Sierra Leone: The governments of West Africa aim to deepen integration of their economies to improve economic growth in the region. IDA has provided financing for three countries (Liberia, Sierra Leone and São Tomé and Príncipe) under Public Private Partnership (PPP) arrangements, allowing them to connect to the ACE submarine cable project connecting the west coast of Africa to Europe and to the rest of the world. For these countries, this was likely the last opportunity to connect to a submarine cable for years to come—switching from satellite to fiber has the potential to reduce prices dramatically and increase quality for communications services, allowing the three countries to capitalize on the transformative power of information and communications technology (ICT).
Poor access to communications services, in particular to international telecommunications capacity, over-dependence on costly satellite technologies and absence of competitive access to capacity via submarine cables are limiting constraints that are significantly hampering opportunities for growth and development in West and Central Africa. Liberia, Sierra Leone and the Democratic Republic of São Tomé and Príncipe are some of the countries with the highest costs of communications in the world. Until 2011, limited speed packages in Sierra Leone cost US$200 a month, or 56.8 percent of per capita gross domestic product (GDP). In Liberia, users paid two to three times more than the regional average for connectivity. These countries that have been connected to the global network using expensive satellite-based connectivity are now switching to affordable and higher quality submarine optic fiber technology, used by most of the African nations.
The Africa Coast to Europe (ACE) cable, a private sector led consortium, is approximately a 17,000 km submarine cable system that will connect South Africa to Europe, potentially connecting up to 23 countries along the route. The ACE is an over US$700 million investment, with each country contributing approximately US$25 million to secure a landing station in its territory. The ACE is the most attractive and viable option for several countries to secure international connectivity along the coast of West Africa and with the rest of the world–and for some countries, the only viable option to connect for many years to come.
Following requests from the governments of Sierra Leone, Liberia and São Tomé and Príncipe, IDA was able to mobilize resources quickly, in less than four months, to enable these countries to make initial payments to join the ACE project on time. This effort required mobilizing larger than normal project preparation funds (US$5 million for each country) in the three projects (.West Africa Connectivity Program (WARCIP, APL 1, Liberia and Sierra Leone - P116273) and Central African Backbone Program (CAB, APL2, São Tomé and Príncipe - P117652).
IDA resources were used to cover the cost of the membership fee of participating countries using catalytic financing and PPP arrangements to minimize public investments. These countries did not want to miss the ACE opportunity, and clearly expressed their commitment to liberalize their sectors, and leverage and federate their private sector operators as much as possible to participate in the investment and to maintain open access principles to cable capacity so that any other operator in the country would have competitive access to the capacity. The projects focused on fostering an enabling environment in the sector, ensuring liberalization, open and non-discriminatory access to capacity as well as building capacity of regulators to ensure that fair rules of competition apply in the sector.
The project was declared effective in April 2011 and is still in early phase of results. To date the following results have been achieved:
Key positions for project and fiduciary management have been recruited.
Payments to the ACE consortium are on track.
The PPP framework for Liberia has been finalized with Special Purpose Vehicle (SPV) creation and adoption of shareholder agreement.
The ACE cable has already physically landed in all three countries, and is expected to go live during the last quarter of 2012. In 2015, international capacity prices are expected to go down two to five times from current prices in 2012 due to the implementation of the ACE cable. Improving international connectivity through the submarine cable will support cost reduction for international communications, while expanding the use of the Internet through lower prices, with a significant potential development impact.
IDA's approval of US$71.5 million for three projects is expected to leverage private sector resources to provide citizens of the three countries with affordable broadband services and put them on par with other nations. The submarine cable will lower prices for enterprises and the private sector in general, providing them digital communications tools to become effective players in the Africa region as well as in the global economy. Along with infrastructure, IDA will help the countries to modernize policy and regulatory frameworks and develop public-private participation frameworks to continue leveraging private investment into the telecommunications sector. Further, the São Tomé and Príncipe project will facilitate the launch of a second global telecommunications operator. In Sierra Leone, IDA will support the commercialization of the state-owned operator Sierratel, and the liberalization of the country's international gateway. In Liberia, support will be provided for rules and regulations to support operators to increase the reach of their networks to underserved areas.
