AfDB approves €98m loans and €17m partial risk guarantee for Air Côte d’Ivoire program to boost regional aviation industry
The AfDB Group's Board of Directors has approved a total AfDB loan of €98.06 million to finance a program of the regional airline, Air Côte d’Ivoire (ACI) to modernize and expand its operations. The loan consists of a €51.16 million sovereign loan, a €42.64 million private sector loan, and an African Development Fund (ADF) loan of €4.26 million.
The deal also includes an African Development Fund Partial Risk Guarantee of €17.06 million in the public-private partnership project. The project focuses on improving air connectivity in the West and Central Africa region. The partial risk guarantee had the effect of crowding in participating commercial banks to the tune of €95.09 million. Air Côte d’Ivoire is contributing €42.77 million equity, raising the total investment to €253 million.
The program will result in the Abidjan-based airline introducing new routes to Nouakchott, Bangui and Luanda.
Despite recent growth, the aviation market in the West and central Africa region is the most disadvantaged on the continent and has huge suppressed demand – a situation that has hampered regional growth and integration. The program is a mix of financing, knowledge, and policy solutions to deal with this aviation market failure in the region.
The program includes the acquisition of five Airbus 320 series aircraft, the partial risk guarantee and a Technical Assistance Package for aviation industry capacity development. This includes the training of pilots and aviation technicians and a business plan to establish an aviation training center of excellence. It also includes support for improving the aviation business climate with regard to tax, fees, and charges, which can act as a brake on growth. The transaction is the first of its kind to use the leveraging power of the partial risk guarantee for the transport sector in Africa.
The project will promote job creation, trade, tourism, and private sector development. It will support air connectivity and economic activities in seven national economic centers, improve air connections to 23 regional locations, increase cargo freight by 35% and passenger traffic from 719,972 in 2016 to more than 1.2 million by 2030. The project will create 684 direct jobs for cabin, air, ground crew and other operational staff by 2020, and some 5,000 indirect jobs in tourism and parts of the private sector by 2029. The project will also include the training of 77 new pilots and 120 aviation technicians. Thirty-five per cent of the latter are targeted for women.
These improvements will contribute to three of the AfDB’s High 5 strategic priorities. One is ‘Integrate Africa’ by increasing air connectivity and intra-regional trade, in land-locked countries and fragile states. It will also contribute to the ‘Industrialize Africa’ and ‘Improving the quality of life of the people of Africa’ priorities through tourism, job creation and private sector development.