Airport expansion to give aviation sector a boost


A new terminal set to open at Accra’s Kotoka International Airport (KIA) aims to ease congestion and is expected to help facilitate tourism growth.

Officials are preparing for the launch of a third international terminal at KIA, the country’s largest aviation gateway, in the second quarter of this year.

Spread over five floors and 45,000 sq metres, Terminal 3, which began construction in March 2016, will expand the airport’s total passenger-handling capacity by 5m and significantly ease peak-hour congestion at the existing international terminal, Terminal 2 (T2).

The $274m project, which has been partly funded by a $120m loan facility from the African Development Bank (AfDB) and is being built by Turkish-based MAPA Construction and Trade Company, will help accommodate rising passenger traffic at Ghana’s airports.

Total passenger throughput is expected to increase from 2.3m in 2017 to 5m by 2021, Kwabena Okyere Darko Mensah, the deputy minister of aviation, told local press.

The project has also provided a boost for the local economy, generating an estimated 900 temporary jobs during the two-year construction phase, with plans to sustain a further 760 permanent jobs into the future, according to the AfDB.

“This terminal is being built for a successful economic future. Its large capacity is a confident statement of intent,” Akinwumi Adesina, president of the AfDB, said during a tour of the site last year. “This will help the economy and society of Ghana considerably through enhanced regional integration and employment.”

Private sector plays key role in infrastructure upgrades

The terminal expansion follows another key infrastructure investment at KIA, engaging the private sector in the country’s quest to raise Ghana’s profile as a regional aviation hub.

In 2016 KIA opened the 17,000-sq-metre Ghana Airport Cargo centre, increasing its cargo handling capacity from 50,000 tonnes per year to more than 70,000 tonnes.

The facility – the first public-private partnership in Ghana’s aviation industry – was developed by a joint venture between private airline Air Ghana and Ghana Airports Company Limited (GACL), and is operated by Swissport Ghana, a joint venture between Swissport International and GACL.

In addition, other recent infrastructure projects should help unlock various regions of the country to economic development.

Earlier this month it was announced that the GACL-funded $25m Ho Airport in the Volta regional capital of Ho, north-east of Accra, would soon be commissioned. The new facility possesses a 1900-metre runway and 150,000-per-yer-passenger-capacity terminal, and is expected to drive economic and tourist activity in the region.

Another regional capital, Kumasi, is also looking to strengthen its aviation infrastructure, and in January of this year GACL requested expressions of interest for design review and construction supervision of the development of Kumasi Airport.

The work will be part of the second phase of expansion at the site, which includes a new terminal building and runway extension. It is hoped that the improvements will help attract new international connections with the Ashanti region, which holds roughly 19% of Ghana’s population, according to the most recent census.

Lower costs help boost domestic air travel, attract airlines

The infrastructure improvements build on earlier key measures implemented to make travel cheaper for passengers and increase the country’s attractiveness to foreign airlines operating in the region.

Early last year the government removed a 17.5% valued-added tax on domestic air travel. As a result, domestic passenger travel increased significantly, growing by around 24% year-on-year in May 2017.

Prior to this, in 2015 the cost of aviation fuel was slashed by 20%, making the country one of the cheapest in the region for fuel.

Increased connectivity set to facilitate tourism growth

Tourism in particular is expected to be a key beneficiary of the airport expansions and cost-cutting measures. The sector’s total contribution to GDP last year was 6.2% and is expected to increase by 4.2% per year to GHS19.9bn ($4.4bn) by 2028, according to the World Travel & Tourism Council (WTTC).

While domestic tourism spending accounts for a larger share of GDP, at 60.4%, according to the WTTC, the Ghana Tourism Authority has also set a target of attracting 1.5m international tourists to the country this year, up from the estimated 1.2m in 2017.

To reach this goal, additional measures are also being taken to improve connectivity, and in June the government expects to receive the first tranche of a $50m grant from the World Bank, to be used to improve road infrastructure and sanitary services in key tourist hotspots. Meanwhile, the Ghana Civil Aviation Authority has outlined plans to construct new airstrips in popular visitor areas to improve connectivity, highlighting Axim, Bolgatanga and the Cape Coast as potential locations.

This Ghana economic update was produced by Oxford Business Group.

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