Case Study: ICT – The East African Submarine System (EASSy)

Background

In 2003 the NEPAD E-Africa Commission presented the proposed East Africa Submarine Cable System Project, deemed essential to providing broadband access to countries along the East African coast. Countries in that region have until now relied mostly on foreign-owned satellites for internet access. The EASSy will fi bre-optic cable will link countries in the region to global and African networks.
The completion of the system will undoubtedly serve as an example of how African and global telecommunications companies can work with regional institutions to develop telecoms infrastructure. It will enable telecommunications operators to access growing markets in voice, mobile and internet communications and reduce their dependence on satellite. Ultimately, low cost of connectivity will mean that
more consumers will have cheaper access to the internet. The high quality broadband offering will allow the region’s industries and business to be more competitive in the global world economy.

Role of involved parties

The underwater cable is owned by the EASSy special purpose vehicle (SPV), as well as any investors in the SPV. The EASSy project will purchase capacity in the cable and will be entitled to sell capacity to other parties. The project has benefi ted from support from the DBSA, AfDB, EIB, AFD, KfW and the World Bank’s IFC; international operators and Government and regulatory authorities.  The EU-Africa Infrastructure Trust Fund and the NEPAD Infrastructure Pproject Preparation Facility (IPPF) made available grant funding to recruit early stage management capacity for the project.

Funding and timelines

The initial feasibility study was completed in 2005 and concluded that the construction of the cable would be financially viable. Environmental and social impact assessments, funded by KfW and AfDB, were also carried out. The African Development Bank, together with several African Governments, has pledged to provide funding. The EASSy project has been plagued by delays as it was originally scheduled to be operational by the end of 2006.  Financial closure was reached in March 2007 and the total project cost is $248 million. The project is expected to become operational in 2010.

Lessons learned

The initial timelines for the project were not maintained, mainly as a result of disagreements between various parties over the funding structure and ownership of the project. Political intervention resulted in disagreement between private investors, interested in make a profit, and government authorities, demanding low cost bandwidth access, resulting in the delays. Disagreements between South African and Kenyan government authorities regarding the cost of access to the fi bre optic cable has been cited
as another contributor to the delay.  The numbers of participants to projects exponentially add to the complexity of running such projects and require a great deal of cooperation and communication to remain on track.

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