The Indian Ocean trade arc is evolving. New logistics models emerge where drones and airships bridge gaps left by limited ground infrastructure. These low-altitude economy (LAE) systems are more than delivery tools—they are potential foundations for trade, finance, and services.
This post and analysis are inspired by the September Nairobi Meeting, where Mr Frank Zhang from China’s AI Universe Association introduced the concept and implementation of the LAE. We explore three candidate hubs—Nairobi, Madagascar, and Sri Lanka—and outline why each matters, how they compare, and what sequence of investment makes sense. This assessment provides a quick download on the vast potential of LAE in the Indian Ocean region.
Drone logistics in Kenya: Nairobi’s low-altitude economy advantage
Kenya leads in setting up the rules, testbeds, and partnerships needed to scale drone logistics.
- Unmanned Aerial Systems (UAS) regulations: The Kenya Civil Aviation Authority enforces active rules and updated standards. In 2025, the Konza Technopolis National Drone Corridor launched Africa’s first operational unmanned traffic management (UTM) system for beyond-visual-line-of-sight flights.
- Operational pilots: Kenya has ongoing drone delivery projects for medical supplies through county pilots, Kenya Flying Labs, and Zipline’s network. These demonstrate demand and set frameworks for expansion.
- Enabling infrastructure: Electricity coverage is approximately 76 per cent and continues to improve. Nairobi’s digital backbone—the “Silicon Savannah”—supports UTM software, fleet data, and e-commerce integration.
- Public–private partnerships (PPP): Konza’s corridor serves as a PPP platform that brings together regulators, governments, and private vendors.
Nairobi is the fastest path to operations for investors with constrained budgets. Expansion should focus on county corridors, integrated e-commerce and health supply chains, and regulatory sandboxes for new payload types.
Airship logistics in Madagascar: Unlocking remote access with flying whales
Madagascar positions itself differently. Instead of scaling mass-market drones, it focuses on heavy-lift airship cargo.
- Heavy-lift airships: In 2025, Madagascar signed a strategic partnership with Flying Whales to deploy the LCA60T, a 200-meter airship capable of carrying 60 tons. Safran provides power-train systems, validating technical readiness.
- Regulatory moves: The Aviation Civile de Madagascar formalised drone guidance in 2025, signalling intent to regulate unmanned operations.
- Infrastructure constraints: Internet penetration was only about 20 per cent in 2023, and electricity access remains low. Satellite and mesh networks are required to enable command-and-control links.
- Market fit: Airships suit mining, forestry, and humanitarian corridors where demand density is thin but access is critical.
- PPP platform: The Flying Whales deal is state-backed and designed to anchor a logistics hub around airship operations.
Madagascar is not aiming for large-scale consumer drone delivery. Its comparative advantage lies in airship corridors that unlock stranded cargo and humanitarian supplies.
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Sri Lanka’s Port City Colombo: Building a drone and finance hub
Sri Lanka combines logistics and finance ambitions. Its location and new infrastructure projects provide long-term hub potential.
- Regulatory framework: The Civil Aviation Authority of Sri Lanka maintains UAS rules, though procedures are stricter than Kenya’s sandbox model.
- Strategic location: Colombo lies on East–West shipping and air routes, serving South Asia, Africa, and Southeast Asia.
- Port City Colombo special economic zone (SEZ): A new foreign-currency zone is being built to attract finance, arbitration, and services, creating a foundation for logistics-finance convergence.
- Digital and human capital: Internet penetration was about 67 per cent in 2023, supporting UAV operations and fintech services.
- Macro recovery: Stabilisation under the IMF program has restored investor confidence, enabling lower-cost financing.
Sri Lanka is not the fastest to deploy drones, but it offers the broadest reach and strongest path to a Singapore/Dubai-style finance-logistics hub.
