EAST AFRICA’S INFRASTRUCTURE: A REGIONAL PERSPECTIVE To attain full intraregional connectivity based on information from 2007, EAC member countries will have to add around 3,500 kilometers of new fiber optic links. Achieving the minimum levels of regional connectivity will require investments in several countries. The levels of investment required in each case are very modest in absolute terms (table 4.7).

In addition to the interregional connectivity within East Africa, the cost of completing the submarine infrastructure is estimated at $260 million, all of which will be undertaken by the private sector (table 4.8).

The benefits of completing regional integration of ICT networks would be substantial relative to the modest costs. Experience from other African countries suggests that connecting a country to a submarine cable via a competitive arrangement for landing stations can bring down the costs of broadband Internet by as much as 75 percent. Not only would this bring substantial savings to existing users of broadband, but the substantial price reduction could be expected to induce additional uptake of

**Table 4.7 . Gaps in intraregional connectivity and total investment required to attain minimum levels of regional connectivity**

|Gap (km)<br>Investment (US$ millions)|
|---|
|EAC +<br>3,565<br>96|
|EAC<br>2,487<br>66|
|Burundi<br>90<br>**2**|
|Kenya<br>894<br>24|
|Rwanda<br>198<br>5|
|Tanzania<br>1,220<br>33|
|Uganda<br>85<br>2|
|Ethiopia<br>408<br>11|
|Sudan<br>670<br>18|
|EAC+ = EAC ( Burundi, Kenya, Rwanda, Tanzania,<br>and Uganda) + Ethiopia and Sudan.|

broadband service. Based on regional experience, each 10 percent reduction in broadband prices could be expected to bring about a significant increase in broadband penetration.

On this basis, the overall benefits of completing the regional integration agenda can be estimated to be $53 million per year for East Africa, against a one-time cost of $96 million to complete the backbone connectivity. This works out to a 57 percent annual rate of return. In EAC, the benefits are $26 million per year for a onetime investment of $64 million, equivalent to a 40 percent annual rate of return (table 4.9). The bulk of the benefits derive from the addition of new broadband users since

**Table 4.8 . Intercontinental and intraregional spending needs for East Africa for 10 years**

||Intercontinen<br>Projects|tal connectivity<br>Required annual<br>investment (US$ millions)|
|---|---|---|
|East Africa|EASSy, TEAMS|260|
|Southern Africa|Infraco, SRII|510|
|Central Africa|Infinity, GLO-1,|1010|
|West Africa|WAFS||
|Total, Sub-Saharan Africa||1780|
|Source: Mayerand others2009.|||

the revenue lost from existing customers is more than compensated by that gained from new customers. Regional integration is therefore a positive business prospect for broadband service providers.

The rate of return for individual countries ranges from 22 to 304 percent (table 4.9). In Uganda, filling in the missing link of 85 kilomters of cable to complete the required backbone infrastructure will cost only about $2 million. Completing this investment would produce a rate of return of more than 300 percent. In Tanzania, which has the largest regional infrastructure gap (approximately 1,220 km), completing the backbone infrastructure will cost $33 million. This one-time investment would produce an annual rate of return of 22 percent.

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