Kenya’s Quest for Fiber

From Sam Imende, Samasource’s program manager in Nairobi:

Kenyans are eagerly anticipating the construction of two major fiber optic cable lines that will greatly enhance internet services and significantly cut down the costs of telecommunications in the region. The current copper cables and satellite systems in Kenya have put ICT based companies at a major disadvantage in global ICT services. Most of the systems are routed through Europe, which is both costly and highly inefficient. A comparison revealed that in South Africa one megabyte of bandwidth cost $300 (Sh21,000) while in Kenya, the cheapest dedicated one megabyte of bandwidth costs $4,000 (Sh280,000).

To offset this cost disadvantage in the business process outsourcing (BPO) sector the Kenyan government has allocated $9mil (Sh630 mil), administered by the Kenya ICT board, to subsidize companies that qualify for assistance. The subsidy will cover the difference between current costs of bandwidth and costs anticipated under a fibre optic network. This is a strong incentive for companies looking to venture into the BPO sector and already half of the existing BPO firms in Kenya have applied for the subsidy. Tax-payers will bear the burden of this subsidy while constructions of the fibre optic lines are underway.

One of the lines, East African Submarine Cable System (EASSy), was expected to be completed by now, but was held up when Kenya pulled out of the project over a disagreement with South Africa on management. However the Franco-US firm Alcatel- Lucent picked up the EASSy contract in March 2007 to develop the first ever optical subsea cable link that will run all the way from South Africa to Sudan. Alcatel-Lucent also won the $82mil to construct a separate cable between Mombasa, Kenya and Fujairah, United Arab Emirates (UAE). The Kenyan government plans to allocate $50mil to upgrade the telecommunication networks by constructing domestic fiber optic networks in preparation of the two cables. These fiber optic networks are expected to reduce bandwith costs by up to 60%.

Kenya’s post-election crisis has taken its toll on the economy and may have delayed construction of the fiber optic projects. It is however prudent, that as the situation stabilizes, the Kenyan government makes it a priority to facilitate the construction of these two fiber optic networks that will offer widespread benefits to Kenyans through cheaper, faster and more efficient ICT services.

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Filed under Africa, outsourcing, Technology

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