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Economic benefits of newly opened Terminal III at JNIA

ON the 1st August this year, Tanzania President Dr Joseph Pombe Magufuli opened Terminal III of the Julius Nyerere International Airport to complement existing terminal II and terminal I. I was not privileged to be on the ground to witness such an important historical event, but thanks to TBC, I was able to follow the proceedings through live broadcast of the event.

To me, opening up of terminal III was historical and I have to admit, I liked President’s Magufuli directives on looking after the facility. Many of us might not be aware, but through research and analysis, I have come to discover that in the transportation industry, airports play a key and active role as infrastructure provider, business partner and economic enablers.

With the projected robust growth in passenger as stated and cargo traffic in the future, it is timely to have this facility to enable to accommodate the increasing demand in traffic which will invariably lead to increased operating and capital costs for airport operators.

I am aware of the on-going debate amongst Tanzanians, some at variance that with this expansion, there will be huge economic benefits to Tanzania and to our neighbouring landlocked nations such as Burundi, Rwanda, DRC, Malawi and Zambia, whereas others have suggested to the contrary.

I have no doubt, President’s Magufuli observation on maintenance culture will earnestly be taken by airport authorities to ensure the new facility upholds its true value to Tanzanians and other users who might consider Tanzania as their hub.

Think on maintenance culture on infrastructure that are public run i.e. industries and other assets, I support Dr Magufuli’s remarks on taking care of the facility because, building maintenance culture is a subject that has to be considered seriously.

Most of you would agree with me that maintenance culture is an attitude which is sadly lacking in Tanzania, whether in the homes, office, schools and place of work especially public ones.

Apart from opening ceremony and presented concerns on ensuring that the facility is well maintained, my take now goes to the kind of economic benefits likely to be generated by the newly launched facility.

Air transport, to the best of my knowledge, is one of the world’s most important industries. Its development and its technical and service achievements make it one of the greatest economic contributors to the advancement of modern society.

This potential, in my opinion, would be a game changer in Tanzania. At least, newly opened facility will provide a wide choice of holiday destinations around Tanzanians attractions and an affordable means to direct flight visit desired destinations without going through third country.

Expanding air services will contribute to sustainable development by facilitating tourism and trade, while generating economic growth, jobs and increased revenues from taxes.

Air transport industry and its economic impacts are often miscalculated because; sometimes people overlook direct, indirect/induced and catalytic effects to the economy.

Within the air transport industry, expansion being made by the 5th phase government in strengthening Tanzanian airport industry will have impact on passenger carriers and cargo increase.

This expansion will create further opportunities on general civil airports activities, opportunities in handling and catering and freight services and fuelling on-site retail.

Since all this activities involves services provides will directly generate significant number of job opening. Indirect/induced benefits that can also be looked at through industry supply chain are many.

On one hand, suppliers will increase off-site fuel, supplier’s food and beverage will also gain from expansion being made. Induced effect will also be boosted by spending of direct and indirect employees.

Here a number of segments will benefit that include food and beverages suppliers recreation and leisure providers, transport logistics within and outside the airport and household good.

Catalytic effects or impacts on other industries is an area that many analysis tends to overlook when examining on how initiatives are taken by the 5th government to expand the airline sector in Tanzania.

Improvement being made will have huge impact on:- trade, tourism sector itself, location/ investment, labour supply both specialised and casual labour, increase productivity/ market efficiency and increase social and consumer welfare of various parties in the value chain.

In short, the air transport industry has a substantial economic impact, both through its own activities and as an enabler of other industries.

Its contribution includes direct, indirect and induced impacts, which are related to the total revenues of the air transport industry and the catalytic impacts of the industry or spinoff effects on other industries.

Closely looking at direct effect cover employment and activity within the air transport industry including airline and airport operations, aircraft maintenance, air traffic control and regulation and activities directly serving air passengers, such as checkin, baggage-handling, on-site retail and catering facilities.

Not all of these activities necessarily take place at an airport, with some taking place at head office. Direct impacts also include the activities of the service providers involved catering and related businesses.

Similarly, close looking at indirect effect covers employment and activities of suppliers to the air transport industry, for example, jobs linked to aviation fuel suppliers; construction companies that build additional facilities; the manufacture of goods sold in airport retail outlets and a wide variety of activities in the business services sector such as call centres, IT, accountancy, etc.

Research on per-worker contribution to economy by sector report 2004 (see OEF 2004) mention that the air transport industry is one of the most efficient sectors measured in terms of GDP per worker.

For example, at US$ 65,000 per worker annual income and this contribution according to the report is around three and a half times the average across the world economy as a whole and exceeds most other sectors of the economy.

This means that air transport employees individually make a greater contribution to the global economy and to Tanzania, is an opportunity we shouldn’t venture to loose.

There are several reasons for this including air transport employees are highly skilled, trained and experienced and the industry carries out intensive research and development to remain competitive.

I would like to close my today’s input by opening up inquiries that might inspire thinking further, leading on how to keep infrastructure to live up to its expected life span. For instance, as nation how are we giving priorities to property management?

To what extent as nation, are we adhering to maintenance policy? These issues are key because, neglect of maintenance has accumulated consequences in rapid increase in the deterioration of a given infrastructure and this could be accompanied by a harmful effect.

The declining maintenance culture in Tanzania and its effect although many of you may disagree is a major problem to both the public and private sectors.

Half-hearted attitude of Tanzanians on maintenance culture, I think has undesirably affect infrastructure development which I am of the opinion is critical and essential to a national’s development.

Realizing vision 2025 goals would be within reach, among others, if existing structures and facilities are constantly maintained.

Poor maintenance culture can pull down a nation a thousand steps backwards and one of the stride actions that could salvage the country from total mess of infrastructure decay and being able to reap economic benefits on infrastructure assets the government is putting in place is maintenance.

Author: Dr Hilderbrand Shayo

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