Tuesday May 23, 2023
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Mogadishu (HOL) - Somalia is pulling out all the stops to regain financial control over its airspace. In an ambitious move to reclaim its lost millions, the Federal Government of Somalia is enlisting the aid of international debt collection agencies to recover an estimated $30 million in outstanding overflight fees. The main culprits are smaller regional airlines, particularly those headquartered in Kenya, which account for over 60% of these unpaid fees.
These unpaid fees, essentially rent for traversing Somalia's airspace without landing, have accrued over time from various local and international airlines and aircraft charterers. Overflight fees have a history of going unpaid due to administrative slip-ups, willful non-compliance, or drawn-out disputes over payment structures.
The proposed debt recovery contract is no-win no-fee, meaning they only get paid when they successfully secure the debts.
Potential applicants must prove their legal status, capability to operate domestically and internationally, and financial stability evidenced by two years of financial statements, with a minimum annual turnover of $2M. They must demonstrate at least five years of international debt collection experience in various jurisdictions and provide three references from clients for whom they have acted within the last three years. Moreover, they must declare any law firms they will partner with in Somalia and, notably, Kenya - a clear nod to Somalia's intention to focus on Kenyan carriers.
The government's swift timeline reflects the urgency of this issue. With expressions of interest closing on May 24, the request for proposals is due to be issued by June 2, with the contract anticipated to be awarded by July 26.
This debt recovery bid comes hot on the heels of a significant win for Somalia's airspace. After over 30 years, the International Air Transport Association (IATA)
upgraded Somalia's airspace to Class A in January.
As Somalia reclaims control of its airspace, the government foresees increased revenue, employment opportunities, and enhanced safety. With approximately 400 international flights traversing Somali airspace daily, this figure is projected to rise to 600 flights in the wake of the Class A reclassification, promising a lucrative uptick in annual revenue of at least $10 million. The current revenue is estimated to be over $30 million annually.