Regional Connectivity Program in Sub-Saharan

AfricaCecile Niang

GICT Africa TeamThursday, 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

17%

13%

38%

45%

29%

0

1

2

3

4

5

6

Sub-SaharanAfrica

East Asia &Pacific

South Asia

Latin America& Caribbean*

Europe &Central Asia

Cos

t of 3

Min

Cal

l to

US

(US

$)0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Cost of 3 MinCall to US (US$)(2000)

% countries withfull competition

17%

13%

38%

45%

29%

0

1

2

3

4

5

6

Sub-SaharanAfrica

East Asia &Pacific

South Asia

Latin America& Caribbean*

Europe &Central Asia

Cos

t of 3

Min

Cal

l to

US

(US

$)0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Cost of 3 MinCall to US (US$)(2000)

% countries withfull competition

Lack of Competition Leads to High Prices for International Calls in Sub-Saharan Africa

3

Incomplete Sector liberalization and Lack of Infrastructure are Key Impediments to Leveraging ICT for Economic and Social

Development• 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

Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Cape Verde

Central African Republic

Chad

Comoros

Congo

Congo DRC

Cote d'Ivoire

Equatorial Guinea

Eritrea*

Ethiopia

Gabon

Gambia

Guinea-Bissau*

Kenya

Lesotho

Malawi

Mali

Mozambique

Namibia

Niger

Nigeria

Rwanda

Sao Tome & Principe

Senegal

Sierra Leone Somalia

Sudan

Swaziland

Togo

Zambia

Zimbabwe

No separate regulatory authority

Incumbent operator fully state-owned

Liberia

Monopoly in mobile service provision

Monopoly for international telephony

*: No mobile service offered in 2003

Mauritius

Guinea

Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Cape Verde

Central African Republic

Chad

Comoros

Congo

Congo DRC

Cote d'Ivoire

Equatorial Guinea

Eritrea*

Ethiopia

Gabon

Gambia

Guinea-Bissau*

Kenya

Lesotho

Malawi

Mali

Mozambique

Namibia

Niger

Nigeria

Rwanda

Sao Tome & Principe

Senegal

Sierra Leone Somalia

Sudan

Swaziland

Togo

Zambia

Zimbabwe

No separate regulatory authority

Incumbent operator fully state-owned

Liberia

Monopoly in mobile service provision

Monopoly for international telephony

*: No mobile service offered in 2003

Mauritius

Guinea

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

1. Developing Next Generation Backbone Networks

2. Fostering Public-Private Partnerships (PPP) to finance and operate the infrastructure.

3. Adopting a pragmatic approach to connectivity:

4. Adopting transparent and technology neutral licensing regimes at national and regional levels

5. Ensuring a competitive market place for affordable access6. Reinforcing the role of independent regulators and regional

regulatory associations

7. Devising effective mechanisms for prompt settlement of disputes

8. Information Sharing and Coordination

9. Transition Issues

6

Connectivity Gap Even Larger in Eastern & Southern Africa

– 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)

12

3

4

5 6 7 8

9

10

11

12

13

14

15

16

17

18

19

20

21

24

25

22

23

Missing E&SA

Backbone

7

• 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

Lack of Financing from the Private Sector is Explained by

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

RCIP is anchored within Broader Regional Connectivity Agenda

Financing

Consensus Building

Network Development

Viability of African

ICI Program

Policy & Regulation

Institutional

Coordination

Capacity Building

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

Thank You!

Cecile Niang

cniang@worldbank.org