Uninterrupted prioritization of air connectivity and tourism as a strategic asset could see an additional 900,000 jobs and at least USD 9.3 billion of GDP added to the Ethiopian economy by 2037, the international air transport lobby IATA says in its study on the importance of air transport and tourism to Ethiopia.
IATA’s value of aviation report for Ethiopia, which identifies air transport and tourism as significant economic enablers, shows that air transport and foreign tourists arriving by air currently contribute 5.7% of GDP equivalent to USD 4.2 billion. The industry also supports about 1.1 million jobs.
“If current trends persist, Ethiopia’s air transport market will expand by 226% over the next 20 years, with annual passenger journeys increasing from 7.2 million in 2017 to 23.5 million a year by 2037,” IATA says.
The report was presented to media representatives by Rapael Kuuchi, IATA’s Special Envoy to Africa for Aero-Political Affairs, on the sidelines of the fifth edition of the Aviation Africa conference that closes in Addis Ababa today.
“The Ethiopian Government’s recognition of air transport as a key driver of the country’s
economic growth has paid significant dividends. Economic, political and regulatory reforms, aimed at energizing and transforming the economy from a state-led to market-based growth, with stimulants such as the recently-introduced “Visa on Arrival” process, are bolstering Ethiopia’s importance as a as a major East African air transport hub,” said Kuuchi .
IATA sees the full implementation of the Single African Air Transport Market SAATM; increased investment in aviation infrastructure, easing repatriation of airline funds and improved air cargo facilitation as four action areas which the Ethiopian government can leverage to unlock aviation’s full potential for the country.
Universal adoption of SAATM across Africa will provide a significant boost for aviation in Ethiopia and throughout the continent, IATA says while future investments in infrastructure are needed to support growth.
“Much needed infrastructure capacity for Ethiopia was provided by the opening of the second terminal at Addis Ababa Bole International airport. For the country to retain its competitive position, future infrastructure investments should align with industry growth, be demand driven, fit for purpose and deliver required service levels at acceptable costs for users,” the report observes.
However, IATA expressed concern over blocked airline revenues which have now accumulated to USD 70 million in Ethiopia. Kuuchi clarified that the blockage of funds is not related to scarcity of foreign exchange but are rather the result of cumbersome financial rules and a slow reconciliation that leads to the 10% withheld on sales in foreign currency accumulating over time.
“The government should continue working with the industry on ways to make these withheld funds available. Airlines need to have confidence that they will be able to repatriate their revenues to allow the full benefits of aviation to be realized,” IATA said.
Ethiopia will also need to improve its facilitation of Air Cargo. Currently, the country 86th out of 124 countries in terms of the worldwide Air Trade Facilitation Index (ATFI) and 42nd out of 135 countries in terms of the eFreight Friendliness Index (EFFI) globally. To reinforce its position as a leading cargo hub for East Africa, the government will also need to implement policies facilitating the smooth movement of air cargo.
“Ethiopia’s continued prioritization of air transport along with the four government interventions IATA is proposing, will help the country’s air transport and tourism market achieve the 226% forecast growth and in doing so, unlock even greater socio-economic opportunities for the country,” said Kuuchi.