International investors back broadband infrastructure plan for sub-Saharan Africa

The International Finance Corporation (IFC) together with Google Inc., Convergence Partners and Mitsui & Co., have agreed to invest up to $100 million in CSquared, a partnership focused on deploying “wholesale, carrier-neutral, open-access fibre optic networks across sub-Saharan Africa”.23 May 2017

The IFC, part of the World Bank Group, said the investment will help improve broadband connectivity1 in a region “where the lack of dependable internet access impairs economic growth, competitiveness, and the development of basic services”. Under the terms of the deal, Google will expand its existing operations in Uganda and Ghana, “with the goal of entering several new markets over the next five years”, the IFC said. “The investment is part of IFC’s Digital Infrastructure Initiative (DII), which aims to increase internet access in under-served regions. Improving broadband connectivity through the DII is a priority for the World Bank Group.”

According to the IFC, “better broadband penetration has a direct impact on gross domestic product growth, increases productivity and transparency, and helps bridge the gender gap”. However, the IFC said “fibre optic cable is expensive, with one kilometre costing between $15,000 and $30,000 – and Africa needs at least half a million more kilometres”. The IFC said deploying and operating infrastructure on a shared basis, as outlined in Csquared’s business model, “can help lower installation and consumer costs”.

The IFC said CSquared has built more than 800km of fibre in Kampala and Entebbe, Uganda and more than 840km of fibre in the Ghanaian cities of Accra, Tema, and Kumasi. “More than 25 internet service providers and mobile network operators now use the company’s fibre networks to offer broadband services and 4G data to end users, with over 1,200 tower and commercial building sites connected directly to CSquared’s fibre infrastructure,” the IFC said. Global head of telecom, media and technology investments at IFC Aniko Szigetvari said: “By supporting broadband business models that promote shared infrastructure, DII will reduce entry barriers and deployment costs in the telecommunications sector, increase affordability, and enable the development of digital economies.”

Google vice-president Marian Croak said: “We believe that together under CSquared, we can get more done to roll-out and operate affordable, high-speed, and reliable infrastructure to expand internet access in Africa. Project Link is demonstrating the impact of shared wholesale infrastructure, and we’re excited to see CSquared bring more infrastructure to more service providers and their customers.”

According to the World Bank’s ‘private participation in infrastructure database’2, the telecoms sector in sub-Saharan Africa was the sector with the largest investment share (68%) between 1990 and 2015.

Total telecoms investment in the region over the period amounted to more than $114 billion, with 208 telecoms projects reaching financial close, the database showed.

Research published in November 2015 by market analysts Ovum3 projected that the number of mobile broadband connections in Africa would reach one billion in 2020, up from 147 million at the end of 2014.

Ovum said the growth of mobile broadband in Africa over the next few years “will be driven by factors such as the ongoing rollout of 3G W-CDMA (wideband code division multiple access) and 4G LTE (long term evolution) networks on the continent and the increasing affordability of smartphones and other data devices”.

References

  1. ^ The IFC, part of the World Bank Group, said the investment will help improve broadband connectivity (ifcextapps.ifc.org)
  2. ^ According to the World Bank’s ‘private participation in infrastructure database’ (ppi.worldbank.org)
  3. ^ Research published in November 2015 by market analysts Ovum (www.out-law.com)

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