Friday, November 30, 2007

Africa - EaSSy - undersea cable

East African Submarine Cable System reaches financial close-The African Development Bank Signs Loans for the EASSy Cable Project

Tunis, 23 November 2007 – The African Development Bank (AfDB), along with other participating development financial institutions (DFIs) have signed loan agreements for the East African Submarine Cable System (EASSy), the landmark fibre-optic cable project that will connect 22 coastal and land-locked African countries to each other and the rest of the world with high-quality Internet and international communications services.

EASSy is an initiative sponsored by 25 telecommunications operators, most of which are African. The project will construct and operate a submarine fibre-optic cable along the east coast of Africa that will run for 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 including Botswana, Burundi, the Central African Republic, the Democratic Republic of Congo, Chad, Ethiopia, Lesotho, Malawi, Rwanda, Swaziland, Uganda, Zambia, and Zimbabwe. The EASSy project will also provide the last link to completely encircle Africa with high-capacity fiber-optic telecommunications networks.

The AfDB’s financing will be channeled through the EASSy Special Purpose Vehicle (SPV) that is also known as the West Indian Ocean Cable Company, or WIOCC, and consists of a $14.5 million senior loan. 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 December 2007 and the EASSy cable is expected to be fully operational in time for the 2010 FIFA Football World Cup to be hosted by South Africa.

The AfDB, the French development Agency (AFD), the European Investment Bank (EIB), Germany’s Development Bank (KfW) and the International Finance Corporation (IFC) of the World Bank group will provide the project’s entire long-term loan financing of $70.7 million, with $14.5 million to come from the AfDB. The total project cost is $235 million and the balance will be provided by the 25 private telecommunications operators wgho will operate the cable as a consortium. These Telecom operators, including 21 African operators, will be the main users of capacity on the cable.

Contrary to previous cables in the African continent that were built on the “closed-club” structure, EASSy is built on a Hybrid SPV Development model. This model will allow smaller operators to participate in the cable consortium at reduced individual entry investments. EASSy also adheres to the main development objectives of “Open Access", Non-discriminatory and Affordable pricing. The cable will act as a crucial medium of internet connectivity to carry telecom traffic for all African operators from the Eastern and Southern African markets to onward connecting Cable networks in Europe, Asia and the Americas.

After years of collaboration between the African Development Bank, World Bank Group and other global and regional development institutions, governments, and the region’s private sector, the project brings together the public and private sectors to expand Telecommunications Infrastructure. EASSy provides a model for future generations of Public-Private Partnerships (PPP) that will be necessary to create the enabling environment for private sector participation in Africa.

The EASSy project will also foster regional integration in line with NEPAD and the AfDB’s strategic objectives. The EASSy project will contribute to the socio-economic development of the region through the expansion of inter-Africa trade, facilitated by lower costs and better communication. The expected increase in employment and income for the regions will help to reduce poverty and lead to sustainable development. Additionally, the EASSy project will help in breaking the barriers of social and geographical isolation and assist the population in its quest to access information and continued education.

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