South Sudan intends to tap a Chinese loan to finance the roll-out of terrestrial fibre-optic cable networks to link the country to submarine cable systems through neighbouring countries. This development bodes well for the ICT sector in South Sudan, which is at risk of underinvestment as a result of many competing demands for limited resources in the newly independent country.
The internet sector in the landlocked South Sudan country is hamstrung by the high cost of international connectivity through satellites. The government reportedly pays around EUR20,000 a month for internet access through VSAT satellites. This is uneconomical for the government and out of reach for most individual users. It is therefore not surprising that the country's internet penetration rate was just 7.6% at the end of 2011, according to BMI estimates.
|Neighbours On The Coast To The Rescue|
|Map Of Eastern Horn Of Africa, 2012|
According to Joseph Stephen Lugga, an official at the Ministry of Telecommunications and Postal Services, the proposed fibre-optic network will comprise three links to submarine cable systems along the east coast of Africa. The first would lead from Juba, the capital of South Sudan, to Mombasa in Kenya. The second will connect Juba to Tanzania through Uganda, while the third will connect Juba to Djibouti through Gambella in Ethiopia.
The projects will be funded by a Chinese government-backed loan, the value of which has not been disclosed. Also not explicitly disclosed is the likely vendor for the project, although we expect Huawei and ZTE to be favourites for the contract considering the Chinese government's inclination to use local suppliers for government-backed overseas projects. This is a welcome development for South Sudan's ICT sector considering the fierce competition for government funds from different sectors of the country's young economy, such as education, health, infrastructure and defence. Meanwhile, the country's budget has been strained by the shutdown of oil production in January 2012 because of a transit fee dispute with Sudan.
The primary aim of the fibre-optic network is to reduce the cost of internet access. Other potential benefits include faster and more reliable services and private sector investments in the retail market in services such as ISPs and internet cafés. Collectively, these developments should boost internet and broadband penetration in South Sudan. However, we are not able to factor this scenario into our current forecast as the effect of the cable networks on the internet sector largely depends on the timely completion of the project.