Regional Connectivity Program in Sub-Saharan Africa

1. Regional Connectivity Program in Sub-Saharan Africa Cecile Niang GICT Africa Team Thursday, May 5, 2005

2. Performance of ICT has Improved But Challenges Remain • SSA has made spectacular progress in the ICT sector over the last ten years, thanks to Reform: • Mobile penetration increased more 900-fold bt 1993-2003 • Internet use by 16 bt 1998-2002 • SSA still lagging behind the rest of the world: • 5.8% telephone penetration vs. 40.4% world average in 2003 • 93 per 10,000 Internet use penetration vs. 982 world average • Africa has only 0.07% of the world’s international bandwidth Lack of Competition Leads to High Prices for International Calls in Sub-Saharan Africa

3. Lack of direct links at national, regional and international levels result in: over-dependence on satellite communications at a higher cost for end-users and businesses International intra-regional traffic (telephony and Internet) transiting unnecessarily through Europe and the US Incomplete Sector liberalization and Lack of Infrastructure are Key Impediments to Leveraging ICT for Economic and Social Development

4. High Level Support Mobilized to Support Africa’s Regional Connectivity • High priority for NEPAD • NEPAD identified regional information and communications infrastructure (ICI) as critical to accelerated development and growth in the region, dedicated e-Africa commission to drive the agenda • Operators are interested • Emerging regional players but still constrained: MSI-Celtel in 13 countries but still limited by policy/regulatory impediments increasing risk of investment • Operators have rolled-out broadband network economically viable and where impediments could be sidelined: example of SAT3 = alliance of 13 operators in Western Africa • EASSy consortium already established in E&SA

5. Development Partners are Designing Common Approach Common Principles to support Africa’s regional Connectivity Program • Developing Next Generation Backbone Networks • Fostering Public-Private Partnerships (PPP) to finance and operate the infrastructure. • Adopting a pragmatic approach to connectivity: • Adopting transparent and technology neutral licensing regimes at national and regional levels • Ensuring a competitive market place for affordable access • Reinforcing the role of independent regulators and regional regulatory associations • Devising effective mechanisms for prompt settlement of disputes • Information Sharing and Coordination • Transition Issues

6. 2.9% telephone penetration in E&S Africa against 5.8% average SSA Lack of direct links both at national and regional levels As a result, price of broadband/Internet access much higher than prices in US or Europe dial-up Internet monthly access prices range from 1 to 10 times the monthly GNI per capita in 14 out of 19 E&SA countries Average satellite prices between US$5,000-8,000 for 1 Mbit (compared with US$ 200 in the US) 1 2 3 4 16 23 8 7 17 6 5 9 25 10 22 24 21 20 11 19 15 14 18 13 12 Connectivity Gap Even Larger in Eastern & Southern Africa Missing E&SA Backbone

7. Lack of Financing from the Private Sector is Explained by • High costs and risks • General market uncertainties & unpredictable policy and regulatory environment • Absence of interconnection regimes or inability to enforce existing interconnection regimes • Lack of coordination, combined with lack of capacity to develop complex infrastructure projects • Competing projects with no perceived sense of coordination • Many actors (operators, countries and regional organizations) • Lack of support from national governments • Lack of of proper cross-border licensing regimes • Fixed infrastructure and gateways still dominated by incumbent state-owned enterprises • Inadequate competition which depresses demand • Limited current traffic as a result of limited competition

8. Connecting E&S Africa to the Global Economy is Critical • Increasing trade transactions within the sub-region, between the sub-region and the rest of SSA, between the sub-region and the world: A 10% decrease in the bilateral price of phone calls would lead to an 8% increase in bilateral trade • Reducing transaction costs to governments and business • Improving competitiveness of E&S African economies • Attracting more investment to E&S Africa • Reducing isolation of E&S Africa

9. Flagship Regional Communications Infrastructure Program (RCIP) • Joint World Bank Group Program aimed at supporting NEPAD connectivity initiative • Objective: Facilitate open and competitive access regional infrastructure • Coordinated approach needed at national & regional level • At regional level: push for further rationalization, coordination • At national level: push for relevant and necessary sector reform • Linkage & leverage with our national work programs • On-going DP coordination

10. Network Development • Policy & Regulation Viability of African ICI Program Institutional Coordination Financing Consensus Building Capacity Building RCIP is anchored within Broader Regional Connectivity Agenda

11. Proposed World Bank Group Strategy Aims to Accelerate Regional Roll-out • Facilitate the reduction of risks (policy/regulatory) to increase private sector participation • WBG financial support subject to market opening: • Liberalization of international segment • Non-discriminatory access to regional infrastructure to all operators • Identify the funding gap (where the private sector cannot do it alone) • Build capacity through NEPAD and other regional organizations • Where public funding is needed, explore co-financing options including PPPs with other development partners

12. Thank You! Cecile Niang cniang@worldbank.org