African Airlines Lag Behind Global Peers In Aircraft Leasing – Afreximbank

The African Export-Import Bank has revealed that African airlines operate with significantly lower leased fleets compared to their global counterparts, highlighting deep-rooted financing constraints in the continent’s aviation sector.

Speaking with journalists on Friday, Head of Project Finance Desk at Afreximbank, Ayo Mobarak, said African airlines operate with about 38 per cent leased fleets, far below the global average of 81 per cent.

He explained that the disparity reflects broader challenges, including limited access to funding, heightened risk perception, and underdeveloped capital markets.

“At the centre of the issue lies a stark leasing imbalance. A 2022 Afreximbank study shows global airlines operate with about 81 per cent leased fleets, compared to just 38 per cent in Africa,” Mobarak said.

According to him, African carriers continue to grapple with limited access to long-term and competitively priced aircraft financing, constraining fleet expansion and renewal.

“As a result, airlines rely heavily on short-term, high-cost financing arrangements that weaken operational sustainability and delay modernisation,” he added.

Mobarak further noted that the challenge goes beyond financing availability, pointing to systemic barriers such as perceived sovereign and airline credit risks, which drive up capital costs and restrict access to long-term dollar funding, export credit support, and global leasing markets.

“These constraints translate into materially inferior financing terms for African airlines,” he said, adding that operators are often forced into high-cost structures with stringent maintenance reserve requirements, thereby limiting their competitiveness.

The impact of the financing gap is already evident across the sector. Poor leasing penetration has slowed fleet renewal and widened the performance gap between African carriers and their counterparts in Asia and Western markets.

He warned that without stronger trade finance frameworks, Africa risks falling further behind in aviation efficiency and trade facilitation.
As a potential solution, Mobarak identified trade finance pooling as a viable mechanism to bridge the leasing gap. The approach aggregates multiple exposures into a single diversified pool, thereby reducing risk and improving access to capital.
Applied to aviation, the model enables airlines to access financing collectively rather than individually, improving credit strength while making capital more affordable, predictable, and scalable.
“This simple principle can be applied to aviation through diversification, standardisation, and credit enhancements,” he explained.

Afreximbank is already advancing this strategy through a proposed aircraft leasing platform structured around a Special Purpose Vehicle (SPV), where aircraft serve as revenue-generating assets.

The platform blends equity and debt financing, supported by guarantees designed to attract institutional investors.

“We are providing both equity into the leasing platform and the necessary guarantees to encourage investors,” Mobarak said.

Under the model, the bank’s development arm will inject equity, while guarantees help reduce investor exposure. The blended financing structure is expected to attract pension funds and sovereign wealth funds into Africa’s aviation sector, an area they have traditionally avoided.

“Investors can participate in both debt and equity with well-defined risk parameters,” he added, noting that the initiative provides a structured pathway for long-term capital inflows into African aviation.