The last flight of Air Senegal International (ASI) touched down in Dakkar on April 24, grinding to a halt the operations of this joint venture between Moroccan national airline company Royal Air Maroc (RAM) and the Senegalese government. Once an inspiring success story of cooperation, ASI’s mounting troubles boiled over last month, when RAM was subpoenaed in a Senegalese court and the fleet of debt-ridden ASI aircraft relegated to a hangar in Dakkar.
RAM announced in April its decision to immediately withdraw from the management and capital ownership of ASI, in spite of an earlier Senegalese court banning RAM from withdrawing from the joint venture pending an audit.
“It is unacceptable that the Senegalese party… ask RAM to remain in the management of this company beyond 2009,” said RAM spokeswoman Habiba Laklalech. RAM executives pointed out that restarting the company would require a $37 million subsidy. The Senegalese administration, charged with settling the full amount of the company’s debts, called the Moroccan pullout “unacceptable and irresponsible.”
Good company gone wild
The Moroccan national carrier and Senegal launched ASI in 2000, with RAM investing 51 percent of the capital and the Senegalese government according air traffic rights, valued at 49 percent of the company’s capital. The partnership made sense: RAM brought its proven experience as a respected international carrier to the table. Also, there were lucrative opportunities in the West African civil aviation market, underserved by the ailing sub-regional carrier Air Afrique.
Beyond business, the alliance expressed the strong historical ties between Senegal and Morocco. Both countries deeply valued their economic, religious and political links that date back to the trans-Saharan trade routes of medieval Islamic empires. Abdoulaye Wade, Senegal’s popular, twice-elected president in power since 2000, and King Mohamed VI, who has ruled Morocco since his father’s death in 1999, worked together to expand trade ties and modernize their longstanding partnership.
Exporting Moroccan know-how to Senegalese companies had two major advantages. It increased friendship between the two countries and also created a West African platform for Moroccan companies to penetrate the region and expand across the African continent. Over the past decade, Moroccan companies helped themselves to a generous portion of business in strategic sectors in Senegal, including electricity, banking, transport, construction and aviation.
ASI got off to a promising start: the carrier had doubled its turnover by 2003 and was named best African company in 2005. But tensions between the Senegalese government and the Moroccan company soon set in, culminating in an embarrassing incident whereby 2,500 Senegalese pilgrims were marooned in Jeddah, without resources, for several days. The oil price spikes of 2006 bogged down the company in debt amounting to $24 million in 2007. That same year, the Senegalese government announced its decision to take over the beleaguered airline, promising to recapitalize the troubled company through a voluntary liquidation. RAM officials said they were neither consulted about Senegal’s decision to nationalize the company nor informed of the decision until it was made public.
“It must be remembered that since October 2007, the Senegalese state formally committed to recapitalizing the company, which has still not been accomplished,” said RAM CEO Driss Benhima. The Senegalese administration’s missteps were the cause of “a number of bitter pills ASI had to swallow in the name of South-South cooperation,” said Benhima. He added it was nevertheless the Senegalese partner that first decided to take over RAM’s share of the airline.
A(nother) step back for regional integration
The crash of Air Senegal International is the first serious scandal to rock Moroccan-Senegalese relations.
“If the historical relations and brotherly ties between the two countries had any importance vis-à-vis the latest developments in this affair, the Senegalese state never would have summoned the Moroccan national company before the court,” Benhima said.
He added that while such disputes are typical of foreign investors in developing countries, RAM had wrongly believed that things would be different for Moroccans in Senegal.
On the Senegalese side, some questioned Morocco’s motives for investing in the first place. Senegalese journalist Koffi Ba accused RAM in an editorial of positioning itself in ASI in order to control a potential competitor (on the Dakkar-Paris line, for example). Calling RAM/ASI a “half-partner, half-rival,” he pointed out that the Moroccan-controlled Senegalese carrier closed its Dakkar-Accra line in 2006, just in time to see the Moroccan carrier inaugurate the same route.
Amidst bitterness and charges of vile conduct from both sides, the divorce could have a negative impact on ongoing efforts to achieve regional integration. The West African Economic and Monetary Union, the African Union, and the Union for Mediterranean all aim to develop closer political and economic links among African countries. But infighting, corruption and bad business deals have a way of impeding integration efforts, and the Air Senegal International affair proves unexceptional in this regard.
Morocco’s pullout from ASI, justified or not, stains its credibility as a foreign investor. The move will likely cause hesitation on the part of African states considering whether or not to grant a telecommunications license, finalize the sale of a bank, or award air traffic rights to a Moroccan company.
Air Senegal International, on the other hand, looks set for a revival helmed by the United Kingdom-based Groupe Sahelian Air in the coming months.
