After a long-drawn battle in Nigeria, foreign airlines are beginning to turn the heat on Ethiopia over a $95 million stuck fund.
Though the blocked fund is a small fraction compared to over $800 million stranded in Nigeria, the carriers said the development would continue to have dire consequences on the East African country – akin to the experience in Nigeria.
The airlines, under the aegis of the International Air Transport Association (IATA), reiterated that the ability to repatriate revenues is guaranteed in international agreements. Therefore, all parties must abide by these agreements to keep the world connected by air.
IATA, at the Focus Africa session held in Ethiopia Tuesday, noted that Ethiopia is recovering strongly from the COVID-19 crisis, with its benchmark regional connectivity (within Africa) standing at 113 per cent of pre-crisis levels, according to IATA’s Connectivity Index.
Passenger traffic originating from Ethiopia tracked at 19 per cent above pre-crisis levels in the first quarter of 2023. This is well ahead of Africa’s overall passenger demand which stood at 8.7 per cent above pre-crisis levels in the first quarter.
IATA’s Director General, Willie Walsh, said the low allocation of foreign currency (U.S. dollars) to the aviation industry by the Ethiopian Government and Central Bank means that $95 million in airline funds are blocked in the country.
“This sends all the wrong signals and puts at risk the economic and social benefits that its global hub supports Ethiopia’s development with. Ethiopia must follow the global rules that it benefits from. It’s time for the government to work with industry to resolve this situation quickly,” Walsh said.
Ethiopian Airlines Group CEO, Mesfin Tasew, reckoned that Ethiopian Airlines is performing very well though.
“Our current performance, in all parameters, indicates that our success will continue strong. We have recovered well from the impacts of the pandemic. By the end of this fiscal year, we expect to generate $6.1 billion, this is a 20 per cent growth compared to our last year’s performance. We will be transporting 13.7 million passengers, which is also a 55 per cent increase from the same period last year.
“While our operations and milestones continue to be persistent, we still have challenges regarding expatriating our accumulated funds in various countries. As of today, we have more than $180 million stranded in several countries. Transferring funds remains a critical challenge for airlines,” he said.
Additional key priorities to support a strong aviation sector in Ethiopia include implementing the Single African Air Transport Market (SAATM).
SAATM was the solution to unlocking travel within the African continent pre-pandemic. Twenty-three countries have signed the Memorandum of Implementation to date; however, none have ratified it. Full implementation of SAATM across the continent would generate significant economic benefits. In Ethiopia alone, it could create 21,000 new jobs and add $81.8 million to the GDP.
Fostering the growth of a Sustainable Aviation Fuel (SAF) industry: SAF will play the most significant role in reducing the aviation industry’s carbon footprint, aligning with the industry’s commitment to achieving net-zero carbon emissions by 2050.
To help meet this goal, IATA urged the Ethiopian government to explore developing and incentivising SAF production.
The country has the potential to become one of the biggest SAF producers with unique feedstocks, vast land area, and significant solar potential – thus providing opportunities for both biomass feedstocks and renewable non-biomass feedstocks like solar and wind power-to-liquid (PtL) solutions.
“Ethiopia’s aviation industry is set to triple by 2040, with an average six per cent growth in passenger traffic over the next 17 years. The Ethiopian government is uniquely positioned to stimulate SAF production, a move that would not only support the forecast surge in air travel but also trigger substantial job creation and boost the local economy. Ethiopia can take the lead, and in doing so, construct an aviation future that is as sustainable as it is successful,” Walsh said.