African Export-Import Bank, Afreximbank, has marked down over $20billion to be given to airlines from member African countries as syndicated loans to acquire new aircraft.
The offer is aimed at reviving and sustaining airline operation in the continent and only airlines that intend to acquire new aircraft will benefit from the loan.
Senior Manager, Syndications and Specialised Finance, Afreximbank, Samuel Mugoya, who made this known at the 25th Air Finance African Conference and Exhibition in Johannesburg, South Africa, said one of the major challenges faced by African airlines is their inability to source long-term loans at single digit interest rates.
Some Nigerian airlines that plan to acquire more aircraft and expand their operation have reportedly indicated interest in the loan, Thisday learnt.
Mugoya, who spoke at a panel during the conference said another challenge many African airlines face that over 60 per cent of their expenses are done with hard currency, whereas they generate their revenue in local currency.
He said part of the guarantee for the loan is the aircraft, which is a huge asset adding before the bank offers to give loan to any airline, it must be convinced about its business plan, which must be in tandem with the reality of its operational environment.
He noted that there is a lot of debt financing for African airlines but no equity and faulted the business plan of many of the airlines, saying most of the business plans are not satisfactory.