The Ghanaian government is set to choose from a list of possible partners comprising African largest carrier, Ethiopian Airlines, Africa World Airline and seven other potential investors for the establishment of a home-based carrier.
According to ghanaweb.com, the strategic partner shortlist, to be deliberated on this week by the Economic Management Team (EMT) and Cabinet, presents government with two main options: to either partner Ethiopian Airlines or Africa World Airlines (AWA) or select one of the other seven strong shortlisted investors.
“With the seven other shortlisted investors, they have shown proof of funds, presented their forms of potential agreements, and we are taking it to government to see who is best suited,” Aviation Minister Joseph Kofi Adda, told Business24 on Saturday.
The seven potential partners are institutional investors mainly from Middle East, Europe, North America, and South America who have partnered local investors to collectively make a claim to be considered for the home-based carrier project.
Despite the impact of the COVID-19 pandemic on the aviation sector, the government plans to facilitate the setting up of a new home-based carrier. It has emphasised that it will only hold a 10 percent interest in the new entity and invite private participation.
In an initial Memorandum of Understanding signed with Ethiopian Airlines (ET) last year to be the strategic partner, government said ET can hold up to a 49 percent stake. Of the majority 51 percent stake, 10 percent is to be owned by the state and 41 percent offered to individuals and institutional investors.
However, the choice of Ethiopian Airlines as the strategic partner was held back due to a lack of agreement over key issues such as routes and tenure of the management contract. That said, “Ethiopia still remains one of the key options along with the others,” Mr. Adda confirmed.
Why investor interest in the midst of a crisis
The COVID-19 pandemic has led to a sharp decline in the prices of airline stocks across the world. Major airlines saw their stocks plummet, and pre-COVID-19 strong carriers such as Air Mauritius in Africa, Delta and United in America, and Air France/KLM and Lufthansa in Europe needed one form of support or the other to ride out the storm.
Despite this grim outlook, the Africa region remains one of the areas with huge potential for aviation, given the current poor air connectivity in the region.
Ghana’s desire to establish a new flag carrier is born out of the desire to leverage the facilitating role of aviation for one of the fastest-growing economies in the world pre-COVID-19.
The country seeks to become the aviation hub of the sub-region, and this is seen as a key part of that project. With an estimated population of 350 million, most of whom are under 30 years, the sub-region is fertile for aviation growth post-COVID-19.
Aviation is an enabler and the aviation economy employs millions of people and generates billions in revenue. For a nation seeking to create jobs for hundreds of unemployed tertiary-educated graduates, building a strong aviation sector is imperative. National pride and recapturing the old routes plied by the defunct Ghana Airways are also some of the key motivations.