IFC, a member of the World Bank Group, will invest in the
East African Submarine Cable System, 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 a month for Internet access. These
prices, some of the world's 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. 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.
The cable will run 10,000 kilometers from the continent's
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 Democratic
Republic of 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 Africa's 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 people's daily lives,
including how they do business and access global markets, receive government
services, and learn."
Capping years of collaboration between the World Bank Group and other global
and regional development institutions, governments, and the region's private
sector, the project establishes an innovative 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
region's economic 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, IFC's 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."
Through its impact, the project directly responds to recommendations by IFC's
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. IFC's involvement reflects a long-standing
commitment to Sub-Saharan Africa, where IFC's annual investments doubled in
fiscal 2007 to a record $1.4 billion from $700 million the previous year. IFC's
financing will be channeled through the West Indian Ocean Cable Company, or
WIOCC, and will consist of an $18.2 million senior loan and a $14.5 million
standby loan. The total cost of construction is estimated at $235
million. Other financing will come from private operators and development
institutions.
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