As part of a wider diplomatic trend during the past decade, Chinese aviation ties with Africa are growing. In this issue of our forthcoming three-part series on the topic, we focus on the wider economic and political factors involved, as well as the needs and tools of the different parties.
As reported by The Economist, Africa has been attracting an “unprecedented” amount of foreign engagement lately, namely from China.
Although Sino-African ties can be linked back to the Ming Dynasty, it really wasn’t until the 1950s that modern relations were established. During that time, Sino-African ties were ideologically driven around anti-imperialism and lasted until the 1980s, when China sought to focus on developments at home. By the 2000s China had greatly industrialized and started seeking new markets, and new natural resources, to fuel it’s ‘peaceful rise’.
Many African states, aggrieved by Western development practices of the past, look to China as an alternative path to change though cooperation and south-south solidarity.
And, the numbers are telling. According to World Bank data, 8.73% of Sub-Saharan exports are destined to China, only topped by India (9.28%). However, China makes up 16.42% of all imports into Sub-Saharan Africa, beating the next nations by 10 percentage points or more.
Africa’s aviation challenge number one – protectionist regulations
Although Africa is home to a few successful airlines such as Ethiopian and Royal Air Maroc, challenges such as punitive and protectionist regulations have kept wide-scale success at bay.
Back in 1999, 44-member states of the African Union (AU) signed the Yamoussoukro Decision, and were set to liberalize the African sky as a way to promote growth and increase interconnectivity. 20 years later, this decision has yet to be fully implemented.
In 2018, the AU launched the Single African Air Transport Market (SAATM) with the hopes of implementing the 1999 Yamoussoukro Decision as part of the Agenda 2063 project.
For its part, China has said that it will assist Africa in implementing SAATM, and continue cooperating on technical issues such as satellite tracking and communication – an issue in the region.
Challenge number two – cost
Another challenge to African aviation is the high expense environment. According to a 2017 press release by airline trade group IATA, African airlines face “high fixed costs”. Indeed, everything from fuel and taxes to insurance seems more expensive when operating from Africa compared to global industry averages.
Here, China has been categorical in its support to African states. Under the 2015 China-Africa regional aviation cooperation plan, the People’s Republic is set to encourage Sino-African joint ventures in commercial aviation and “render greater support to guarantee policy environment and capital”.
Indeed, China has many tools at its disposal to reach this goal.
On one hand, the concerted push for joint ventures may raise investor appetite and decrease individual shareholder exposure, promoting long-term viability.
On the other, our research finds 13+ aviation finance firms owned and/or controlled by Chinese entities. These firms, some of which are state-owned, can offer attractive lease terms and thus, spur fleet growth on the continent.
Moreover, the PRC can use the CAAC, the Civil Aviation Administration of China, to grant routes to select partners. With an increasing amount of direct flights between China and Africa, such as Air Madagascar and more recently RwandAir flights to Guangzhou, this right has been used repeatedly.
Chinese ties with African aviation have a unique, developmental, political dimension. For African states, Chinese investment in their domestic and international connectivity capacity is certainly not an opportunity one should ignore. Likewise, for the Chinese state and the PRC’s commercial entities, the African commercial aviation market is a largely untapped one to be developed and used in support of the PRC’s long-term ‘peaceful rise’.
What are your thoughts on these developments? Let us know in the comments.