Implication of forex exchange crisis on African airlines

A severe shortage of foreign currency in some African countries, such as Malawi, is having a detrimental impact on the operations of key African airlines. Ethiopian Airlines and Kenya Airways are among the airlines that have halted ticketing services in Malawi, exacerbating the challenges faced by the aviation industry in the region. Alex Nwuba, Chairman at Nelike Capital Partners, shed light on the dire situation in an interview with CNBC Africa's Julius Mungo Ali. The currency crisis is not isolated to Malawi but is a widespread problem across the African continent, with over $608 million trapped in funds that cannot be remitted due to the lack of foreign exchange availability. This has led to a significant economic setback, affecting not only the airline industry but the overall economy. African central banks prioritize other economic needs over the airline industry, resulting in a scarcity of foreign exchange for the aviation sector. The airlines rely on these funds to sustain their operations, creating a challenging situation for them. The suspension of ticketing services by major airlines in Malawi, including Ethiopian Airlines and Kenya Airways, is expected to impact travel costs and the aviation market in the country. While Malawi Airlines still offers limited services to destinations like Johannesburg, the reduced airline options will likely drive up prices due to the basic principles of supply and demand. The scarcity of airlines operating in the market will lead to increased fares, mirroring similar trends in other regions across the globe.