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IFC Invests in Landmark Project to Improve Telecommunications Access for 250 Million in Africa


In Washington, DC:
Hannfried von Hindenburg
Phone: +1 (202) 458-5613
Email: hvonhindenburg@ifc.org

In Johannesburg:
Houtan Bassiri
Phone: +27 11 731 3179
Email: hbassiri@ifc.org


Washington, DC, August 2, 2007 ─ 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.  

IFC’s Board today approved an investment of up to $32.5 million in the cable, known as EASSy.  It 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 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, 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.

Video
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.

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.
 
About 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. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY06, IFC committed $8.3 billion, 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.