With the imminent construction of the East African Submarine Cable System (Eassy), the Development Bank of Southern Africa (DBSA) has "tentatively" set aside $40 million for project participants.
DBSA ICT specialist George Finger says the final amount the bank will provide as investment funding to Eassy participants will depend on how much other investors, such as the African Development Bank and the World Bank, are willing to invest in the project, he says.
"The bank's investment in Eassy can go up or down, depending on how much appetite for risk the other financiers have."
Sammy Kirui, chairman of the Eassy project management committee and MD of Telkom Kenya, says the financial aspect of the Eassy project is expected to be concluded in the coming weeks, when the physical implementation and construction of the cable system will begin.
Finger says the DBSA has been in constant discussion with the Eassy project coordinators, as well as other investors, to finalise the role each party will play in providing funding.
Strategy shift
Meanwhile, the DBSA is developing a new strategy to give ICT investment a more regional flavour, which will see country lending caps increased, Finger says.
He would not provide firm details about the amount the bank plans to invest in ICT in the 2007/8 financial year. However, he explains the DBSA's 70:30 split in investments in favour of SA would change to a greater focus on regional projects.
Finger previously said ICT investment increased from accounting for 8% of the DBSA's investment in the 2005/6 financial year, to 20% in 2006/7. Last year, ending in March, the bank's portfolio of commitments in the ICT sector was over R3.2 billion, half of which is earmarked for spending outside SA, he says.
The investment cap for each of the countries in which the DBSA invests has also transformed in line with the changes in policy and regulatory framework, he says.
"It is very difficult to state what the new caps will be, as this strategic information would provide competitive advantage to our competitors."
He says the DBSA still has a big appetite for risk and continues to invest in countries where other investors may be unwilling to go.
"Sometimes we burn our fingers, and we just have to live with the pain, but we do believe the bank should play a strong role in developing communities."
Competition catalyst
The DBSA also provides investment funding to local operators who wish to expand into the African continent and entities that have been licensed as second national operators in their own countries, says Finger.
He notes there has been a growing demand for investment funding from African telecoms operators as the telecoms environment has become more liberalised and investors see more opportunities.
"The DBSA's ultimate goal is to encourage competition in the sector and assist to lower telecoms costs in Africa."
Related stories:
DBSA ploughs more into ICT
Eassy consortium signs supply contract
$240m Eassy begins final stretch
Share