Managing Director, Federal Airports Authority of Nigeria (FAAN), Olubunmi Kuku, says that the current financing model for African airports remains constrained by sovereign risk and weak capital structures. Her remarks framed the discussion on how the continent can unlock sustainable infrastructure funding.
She spoke at the Airport Infrastructure Panel of the Ethiopian Aviation Forum held at the Ethiopian Skylight Hotel, alongside Aviation C-Suit Executive, Mr. Javed Malik, who provided practical perspectives on airport structure and long-term development, backed by his experience in driving sector growth.
The session moderated by Mr. Dawit Lemma, Chief Executive Officer Krimson Aviation, exposed financing gaps, country risks, operations as well as technology.
“You’ve rightfully spoken about some of the ratings that our African countries have and how challenging it is to raise financing, and the one thing to note is, it’s even more challenging as an operator to raise financing, especially with the country risk,” Kuku said. However, she stressed that the financing model challenge goes beyond access to funds.
She explained that operators are structurally limited by national credit ratings, especially in Africa where there is a warning sign to investors that lending carries notable risk, which directly affects how airports can raise money.
“It’s difficult to raise anything beyond the country risk… so if you have BBs or B-minuses” financing ceilings remain capped. Therefore, she urged stakeholders to rethink the financing model used across African airport projects.
Rethinking the Financing Model for Airport Growth
Kuku argued that choosing the right financing model is critical to unlocking capital. “One of the things to consider is really the financing models that you choose,” she said. Meanwhile, she noted that developed markets raise “very sophisticated bonds… green and infrastructure bonds,” unlike most African operators.
Drawing from Nigeria’s experience, she said: “In Nigeria specifically, we have looked at various models for managing as well as financing our airport infrastructure.” These include concessions and long-term private equity structures. In addition, she emphasised that sustainability must drive any financing model adopted.
She highlighted the role of ecosystem investors in strengthening the financing model. “It really helps when you’re talking about financing, where you see an investor who has interest across the entire value chain,” she said. Such investors, she added, consider handling, service infrastructure and MRO opportunities.
Long-Term Capital Over Short-Term Gains
Kuku warned against short-term investment behaviour that weakens infrastructure outcomes. “Not just private equity investors who are looking for a 5-7-year exit and looking for an 8X type of return,” she said, “but one that is strategically aligned with your long-term goals.” Therefore, she insisted that the financing model must prioritise long-term alignment.
She further explained that flexible structures are essential. “You can structure your financing options where you’re sort of looking at what I’m getting from the debt and equity markets,” she said. This blended financing model combines development finance institutions and private sector capital.
According to her, rigidity remains a key problem. “That… is an appropriate model where you’re structuring your capital options as opposed to sticking to one option,” she stressed. In addition, she called for modular infrastructure planning to support phased investment.
Modular Planning and Innovative Instruments
Kuku stressed the importance of phased development within the financing model. “The second is really to think through modular infrastructure,” she said. However, she warned that poor planning undermines funding efficiency.
“Where some countries make mistakes is the lack of a long-term master plan for each of those airports that are modular in nature,” she explained. Therefore, she advocated a structured approach that aligns infrastructure delivery with funding cycles.
She also pointed to innovative tools. “Also looking at debt convertibles, where you’re getting debt in initially… and then… can I convert this to equity?” she said. This approach strengthens the financing model by improving investor confidence over time.
Kuku linked financing success to traffic strategy. “They didn’t just rely on their domestic traffic. They looked at the hub-and-spoke model,” she said, referencing Ethiopia. Meanwhile, she concluded that flexibility remains key. “Rather than just a straitjacket approach,” she added.
Malik: Long-Term Strategy Anchors Financing Model Success
Providing operational context, aviation expert Javed Malik reinforced the need for long-term planning within any financing model. “I’m going to share from an operational perspective, taking airports from a government to a private space,” he said.
He cited a private investment case driven by generational thinking. “The equity owners had one vision… they had a hundred-year vision of what is going to be legacy for a hundred years,” Malik explained. Therefore, he stressed that long-term planning strengthens investor confidence.
Malik emphasised governance discipline. “Governance, compliance and safety are non-compromisable,” he said. “If you as a management get that right, everything else, we can support you. You get that wrong, we’re out.” This, he noted, is fundamental to any sustainable financing model.
Airports as Self-Sustaining Economic Hubs
Malik described airports as integrated economic systems rather than standalone infrastructure. “When we built this airport, it was about how do we get the water positive… how do we become off grid… because it’s a city,” he said. Meanwhile, sustainability enhances the long-term financing model.
“Our focus is all about how we give back… how do we self-generate… how do we become self-sufficient,” he added. Therefore, both aeronautical and non-aeronautical revenues must support airport viability.
Referencing Singapore Changi Airport, Malik highlighted global best practice. “He said, pick a number between one and a hundred… there’s our master plan for 37 years,” he recalled. “Why is it the best airport in the world? Because it has that long-term strategy.”
Financing Model Must Align with Vision
Both speakers agreed that Africa’s infrastructure gap reflects deeper structural issues. The financing model must align with long-term strategy, governance and traffic growth. However, without patient capital and flexible structures, progress will remain slow.
