African ICT investments under scrutiny

Investments in African information and communication technologies have come under scrutiny lately, as the World Bank offered to help fund several projects, and in one case this week was rejected.

The moves coincide with several other initiatives in both the private and public sectors to set development milestones and spur growth of telecommunications equipment distribution.

The World Bank has moved over the last month to spur some projects that have been flagging. But this week, officials heading the East Africa Submarine Cable System (EASSY) were in a position to reject a $100 million conditional loan offered by the World Bank.

The World Bank had offered to provide the project with 50 percent funding of the total $200 million required to complete the project, on condition that the cable operators adopt open-access guidelines.

EASSY project coordinator John Sihra says the project management team rejected the funding from the bank because of the condition. He adds, however, that there was no need for the funding, since the project financing has been fully subscribed by members.

The EASSY project aims to encircle Africa completely with high-capacity fiber-optic cable. Open-access strictures would require that all service providers be free to join the project. EASSY project managers say, however, they will only allow service providers with international gateway licenses to become members.

The World Bank’s fear is that if the service providers with international gateway licenses are the only ones allowed to acquire bandwidth, they could form a monopoly. This could result in high costs for users if the current members decide at a later stage to sell capacity to other service providers.

Many service providers could be left out. For example, no service provider in Zambia has yet been granted an international gateway license by the Communications Authority of Zambia (CAZ).

“The World Bank has been pushing us to accept their money which has conditions attached, but we are saying, why should we should get it when the project is fully financed by our members,” Sihra says.

Currently the EASSY project has 33 members, including Mauritius Telecoms, Botswana Telecom, Ethiopian Telecommunications, Djibouti Telecoms and Tanzania Telecom. The laying of the 9,900-km. cable is supposed to begin in the second quarter of this year and is earmarked to be operational in the middle of next year.

The World Bank, meanwhile, is continuing efforts to push ICT development. Last month it entered into an ICT development agreement with the Common Market for Eastern and Southern Africa (COMESA).

As part of that effort, the World Bank has also agreed to establish a regional cooperation department that will work with COMESA to finance regional ICT projects, according to COMESA Assistant Secretary General Sindiso Ngwenya. The COMESA region consists of 21 countries from eastern and southern Africa, including Angola, Kenya, Zimbabwe, Malawi, Mauritius and Zambia.

The World Bank agreement comes in the wake of the region’s failure for five years to raise enough money to put the Comtel project in operation. The project is estimated to require about $300 million.

Member countries had agreed to contribute funds to the project, which would roll out 16,000 km. of fiber optics and a microwave network. But so far only the Development Bank of Southern Africa (DBSA), which finances developmental projects in Southern Africa, has offered the project money — about $1,000.

“We agreed that the World Bank should establish a regional department that will specifically look at the financing of the regional ICT projects. This will make everything easier because we will be negotiating for funds from within the region,” COMESA’s Ngwenya told the IDG News Service.

The Comtel project is a private regional telecom company being spearheaded by COMESA to create a regional network and unify pricing for telecommunication services.

On the private-vendor front, Motorola regional sales director Stefano Mattiello said last week that the company has positioned itself to provide wireless networking solutions throughout Africa. Motorola is currently distributing equipment including base stations, base station controllers, and General Packet Radio Service technology.

Mattiello said Motorola wants to maintain a local presence in each African country.

The Southern Africa Development Community (SADC), meanwhile is targeting a 15-year timeframe for completion of ICT infrastructure projects that would get the entire region connected via new networks. SADC’s Regional Indicative Strategic Development Plan has identified information and communication technologies as key drivers for technology integration and development.

SADC Principal Economist Angelo Mondlane said regional integration through ICT development is the only way for the area to develop. The SADC region consists of 14 countries including South Africa, Botswana, Namibia, Lesotho and Swaziland.