Editor’s Note: September 21, 2018

National airlines just aren’t worth it

Nigeria has suspended plans to revive its national airline. Announced amid much fanfare in July the rebranded Nigeria Air was supposed to take to the skies by December.

Announcing the move aviation minister Hadi Sirika called it a “tough decision.” It’s also the right one.

Despite the persistent failure of sovereign carriers governments continue to covet them. Zambia, Uganda, Ghana and even Chad are part of a growing list of African countries currently looking to resurrect defunct airlines.

The motivation, admitted or not, is usually a misplaced sense of national pride.

What they often end up with are unsustainable vanity projects that drain public finances – something African governments simply cannot afford. 

Struggling South African Airways is a good example. Those that thrive, like Ethiopian Airlines, are very much the exception.

There is one reason to consider having a national carrier – connectivity. Africa’s fragmented and underserved airspace is a drag on trade and investment.

But instead of seeking to run their own airlines the focus for governments should be on implementing existing policies aimed at liberalising the market, like the African Union’s recently launched Single African Air Transport Market initiative

What this lacks in national pride it makes up for in commercial sense.

From The Continent

South African president Cyril Ramaphosa reportedly plans to relax visa rules in a bid to boost the tourism sector. This comes amid flagging efforts to kick-start the country’s economy, which recently slid into recession. More: Bloomberg 


Ghana’s cocoa industry regulator Cocobod has signed a $1.3bn loan deal with international lenders to finance bean purchases for the 2018/19 season, and is seeking an additional $300m to boost farm productivity. Ghana is the world’s second-largest cocoa producer. More: Reuters

The Daily Stat

$500m

The size of a new World Bank loan to support Tunisia’s budget amid an ongoing economic crisis.MoreReuters

The Global Perspective

A Milan judge has sentenced two defendants, Nigerian Emeka Obi and Italian Gianluca Di Nardo, to jail for international corruption. It is the first verdict in a major anti-corruption case involving Shell and Eni over the $1.3bn purchase of an oilfield in Nigeria in 2011. More: Nasdaq

London-based private equity firm Development Partners International has bought a majority stake in Moroccan irrigation company Compagnie Marocaine de Goutte à goutte et de Pompage (CMGP). The $100m deal is the biggest private equity transaction in Morocco so far this year. More: Private Equity Wire

The Daily Follow

AVCA @AVCA_Africa: News and updates from the African Private Equity and Venture Capital Association.