The financing vehicle for the ACE submarine cable was structured as a Public Private Partnership in each country to maximize private resources as much as possible. Government financing also helped close the financing gap to make the project happen, as well as guarantee that access to the cable will be open to all operators under fair and non-discriminatory conditions. In Sierra Leone, an additional partnership with the Islamic Development Bank is helping to scale up connectivity at the national level.
Toward the Future
In 2007, the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union finalized a joint regional poverty reduction strategy (R-PRSP) for West Africa, the first of its kind in Sub-Saharan Africa. Recognizing that the region is not on track to achieve the Millennium Development Goals (MDGs), the regional PRSP emphasizes the need for enhanced cooperation among West African countries and deeper regional integration to help them accelerate growth, reduce poverty, and improve performance on the MDGs. The strategy proposes four strategic directions for regional intervention: (i) improve governance, prevent and manage conflicts, and facilitate the free movement of people across the sub-region; (ii) integrate markets to increase competitiveness and economic growth; (iii) develop and interconnect infrastructures; and (iv) build up human resources. The integration and opening up of the regional market should lead to improved competitiveness for the service sectors but also for the productive agricultural and industrial sectors, which would benefit through greater access to more efficient and less expensive basic services (transport, telecommunications, banking and insurance). The World Bank Regional Integration Assistance Strategy for Sub-Saharan Africa (RIAS) (2008) and the West Africa Implementation Action Plan (2010) supports these efforts and aims to create a unified economic space. Since IDA facilitated the participation of the three countries in the ACE consortium, other countries have also requested financing. To this end, similar projects are currently under preparation for Gabon (expected in March 2012 under the Central African Backbone (CAB) Program) and for Benin, expected in July 2012 under the West Africa Regional Communications Infrastructure Program (WARCIP). The WARCIP and Central Africa Backbone Projects are examples of projects which IDA is supporting to promote broadband connectivity and availability of affordable bandwidth in Africa. Other noteworthy activities in the connectivity area have been undertaken in Chad, Cameroon and the Central African Republic (CAR) (as part of the CAB), in Burundi (as part of the Regional Communications Infrastructure Program (RCIP) and in Burkina Faso (as part of WARCIP).
The WARCIP will benefit the entire population of West Africa. All over Africa, businesses, governments, teachers, doctors, farmers, and fishermen are using ICT to communicate, share information, improve productivity and service delivery, find better prices, improve access to markets, and increase their bargaining power. Additionally it is expected that the entire West Africa region would benefit by having access to new communications services, sources of information and knowledge, enhanced and diversified employment opportunities, improved delivery of public and private sector services, increased productivity and transparency of government, and more rapid and coordinated response to emergencies. Overall, the region would see a boost to its competitiveness, social inclusion, economic diversification and regional integration efforts.
"Liberia will be an integral part of the global community with faster Internet connectivity," says Angelique Weeks, chairperson of Liberia Telecommunications Authority. "It will provide easy video conferencing, improved access to knowledge bases linking multiple entities for e-governance, e-learning, e-commerce, e-health, and enhance the services of government functionaries." While the technology shift will benefit business and government, it will also make a world of difference to consumers like Steven Nyalay. The high cost of communication is taking a toll on Nyalay's finances. As one of the leaders of a cocoa-farmers' co-operative in Sierra Leone's eastern district of Kailahun, he is constantly linking up with global partners to keep abreast of the latest cocoa prices in the world market. "This information determines our sale price of cocoa beans and the profit or loss we make," says Nyalay. "But I always find it very costly to communicate via the cell phone and Internet." Connection to the ACE submarine cable is good news for people like Nyalay: prices are expected to drop dramatically, making it easier for people to run their businesses and communicate with each other and the rest of the world.
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