’s Agenda 2063 plan to achieve a transformed and sustainable economy for Africa’s future. In March 2018, another flagship project of the AU Agenda 2063 was launched in Kigali, Rwanda, which is the Africa Continental Free Trade Area (AfCFTA). President Paul Kagame of Rwanda who is also the Chairperson of the African Union (AU), as well as Moussa Faki, Chairperson of the African Union Commission (AUC), and Vera Songwe, Under-Secretary-General of UN and Executive Secretary of the UN Economic Commission for Africa (ECA) speak strongly of the  huge benefits of the SAATM and the AfCFTA, which many Africans see as essential to move the continent out of economic backwardness.

SAATM and Africa’s Cargo Evolution
As on January 29 when the SAATM plaque was unveiled during the 30th AU Summit in Addis Ababa, Ethiopia, 23 States had signed the Solemn Commitment to the launch of the SAATM. Shortly afterwards, according to Iyabo Sosina, immediate-past Secretary General of AFCAC – who was at the core of the review of the YD because AFCAC is the Executing Agency (EA) of the YD – new states have began processes of joining the SAATM. On this score, Africa is irreversibly set for its eventual air transport and aviation revolution.  This is why the launch of the SAATM to many heralds the imminent turn-around of the air cargo industry in Africa.

A significant aspect of the SAATM launch is the air cargo industry in Africa which holds much potentials but little developed. According to the International Air Transport Association (IATA), Africa contributes 1.9 percent of global air cargo. It however, notes that air cargo is showing significant growth in Africa.

Air cargo faces many challenges on the continent which range from lack of air cargo infrastructure among Africa’s leading and small airports, predominance of small, weak and fragmented cargo airlines, as well as the disinclination of African entrepreneurs to venture into cargo airlines.
According to a source from Lufthansa Consulting, the opportunities in Africa’s air cargo industry are huge and unknown to many investors. He says investors readily choose to invest in passenger airlines than cargo carriers in Africa because they do not understand how to exploit the hidden benefits of the air cargo industry.

Those who understand the huge potential benefits of air cargo in Africa have positioned to exploit the opportunities the SAATM would create for air cargo in Africa. Various airports and airlines in Africa are repositioning for the challenges and benefits of SAATM. Particularly, the example of Ethiopian Airlines Cargo and airport facility serve as a paradigm for African current and emerging cargo airline operators and airports. The airline has won several awards outside Africa.

According Tewolde GebreMariam, the Group CEO of Ethiopian Airlines: “In addition to the belly hold cargo capacity that it avails to more than 110 international Destinations. It currently flies to 44 dedicated freighter destinations on 5 continents using 8 dedicated freighters including 6 wide-body ultra-modern Boeing B777-200LRF with another 4 on order and operates  cutting-edge cargo terminals in Addis Ababa, our main hub, with a capacity to accommodate 1 million tonnes annually.”

The launch of the SAATM has won global accolades for Africa. While the SAATM will open opportunities for access to many new city-pairs on the continent, it will help engender industrialisation and economic development in Africa which will boost air cargo on the continent.
Olumuyiwa Benard Aliyu, President of the International Civil Aviation Organization (ICAO), noted in Addis Ababa that SAATM and a liberalised aviation market is best for Africa, encouraging African states and operators to reposition themselves to take full advantage of the emerging climate.

Cecilia Abena Dapaah, Minister of Aviation for Ghana, wants other states to promptly sign the Solemn Commitment for SAATM, stating that Ghana is ready to play a leading role in ensuring the success of the SAATM. According to her, Ghana is already engaging in airports and aviation infrastructure development which is a prerequisite for the effective exploitation of the inherent benefits of the SAATM.

Among states that have signed the SAATM, there are still traces of reluctance to fully liberalise their markets. In Nigeria, for instance, though Senator Hadi Sirika, the Minister of State for Aviation, as well as Muhtar Usman, Director General of the Nigerian Civil Aviation Authority (NCAA), and other key players in the aviation industry support the implementation of the SAATM, the local airlines’ association under the Airline Operators of Nigeria (AON), recently discouraged the signing of the SAATM. Noggie Megison, President of AON, says Nigeria is not ready for SAATM.

However, Chance Ndagano, CEO of RwandAir and Gebremariam of Ethiopian and several other airlines on the continent want the freedom to explore new markets on the continent. Nigerian analysts say the excuses from the AON are internal challenges created by inefficiency and corruption in Nigeria, which have burdened the country with poor aviation infrastructure and an operating environment that suffocates airlines and most other businesses. The SAATM, they say, will encourage Nigeria to commit to improve its aviation industry as Nigeria would benefit significantly from the SAATM.

Nigeria’s President Muhammadu Buhari was declared the Champion of AU’s Initiative against Corruption for year 2018; corruption has been the bane of Nigeria’s aviation industry in addition to poor management among some operators.

Ralph Kuuchi, the Vice-President of IATA for Africa, said the SAATM will encourage competition and strengthen African airlines, thereby encouraging improved airline services for Africans, a view shared by Joe Maswanganyi, the Transport Minister of South Africa. Kuuchi urges Nigerian and other African airlines to embrace the SAATM and expand their opportunities and grow strategically rather than move backwards.

Moving Forward
Launching the SAATM only opens doors for African air cargo operators to exploit the opportunities on the continent. However, airlines and airports have to take the lead to upgrade air cargo services in Africa. While robust liberalisation is expected among the 23 states that have signed the SAATM, more African airlines should engage in air cargo services with the right equipment, business models and mindset to excel.

Apart from leading airports in South Africa especially OR Tambo Airport, Johannesburg, Bole Airport in Ethiopia and cargo facilities in Egypt, and few others, most of Africa’s air cargo facilities are inadequate to support a sizeable number of cargo aircraft simultaneously, while others do not have facilities to support perishable cargo such as horticultural products and pharmaceuticals. These facilities must be put in place as prerequisites for the SAATM to support cargo improvement in Africa.
Continued improvement in regulatory standards is vital to enhance safety and security, as Aliu, ICAO Council President, who is also a Nigerian, has insisted. Africa has made tremendous progress in safety regulation in recent years which needs to be sustained.

Furthermore, even though air transport complements other modes of transportation, air cargo services providers should not impose costs that would discourage movement of goods by air on the continent. African governments have a duty to lead Africa’s aviation and economic transformation by providing the right operating environment and adhering to the policies guiding the SAATM.

The next two or three years could give a hint of how Africa will play in the global air cargo market, to double or triple the continent’s share of global air cargo traffic. In any case, the future is bright for the SAATM and air cargo development in Africa.