(3 minutes read)
- According to the draft document of the second Homegrown Economic Reform (HGER 2.0), the government plans to open the domestic aviation sector to allow foreign investors.
- the proposal to end the protection and liberalise the domestic aviation sector is to improve efficiency and access.
The federal government of Ethiopia is planning to open its skies for foreign investors. According to the draft document of the second Homegrown Economic Reform (HGER 2.0), the government plans to open the domestic aviation sector to allow foreign investors. The document is a continuation of HGER 1.0 and will be valid for the next three years.
Until now, Ethiopia had allowed only local investors in the domestic aviation sector with the state-owned Ethiopian Airlines as the leading market player. According to reports, the proposal to end the protection and liberalise the domestic aviation sector is to improve efficiency and access.
An Ethiopian investment regulation ratified two years ago that the domestic aviation sector is eligible for joint investment by foreign and local investors. The investment code allowed a joint venture for local aviators to hold the majority stake in the partnership. However, it did not materialise due to a lack of further directives to implement the investment code.
Getachew Mengiste, director general of the Ethiopian Civil Aviation Authority revealed that interested foreign investors have started approaching the authority. He admitted that the country has the promote the new laws and attract foreign investors into the domestic aviation sector through appropriate incentives and packages in consultation with the Ethiopian Investment Commission and local private operators. Foreign investors are seeking loans, using their aircraft as collateral, Tax holidays, and access to airports, according to Getachew.
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Some private operators observed that despite the introduction of a very encouraging and forward-looking legislation to reform the domestic aviation sector, the practical trend on the ground remained challenging for private aviation operators. Experts are of the view that Ethiopia’s private aviation sector could generate billions of dollars in revenue, particularly by training and exporting manpower, and maintenance services.
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