Editor’s Note: April 24, 2019

Uganda does not need a national airline

Uganda took delivery of two new Bombardier passenger jets on Tuesday, part plans to revive its national carrier Uganda Airlines, which was liquidated in 2001.

President Yoweri Museveni was there as part of a ceremony celebrating the occasion, with flights set to start in July. By all accounts it was a joyous affair, with one problem.

It’s a terrible idea.

National airlines are best known for wasting money. They struggle to compete in a notoriously difficult industry, often ending up as an unsustainable drain on public funds.

Exceptions like Ethiopian Airlines aside, this has been the story of national carriers on the continent, including Uganda Airlines. Ironically it was Museveni that shut it down in the first place due to poor finances and mismanagement.

If past experience is not enough to put Uganda off, market conditions should be. 

African carriers are expected to post a $300m loss in 2019, the only decline globally. Last year Nigeria shelved plans to revive its national carrier due to cost concerns, while South African Airways is close to bankruptcy.

Add the backdrop of stretched public finances and rising debt across Africa, including Uganda, it’s just a bad idea.

Focusing on implementing policies to ease travel and liberalise the continent’s airspace would be a better use of time and money.

From The Continent

The African Union has given Sudan’s military three months to transfer power to civilian hands, extending an earlier 15-day ultimatum issued by the organisation. The country’s former president Omar al-Bashir was removed from office by the military on April 11 after 30 years in power. More: France 24

Tanzania hopes to boost the country’s power generating capacity to 10,000MW by 2025 through investments into renewable and thermal energy. This is more than six times the current capacity of 1,602MW. More: Xinhua

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The number of new hotels Accor plans to open in 14 African countries in the next four years.More: Bloomberg

The Global Perspective

The Asian Infrastructure Development Bank has approved Côte d’Ivoire, Guinea and Tunisia as its latest members, bringing its total to 97. Other African members include Ghana, Kenya, Egypt and Algeria. More: AIIB

BNP Paribas is seeking buyers for its stakes in retail banks in Tunisia and Gabon, part of a plan to exit some of lender’s non-core assets. A number of international banks have scaled back their investments on the continent in recent years due to tighter global regulation. More:Reuters

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