The construction of a 10,000 kilometre undersea fibre-optic cable is to bring huge improvements to Mozambique’s Internet and telecommunications access.
For the construction of the connection a 70 million US dollar loan has been agreed by the International Finance Corporation (IFC), the African Development Bank (AfDB), the European Investment Bank (EIB), Germany’s development bank (KfW), and the development bank of France (AFD).
Construction of the East African Submarine Cable System will begin in December, and once fully operational will link 21 African countries to Europe. The cable could transform telecommunications for 250 million Africans and substantially reduces costs for consumers and businesses. It is planned to complete the project in time for the 2010 football World Cup in South Africa.
The total cost of the project is expected to be 235 million US dollars, with the majority of the financing coming from the 25 telecommunications operators who will run the cable as a consortium. These operators include telecom providers in the 21 African countries who will benefit from the increase in capacity.
According to IFC Executive Vice President and CEO Lars Thunell, “the project will transform the African telecommunication landscape and have a direct positive impact on business in East Africa.”
The IFC calculates that consumers along the east coast of Africa pay between 200 US dollars and 300 US dollars a month for Internet access – which is considerably higher than in most of the world. It is hoped that the cable will cut costs by two thirds, with the number of subscribers tripling.
Costs should decline further as it has been built into the project that competition will increase as other service providers can have access to the bandwidth.
It is estimated that currently only four percent of Africans have access to the Internet. They suffer from the world’s highest subscription rates and slowest speeds. With the new cable up and running, access could be provided to a quarter of a billion people.
Visiting Mozambique on 22 November, Thunell pointed out that currently the IFC portfolio in Mozambique amounts to 113 million US dollars, invested in eight projects. These include companies in the areas of finance, agro-business, base metals, and oil and gas.
