+From: African Network of IT Experts and Professionals (ANITEP) List
+[mailto:[log in to unmask]]On Behalf Of Jeffrey Cochrane
+Sent: Tuesday, October 12, 1999 5:40 AM
+To: [log in to unmask]
+Subject: Re: State of the Continent: ICT
Hi Jeff and all
+Looking for words of wisdom for ICT donors from Africa, we received
+On 6 Oct 99, at 9:19, Henry Watermeyer wrote:
+> Maybe organisations like USAID and the World Bank should consider
+> refusing to find telcom dependent projects until those projects
+> cease to be milked by the local telcos.
+Henry, can you or others be a bit more specific with regard to what
+it means for a project to be "milked" by a local telco? It might also
+be helpful to take the telco's perspective -- might they have national
+interests in mind in taking the actions that some perceive as
We, in SA, pay approx 18 times as much for data communications as is charged
in the USA.
With the privataisation of the telco into TELKOM SA, with shareholdings by
the South West Bell Corporation of the USA and Malaysia Telecom, we now see
the financial statements of TELKOM. These reflect significant profits over
and above the investement being made in expanding and upgrading the network
prior to deregulation in about three years.
What the US donors, including the largest individual shareholder in SBC, are
saying is that it must be possible for the reseasrch & education sector, in
our specific case, to be charged at a more affordable, by which they mean
sustainable, level so that the projects they fund do not end up struggling
while we see large profits for the telco. (They also object to paying Value
Added Tax on the spending associated with their funding but thats another
+As national telco's increasingly change the way business is done
+in Africa, at what point can a donor's assistance be helpful, and
+how should such assistance be channeled?
It seems to me that donors, especially acting in concert, have both an
opportunity and a responsibility to ensure that the projects they fund are
The danger comes from outside shareholders in privatised telcos looking for
good, if not great, returns from their foreign investments. SBC is not an
investor in Telkom SA out of the goodness of its heart. It is looking for
returns on its investment which are higher than it can achieve in the highly
regulated market back home. If a local telco can ensure a monopoly for an
extended period and therefore higher prices for its products & services it
makes a very attractive investment opportunity.
Donors, because of their typically high profile parents, are very often the
only people who have the opportunity and the ability to influence the
conditions that are written into the shareholders agreements. The likes of
the Ford Foundation, AW Mellon Foundation, Open Society Foundation, to name
but a few, pour millions of dollars into aid projects every year and have
huge clout back in the States and in the countries they operate in, which
they need to use early in the privatisation processes.
Doing this will greatly improve the benefits that they are able to bring
through their generousity.
In our case one of the larger donors has spent more that thirty million US
dollars on virtual library projects over the last three years. Thats big
bucks where I come from, but for these projects to work properly, we have to
reduce that 18xUS cost to something more reasonable. The donors are making
that possible through their intervention. I am fortunate enough to be part
of the SA negotiating team which is trying to retofit a solution with the
help of the US Donors but it would have been much better done before the
government sold part of Telkom SA to SBC and Malayasian Telecom.
Hope this gives you some food for thought.
+Jeff @ Nairobi
+Information and Communication Technology Programs
+Tel +254 (2) 862400
+Email [log in to unmask]
+Email [log in to unmask]
+PO Box 30261