IFC, the private investment arm of the World Bank, will invest up to 32,5 million US dollar in the East African Submarine Cable System (EASSy), a landmark fiber-optic cable project that will connect 21 African countries to each other and the rest of the world with high-quality Internet and international communications services.
The cable will transform the telecommunications landscape in the region as it improves access for 250 million Africans and substantially reduces costs for consumers and businesses. Construction is expected to begin in the next few weeks, with the EASSy cable fully operational by the beginning of 2009.
Consumers along the east coast of Africa typically pay between 200 and 300 dollar a month for internet access. These prices, some of the worlds highest, have an adverse economic impact. Estimates suggest that reducing the price of international communications by 10 percent would benefit consumers here by more than 2,5 billion dollar.
As a result of this project, prices for international connectivity will drop by two-thirds at the outset, and the number of subscribers will triple. Because the project gives open access to service providers, prices will fall further as volume and competition increase.
EASSy will run 10.000 kilometers from the continents southern tip to the African horn, connecting South Africa, Mozambique, Madagascar, Tanzania, Kenya, Somalia, Djibouti, and Sudan.
Another 13 adjoining countries will also be linked to the system as terrestrial backbone networks are completed through a broader World Bank Group initiative: these include Botswana, Burundi, the Central African Republic, the DR Congo, Chad, Ethiopia, Lesotho, Malawi, Rwanda, Swaziland, Uganda, Zambia, and Zimbabwe.
To expand the benefits of the new cable and stimulate traffic, IFC is coordinating its efforts with the World Bank, which is financing a complementary system of terrestrial backhaul and backbone networks through the Regional Communications Infrastructure Program.
– The EASSy cable will complete Africas integration into the global communications network, with significant development impact for the people of East Africa and the larger region, said IFC Executive Vice President and CEO Lars Thunell.
– Information and communications technologies transform every part of peoples daily lives, including how they do business and access global markets, receive government services, and learn, added he.
Capping years of collaboration between the World Bank Group and other global and regional development institutions, governments, and the regions private sector, the project establishes a public-private partnership to expand access to communications.
It addresses a major gap in the global communications infrastructure and is expected to have a profound impact on the regions economical integration and cooperation. The fiber-optic cable will also improve the quality of service.
– Despite the recent growth in connectivity in Africa, there remain severe bottlenecks in the availability of affordable international communications and Internet services, said Mohsen Khalil, IFCs Director of Global Information and Communication Technologies.
– The EASSy cable will facilitate the effective entry of East Africa into the global economy and allow its countries to compete on a more level playing field, creating significant opportunities for people throughout the region, noted he.
Through its impact, the project directly responds to recommendations by IFCs Independent Evaluation Group this week: that IFC should redouble efforts in Africa and help improve what is the world’s most difficult climate for doing business.
The new cable is a partnership among 26 telecommunications operators, the majority of which are African firms. IFCs annual investments in Sub-Saharan Africa doubled in fiscal 2007 to a record 1,4 billion dollar from 700 million the previous year.
IFCs financing will be channeled through the West Indian Ocean Cable Company, or WIOCC, and will consist of an 18,2 million dollar senior loan and a 14,5 million standby loan. The total cost of construction is estimated at 235 million dollar. Other financing will come from private operators and development institutions.
Video
A short video (available in both English and French) on IFC and the World Banks efforts to connect East Africa can be found on www.worldbank.org/rcip/video
Map
A map showing the gap that the East African Submarine Cable System is filling can be downloaded at http://go.worldbank.org/GKHOFFDJB0
Use of the map is free of charge.
IFC on IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments.
IFCs vision is that poor people have the opportunity to escape poverty and improve their lives. In FY06, IFC committed 8,3 billion dollar, including syndications, to 284 investments in 66 developing countries.
For more information, please visit www.ifc.org
To learn more about the IFC–World Bank Global ICT department, visit www.ifc.org/ict.
