Nairobi, November 26, 2007—IFC,
a member of the World Bank Group, the African Development Bank (AfDB),
the European Investment Bank (EIB), Germany’s development bank (KfW),
and the development bank of France (AFD) have signed agreements to 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 will begin in
mid-December, and the cable, known as EASSy, is expected to be fully operational
in time for the 2010 Soccer World Cup in South Africa.
The five development finance institutions
will partner to provide the project’s entire long-term loan financing
of $70.7 million, with $18.2 million coming from IFC. The European Union
will also help finance a special purpose vehicle that forms part of the
cable's operational structure. Total project cost is $235 million
and the rest of the financing will be provided by 25 private telecommunications
operators who will run the cable as a consortium. These operators, 21 of
which are African, will be the cable’s main capacity users.
“It is a major accomplishment to have
finalized the loan financing of this complex project,” said IFC Executive
Vice President and CEO Lars Thunell. “This is a vote of confidence for
the continent. The project will transform the African telecommunication
landscape and have a direct positive impact on business in East Africa.”
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.
As a result of the EASSy cable, 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.
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.
The fiber-optic cable will address a major gap in the global communications
infrastructure and is expected to have a profound impact on the region’s
economical integration and cooperation.
The international lenders’ financing
for the project will be channeled through the West Indian Ocean Cable Company.
A short video (available in both English
and French) on IFC and the World Bank’s efforts to connect East Africa
can be found on www.worldbank.org/rcip/video.
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, a member of the World Bank Group,
fosters sustainable economic growth in developing countries by financing
private sector investment, mobilizing private capital in local and international
financial markets, and providing advisory and risk mitigation services
to businesses and governments. IFC’s vision is that poor people have the
opportunity to escape poverty and improve their lives. In FY07, IFC committed
$8.2 billion and mobilized an additional $3.9 billion through loan participations
and structured finance for 299 investments in 69 developing countries.
IFC also provided advisory services in 97 countries. For more information,
To learn more about the IFC–World Bank
Global ICT department, visit www.ifc.org/ict.