Nigerian South African Chamber of Commerce

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AFRICA-THE NEXT BIG THING: FOCUS ON AVIATION AND TOURISM

Posted on: 27 Sep 2017

Africa is the second largest and second most populous continent, its average population is the youngest amongst all the continents and rapidly growing in investment despite the challenges of famine, disease and wars, which has really affected its growth rate. However, the potentials in Africa are enormous and travel and tourism has major role to change the economic landscape drastically in other to reposition the continent as a safe haven for future investments.

Mr.  Bernard Bankole, Managing Director/CEO of Finchglow Travels Limited/FCM Nigeria made  it known while speaking on the topic “Africa – The Next Big Thing: Focus on Aviation & Tourism” at the Chambers August Breakfast forum sponsored by South African Airways.

Bankole said that aviation has the potential to make an important contribution to economic growth and development within Africa. Air transport can open and connect markets, facilitating trade and enabling African firms to link into global supply chains. It plays an especially pivotal role in just-in-time global manufacturing production and in speeding fresh produce from agricultural communities in developing economies to markets in the industrialised world.

He said it enhances air connectivity which can help raise productivity, by encouraging investment and innovation; improving business operations and efficiency. Air transport is indispensable for tourism, where convenient air service facilitates the arrival of larger numbers of tourists to a region or country. While many air markets between Africa and countries outside of Africa have been liberalised to a significant extent, most intra-African aviation markets remain largely closed, subject to restrictive bilateral agreements which limit the growth and development of air services.

This has limited the potential for aviation to be an engine of growth and development recognising that this restrictive arrangement was limiting growth, many African nations adopted the Yamoussoukro Decision in 1999.This agreement committed the 44 signatory countries to deregulating air services and to promoting regional air markets opening to transnational competition. However, the implementation of this agreement has been slow and limited, and thus the potential benefits of liberalising intra-African air markets remain largely unrealised. It is in no doubt that liberalization of our air space is the way to go to enable smooth connectivity within Africa couple with other issues.

Liberalisation can lead to increased air service levels and lower fares, which in turn stimulates additional traffic volumes, facilitates tourism, trade, investment and other sectors of the economy and brings about enhanced productivity, economic growth and increased employment.

According to him, there is considerable evidence that liberalisation of international air markets has provided substantial benefits for passengers and for the wider economy. For example, one study of the EU single aviation market found that liberalisation had greatly increased competition on many routes, had resulted in many more new routes operating, and had led to a 34% decline in discount fares in real terms.

Furthermore, other studies have demonstrated a link between increased air traffic and growth in employment and Gross Domestic Product (GDP). For example, one study estimated that each 10% increase in international air services led to a 0.07% increase in GDP, which can translate into millions (or even billions) of dollars of incremental GDP.

African Successes with Air Service Liberalisation:

  • Where African nations have liberalised their air markets, either within Africa or with the rest of the world, there have been substantial positive benefits,
  • The agreement of a more liberal air market between South Africa and Kenya in the early 2000s led to 69% rise in passenger traffic.
  • Allowing the operation of a low cost carrier service between South Africa and Zambia (Johannesburg-Lusaka) resulted in a 38% reduction in discount fares and 38% increase in passenger traffic.
  • Ethiopia’s pursuit of more liberal bilateral (on a reciprocal basis) has contributed to Ethiopian Airlines become one of the largest and most profitable airlines in Africa.

The future of tourism in Africa holds great potentials but its expansion and development depends on better transport infrastructure including Air transport, Land and Water ways. In addition, open borders and improve marketing of the niche sectors such as adventure and eco-tourism (travellers).

The potential of African’s tourism is untapped, while Africa accounts for 15% of the world’s population, it receives 3% of the world’s tourism. In order to maximize Africa’s tourism potential, critical investments are needed in key investment sectors like transport, energy, water and telecommunication even though there has been improvement in telecommunications, internet facility is still a great challenge and expensive to manage compared with their counterpart in other continents where the internet is free at major locations such as the Airport, Hotel, city centre etc.

Africa is home to one of the fastest growing economies and revenue from tourism in Africa already represents more than double the amount of donor aids. Tremendous opportunities exist to further expand tourism across African continent, yet challenges remain. The hasty need for solid infrastructure, in terms of good road and transportation corridor for better airline connections and fewer visas to cross African borders are just a few of the reasons tourism has not taken off.

According to the World Tourism Organization (UNWTO), 63.6 million international tourist arrived Africa in 2012 compare to 17.4 million visitors in 1990.  The top size countries for international tourist receipts in 2012 were in descending order; Egypt ($9.94billion), South Africa ($9.994 billion), Morocco ($6.7billion), Tunisia ($2.1 billion), Tanzania ($1.5billion) and Mauritius ($1.4billion) (you will notice no country  in the sub-Sahara).  The economic potential of tourism remains viable, with direct or indirect.

In Africa alone, travel and tourism generated 8.2million direct jobs in 2012. Africa is home to the world’s young population with close to 70% of its population between the age of 25 and youth consisting about 37% of the labour force, making up approximately 60% of unemployment, for this reason, African Union should aim at promoting tourism through the development of cross border infrastructure and regional transportation corridor which will facilitate movement of people and goods in the continent.

Africa’s future looks bright given the huge growth in adventure and eco-tourism, coupled with the rich cultural heritage and natural beauty. Already, several airlines around the world have plans to expand their routes. Soon those untouched beaches and remote villages will become a thing of the past.

This is another unexploited resource in Africa. Interest in culinary travel, from sampling street food to cooking classes with local chefs, has been growing exponentially worldwide. And although Africa does not immediately top our minds, it is rapidly getting on the radar as a culinary destination for food enthusiasts looking for more authentic travel experiences. As we know, food is one of the few travel trends that cannot be experienced virtually or online. It remains very precise and very real. Culinary tourism, in general, is on the rise, with travellers wanting to discover and taste new and authentic dishes while enjoying local hospitality. These have all become part of the authentic travel experience. South Africa, particularly, has gained international recognition with their vibrant and diverse food and wine market.

For investors, the next big thing in the emerging world could be Africa’s lion economies, featuring several of the same attributes as other developing-nation superstars. Africa has the potential of being a big winner in longer term. Investors with longer timelines should consider adding exposure to the continent not just in the area of Travel and Tourism, but also in other sectors like agriculture, telecommunications, and infrastructures amongst others. Seven countries in eastern, central and southern Africa have begun talks aimed at establishing a multinational Pan African Airline.

Bankole said that other important factor are tourist attractions of which Africa is not in short supply like adventure and eco-tourism, coupled with the continent’s rich cultural heritage and natural beauty. God has done enough for us on this continent and with the creative abilities of our people, more of such facilities are going to spring up in years to come. My charge therefore is that we should look inwards and realize that we indeed have the capacity to “own” the world in the next few years but that will only happen when we prepare for it. Potential not nurtured easily go to rot. I hope we find the grace to work towards making the best of now to prepare a great future for ourselves and our generations unborn.