Is insurance the missing link in Africa's aircraft financing?

 

BY PAUL TENTENA

Africa’s aviation sector is entering a period of significant expansion, but access to capital remains a major constraint for airlines seeking to grow their fleets. 

As demand for aircraft increases, insurance could play a critical role in giving lenders greater confidence to finance them.

With Uganda, ordering about six Boeing Aircrafts to add to its Uganda Airlines fleet, which is expected to be delivered in 2032, African fleets average around 13 years of age, and most carriers grow through quality used aircraft and engines rather than factory orders. 

With engine shop-visit backlogs and new-delivery delays pushing spare-engine demand and values to record levels, the EIRS approach responds to a pressing need: airlines and lessors need engines financed today, and lenders need cover to do it.

“Insurance exists to turn two risks, ‘what if the plane is destroyed or seized?’ and ‘what if the airline stops paying?’, into something a bank is allowed to lend against. Without it, aircraft finance is only available to a handful of top-tier carriers,” says Nolwenn Allano, Chief Commercial Officer, EIRS.

Boeing forecasts that passenger traffic in Africa will grow by an average of 6% annually through 2044, while the continent’s commercial aircraft fleet is expected to more than double from 715 aircraft in 2024 to 1,680 aircraft by 2044.

Aurelien Paradis, who leads the AU Group/EIRS partnership, notes “An aircraft loan or engine financing is secured lending against a single, highly movable asset, made to a borrower - an airline - whose credit standing is often weak. That’s where we come in.”

From insurance to risk intelligence

Against this backdrop, EIRS believes aviation insurance needs to play a broader role in supporting the sector’s long-term resilience.

“The issue is not simply whether an airline can identify an aircraft it wants to acquire. The bigger question is whether the financing structure gives the lender sufficient confidence to fund it,” adds Prashanth Parthasarathy, Head of Aviation, EIRS. “Insurance can become an enabler of fleet growth rather than simply a protection bought after the financing decision.”

Supporting Africa’s aviation growth

African airlines face financing challenges in a demanding operating environment, where high costs, ageing fleets, supply-chain pressures, and geopolitical risks complicate expansion. IATA has noted that African airlines experience some of the world’s highest unit costs. For EIRS, this underscores the need to see aviation insurance as more than a risk-transfer tool.

“Africa’s aviation opportunity is clear but turning that opportunity into growth requires access to capital and confidence to invest,” said Mark Brown, CEO of Aviation Africa. “Bringing airlines, financiers, insurers and the wider aviation ecosystem together is an important part of finding practical solutions.”

As the continent prepares for a larger aviation market, the question is no longer simply whether Africa needs more aircraft, but whether its financing ecosystem is equipped to fund them.

EIRS will engage with airlines, operators, financiers and other stakeholders throughout Aviation Africa 2026. Participants are invited to connect with the EIRS delegation in Nairobi to discuss how insurance-led solutions can support aircraft and engine financing and the next phase of aviation growth across Africa.