Kenya vs Madagascar vs Sri Lanka: Best Indian Ocean drone logistics hubs
| Dimension | Nairobi (Kenya) | Madagascar | Sri Lanka
(Port City Colombo) |
|---|---|---|---|
| UAS rules | Kenyan Civil Aviation Authority (KCAA) standards updated in 2024 | Madagascar Civil Aviation Authority (ACM) rules formalised in 2025 | Civil Aviation Authority of Sri Lanka (CAASL) rules in 2025; stricter processes |
| UTM corridors | Operational Beyond Visual Line of Sight (BVLOS) corridor at Konza | None; airships instead | No national UTM corridor |
| Demonstrated use cases | Medical delivery, Zipline, e-commerce | Heavy-lift airships for mining/aid | SEZ finance, UAV possible under CAASL |
| Infrastructure | Rising electrification, strong tech base | Low electrification, low internet | Higher internet, strong port/airport |
| Trade signal (LPI 2023) | Mid-pack globally | Lower tier | Around median, timeliness improving |
| PPP momentum | KNDC corridor PPP | Flying Whales JV | Port City Colombo SEZ, port expansion |
Pathways to growth
- Nairobi: Consolidate drone corridors, expand county networks, add insurance and clearing desks anchored to UTM systems.
- Madagascar: Stand up the LCA60T operator, connect mining and forestry corridors, add UAV last-mile nodes, and integrate finance products.
- Sri Lanka: Pilot near-port UAV and eVTOL logistics, integrate port and airport data, and channel trade finance into Port City Colombo.
Together, they can form a tri-node system: Nairobi as the operational centre, Madagascar as the heavy-lift spoke, and Colombo as the financial hub.
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Risks and mitigation
Regulation and security remain the foremost concerns in building low-altitude economies. Here, the Specific Operations Risk Assessment (SORA) framework provides a standardised method for evaluating risks and assigning mitigation measures.
By applying SORA, policymakers and operators can structure sandbox corridors, classify ground and air risks, and assign appropriate levels of operational assurance. This creates a transparent pathway for authorisation while reducing uncertainty for investors and regulators alike.
Connectivity gaps pose another systemic challenge, particularly in under-served geographies such as Madagascar. Power reliability and command-and-control (C2) links are often fragile. To address these, solar-plus-storage systems coupled with satellite communication links can help bridge the infrastructure deficit. These measures ensure continuous operations across critical low-altitude corridors, even in environments where traditional grid or terrestrial networks are weak.
Investment approaches
Investment strategies differ across Kenya, Sri Lanka, and Madagascar, reflecting their stage of ecosystem readiness and the capital appetite of investors. For those with limited capital, Nairobi presents a low-risk entry point. Proven use cases in logistics and agriculture, combined with a relatively fast payback period, make Kenya a strong testing ground for commercial pilots under a SORA-compliant regime.
For a full-scale capital plan, Sri Lanka offers the most compelling case. The convergence of logistics and financial infrastructure within Port City Colombo’s SEZ provides the backbone for scaling. Here, investors can align with SORA-based operational authorisations while tapping into the city’s role as a regional financial hub, amplifying both scale and capital recycling.
An adjacency strategy applies in Madagascar, where heavy-lift airship corridors are emerging as a niche opportunity. While less commercially mature, these projects can be supported through blended finance, leveraging multilateral, public, and private capital to de-risk early infrastructure investments. By embedding SORA methodologies into corridor design, Madagascar can demonstrate operational safety even in frontier markets.
At the macro level, Sri Lanka remains vulnerable to foreign-exchange volatility and broader debt pressures. These risks are significant for large-scale projects in Colombo’s SEZ. Financial structuring offers partial mitigation: foreign-currency accounts and multilateral guarantees help hedge volatility, providing greater certainty for long-term investors. When combined with the predictability of SORA-based regulatory processes, such measures strengthen the investment case despite systemic headwinds.
Conclusion
Nairobi provides the quickest operational entry point. Sri Lanka offers the broadest long-run reach as a combined logistics-finance hub. Madagascar delivers targeted impact through airship corridors in resource-heavy and humanitarian contexts.
This tri-node architecture—Nairobi for operations, Madagascar for heavy-lift access, and Colombo for finance—can seed a distributed, inclusive logistics network across the Indian Ocean.
A comprehensive analysis is submitted to the Journal of ISEA-SR21.
This article was co-authored with Dr. Alex Lin.
You can also find me on my podcast and newsletter, where I share regular insights on geopolitics and leadership.
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