World Bank offers East African fiber consortium EASSy funding.(ACROSS AFRICA)

World Bank's Pierre Guislain outlined the financing offer the Bank has made to the East African fiber project EASSy. The offer has been under negotiation since November 2004, and this was the first public announcement of the Bank's proposal. The offer is conditional on consortium members accepting Open Access principles, which seems to be gathering momentum with Africa's governments and regulators.

The consortium has a financing shortfall, as a number of its incumbent members are unable to raise the required capital from their own resources. The offer has split the consortium members down the middle. The larger members who have the capital to make their contributions see the offer as "a diversion" that will prevent them from raising the rest of the money quickly. They maintain that the shortfall will be made up by other members like VSNL, the main shareholder in the South African SNO.

However, if this happens, the smaller members with less capital will either have to leave the consortium, or their donor backers will have to accept the terms offered by the consortium. This route contains a number of political dangers for the larger members, possibly placing them in conflict with their governments and regulators. The talk of landing stations as "essential facilities" has already quickened the pulse of some of those involved. The smaller members, particularly the landlocked countries, went to see the project built on a different basis than the club consortium route used to build SAT3.

The Bank's offer forms part of its Africa Action Plan and is a joint IFC/World Bank program to support NEPAD's Africa ICT connectivity initiative. The World Bank's Guislain started by describing to those attending the shortcomings of the "closed club consortium structure." The club consortium route means that members have an exclusive right to capacity and that non-members pay "an excessive premium for access." In each country, it would create a monopoly or duopoly in terms of access. The result would be that the new fiber would have a limited impact on the high prices paid by Africa for international fiber access and thus on the wider development of the continent.

The Open Structure proposed by the Bank would be funded through a mixture of commercial debt (DFIs, commercial banks) and equity (financial investors). Capacity would be accessible to all market players (including those ...