Page 18 - LUA March-April 2025

FEATURE

fees and complex permit requirements customs and trade regulations across
to discourage foreign carriers, further African markets. This includes working
stifling market growth. For example, towards the creation of a single customs
the Ghana Civil Aviation Authority's clearance process for air cargo to
scheme of charges includes landing and reduce delays and simplify trade flows.
overflight permit fees ranging from $5 to Furthermore, new trade corridors under
$25, depending on aircraft weight. High AfCFTA have enabled KAAO members
operational costs also pose a challenge, to expand into previously underserved
as African airports are among the most markets, increasing business
expensive in the world, with high fuel opportunities and connectivity,” explains
costs and ground handling fees eroding “While there are Aluvanze of KAAO.
profit margins for African carriers. clear signs of Digital platforms are transforming
Poor trade and transport infrastructure cross-border trade efficiency, with the
exacerbates the problem, as weak road, progress, the full Pan-African Payment and Settlement
rail, and port networks increase reliance potential of AfCFTA’s System enabling instant payments in
on air transport while raising costs and impact on cargo local currencies and potentially saving
handling times. Inefficient logistics African businesses $5 billion annually in
infrastructure further reduces the and route expansion transaction costs.
effectiveness of cargo operations. Lastly, remains partially For local logistics providers,
limited intra-African trade remains a unlocked due to the expanding intra-African trade
significant constraint, with intra-African environment offers unprecedented
trade accounting for only 17% of total operational and growth opportunities. Previously
African trade, far below Asia (59%) and regulatory barriers. fragmented markets now present
Europe (68%). Low trade volumes limit potential for consolidation and regional
demand for air cargo services and reduce LIZ ALUVANZE expansion. The path forward requires
profitability on intra-African routes.” KAAO coordinated public-private partnerships
In addition to these challenges, to address financing gaps.
security issues in the Sahel and the East African Community (EAC), A World Bank study, cited by
parts of Central Africa continue to is actively engaging with African Brookings, projects that foreign direct
disrupt logistics networks, increasing governments to accelerate the full investment into Africa could rise by
transportation costs due to higher implementation of the SAATM. Progress 159% if countries align their policies on
risk premiums. Additionally, political has been made, with several East African investment, competition, e-commerce,
instability in several countries has countries, including Kenya, Tanzania, and intellectual property rights.
at times resulted in border closures, and Uganda, showing increased
undermining the agreement's goal of commitment to SAATM reforms. THE PATH FORWARD
seamless trade. KAAO is also advocating for open FOR AFCFTA
skies and fair competition by working Beyond its economic impacts, the
EXPLORING LOGISTICS with AFRAA and regional aviation AfCFTA-driven transformation of
OPPORTUNITIES authorities to dismantle protectionist logistics is reshaping development
Despite these constraints, innovative Bilateral Air Service Agreements pathways across the continent. The
solutions are emerging. “We’ve been (BASAs) and promote open skies sector has become a significant source of
strengthening our presence in Africa policies. This policy push aims to formal employment in many countries.
by expanding our warehouse capacity, establish reciprocal rights for African Under the AfCFTA, manufacturing
enhancing transport infrastructure, carriers, enabling them to compete on could be the biggest beneficiary, alone
and investing in sustainable solutions equal terms with foreign airlines. adding up to 16 million new jobs,
and technology. Real-time tracking To reduce operational costs, KAAO according to Brookings.
and digital supply chain tools help our is lobbying for lower landing, overflight, For Africa's logistics sector, the
customers stay on top of their shipments. and handling fees, specifically for AfCFTA represents both the most
We’re also growing our local teams to cargo operations, to enhance cost significant opportunity and the most
provide on-the-ground expertise and competitiveness. On the infrastructure profound challenge in generations. The
personalised support. These investments front, KAAO members are investing in agreement is forcing a comprehensive
ensure we can keep up with the evolving improved logistics solutions, including reimagining of how goods move across
needs of businesses taking advantage enhanced cold chain facilities and cargo the continent, who moves them, and what
of the AfCFTA’s opportunities,” says handling infrastructure. Additionally, infrastructure and systems support this
Goedhart of Rhenus Logistic. KAAO is strengthening trade and market movement. While full implementation will
“KAAO, together with African access by collaborating with the EAC take decades, the transformation is already
Airlines Association (AFRAA) and and the African Union to harmonise well underway.

16 LUA MARCH - APRIL 2025