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Clusters can make the difference

Posted 12 June 2019 · Add Comment

Building up an aerospace manufacturing sector in Africa would be a significant creator of employment in the continent, says Airbus’ aviation White Paper. Alan Dron reports.

Aerospace industry jobs could be a major driver of economic activity in those nations that can build up a cluster of companies serving the sector.
There are currently three African nations with significant aerospace manufacturing clusters – South Africa, where the industry contributed $1.8 billion to the national economy in 2017; Morocco ($1.1 billion) and Tunisia ($430 million).
The three countries are in the top 45 largest aerospace manufacturing nations globally, as measured by the value of components they produce – largely for export.
The two north African nations have been able to make use of their proximity to Europe to set up aerospace companies, while South Africa has long had a substantial aircraft manufacturing capability.
Not only does aerospace create high-skilled jobs itself, it has a multiplier effect as other companies grow up to support it. In South Africa, for example, it has around 15,000 highly skilled engineers, but also supports 60,000 other skilled jobs in supply chain companies.
Morocco’s push for international investment in its aerospace sector may serve as a template for emerging nations seeking to develop such an industry, Airbus said in its White Paper on the current state of the industry on the African continent.
The north African nation has seen remarkable progress in developing aerospace as a manufacturing sector, with revenue growth having risen by an average 17% a year over the past decade.
There are several prerequisites for a country that aims to build up an ‘aerospace eco-system’ of complementary companies. These include solid national infrastructure, people with the right skills, and access to the necessary financing to allow it to grow.
Infrastructure covers the basics of an industrial society – a reliable power supply, plus transport facilities, such as ports, and a good road system along which components can be moved. ‘Free zones’, where companies can grow with relief from taxes, can also be important.
Tunisia, for example, plans to boost all of these with the creation of the Tunisia Aeronautic Valley, which will act as a hub for new aerospace-related companies wanting to set up in the country.
Building up a base of suitably skilled personnel can also be a challenge. Morocco is seeking to meet this through its Aviation Professionals Institute, which provides vocational training to people in the sector and which aims to train around 800 people annually. The institute is a good example of government and private sector coming together.
As for access to the necessary finance – particularly from the private sector – Airbus said that financiers regarded Africa as being a riskier environment, with poorer returns on investment, than other regions. While none were suggesting they should quit Africa, some felt that discussions of creating aerospace industries in countries where the infrastructure had not yet been fully established was somewhat premature.
If the infrastructure problems could be fixed, two other factors had to be in place before significant financing would materialise – the ability to secure a sovereign guarantee on financing and the existence of a profitable business plan.
If those factors could be put in place, the potential was huge, African aviation players attending the launch of the White Paper said.
The entry barriers to the aerospace industry were huge, as were the number of external safety and quality regulations with which companies had to contend, admitted Johan Steyn, managing director of South African aeronautical manufacturing and engineering company Aerosud. But, if they could overcome these hurdles, the prize was great.
“In the next 20 years more than 34,000 large aircraft will enter the market. We see that as a market of infinite possibilities in which to participate,” he added.
Abdelbasset Ghanmi, director of advanced technology promotion of Tunisia’s Foreign Investment Promotion Agency, agreed. Building an aviation manufacturing eco-system was not impossible; Tunisia’s aviation sector now comprised 80 companies employing more than 17,000 people: “We have to believe in our capabilities.”
The increasing number of ‘incubators’ and other programmes supporting entrepreneurship in Africa is likely to be a driving force in the future development of its aerospace industry, the conference heard.
 

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