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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.
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
.
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About IFC
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, visit
www.ifc.org
.
To learn more about the IFC–World Bank Global ICT department, visit
www.ifc.org/ict
.
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