The World Bank FOR OFFICIAL USE ONLYdocuments1.worldbank.org/curated/en/868171468032398453/...1...

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Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 62002-GN

EMERGENCY PROJECT PAPER

ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR 21 MILLION

(US$34 MILLION EQUIVALENT)

TO THE

REPUBLIC OF GUINEA

AS PART OF SDR 56.8 MILLION (US$ 92 MILLION EQUIVALENT)

FOR THE SECOND SERIES OF PROJECTS UNDER THE FIRST PHASE OF THE WEST

AFRICA REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM (WARCIP

APL1B)

May 25, 2011

This document has a restricted distribution and may be used by recipients only in the

performance of their official duties. Its contents may not otherwise be disclosed without World

Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 29, 2011)

Currency Unit =

0.616921 DTS = US$1

US$ = SDR 1

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

$

ACE

ADSL

AGETIC

United States dollar, all dollars are US dollars unless

otherwise indicated

Africa Coast to Europe

Assymetric Digital Subscriber Line

Agence Guinéenne des technologies de l'information et de

la communication

APL

ARPT

Adaptable Program Loan

Authority of Regulation of Post and Telecoms

BP Bank Procedures

C&MA Construction and Maintenance Agreement

EASSy

ECOWAS

EEZ

Eastern Africa Submarine Cable System

Economic Community of West African States

Exclusive Economic Zone

EIA

ESIA

Environmental Impact Assessment

Environmental and Social Impact Assessment

ESMF

ESMP

ESSAF

Environmental and Social Management Framework

Environmental and Social Management Plan

Environmental and Social Screening Assessment

Framework

FM

Gbit/s

GDP

GoG

GPRS

GPT

GSM

Financial Management

Gigabit per Second

Gross Domestic Product

Government of Guinea

General Packet Radio Service

General Purpose Technology

Global System for Mobile Communication

GUILAB

ICPC

ICT

Broadband Company for Guinea- La Guinéenne pour la

Large Bande

International Cable Protection Committee

Information and Communication Technology

3

IDA International Development Association

IsDB

IFC

Islamic Development Bank

International Finance Corporation

IFR

IRR

IRU

ISP

Interim Financial Report

Internal Rate of Return

Indefeasible Rights of Use

Internet Service Provider

ITES

ITU

Information Technology Enabled Services

International Telecommunication Union

IXP

Kbit

LDC

MAN

M&E

Mb

MIGA

Mbit/s

MoF

MPTNTI

NPV

Internet Exchange Point

Kilobit

Least Developed Country

Metropolitan Area Network

Monitoring and Evaluation

Megabyte

Multilateral Investment Guarantee Agency

Megabit per second

Ministry of Finance

Ministry of Posts, Telecommunications and New

Information Technologies

Net Present Value

OP Operational Procedures

ORAF

PAD

PDO

PIU

Operational Risk Assessment Framework

Project Appraisal Document

Project Development Objective

Project Implementation Unit

PPA Project Preparation Advance

PPP

RAP

Public Private Partnership

Resettlement Action Plan

RIAS

RPF

Regional Integration Assistance Strategy

Resettlement Policy Framework

R-PRSP

3/WASC

SDR

SOTELGUI

Regional Poverty Reduction Strategy Paper

South Atlantic 3/West Africa Submarine Cable

Special Drawing Rights

Telecommunications Company of Guinea- Société de

Télécommunication de la Guinée

SPV

TA

WARCIP

Special Purpose Vehicle

Technical Assistance

West Africa Regional Communications Infrastructure

Program

WBG

World Bank Group

4

Vice President:

Director of Regional Integration:

Obiageli K. Ezekwesili

Yusupha B. Crookes

Country Director: Ousmane Diagana

Sector Director: Jose Luis Irigoyen

Sector Manager:

Task Team Leaders for WARCIP APL 1B

Philippe Dongier

Boutheina Guermazi and Mavis Ampah

Task Team Leader for WARCIP- Guinea: Boutheina Guermazi

5

Table of Contents

A. Introduction ......................................................................................................................... 10

B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for

Proposed Bank Emergency Project. .......................................................................................... 10

C. Bank Response: The Project .............................................................................................. 14

D. Appraisal of Project Activities ........................................................................................... 18

E. Institutional Arrangements and Financing Plan ............................................................. 22

F. Key Risks and Mitigating Measures ................................................................................. 25

G. Terms and Conditions for Project Financing ................................................................... 26

Annex 1: Detailed Description of Project Components ........................................................... 28

Annex 2: Results Framework and Monitoring ........................................................................ 34

Annex 3: Summary of Estimated Project Costs ....................................................................... 36

Annex 4 Operational Risk Assessment Framework (ORAF) ................................................. 37

Annex 5: Financial Management and Disbursement Arrangements ..................................... 41

Annex 6: Procurement Arrangements ...................................................................................... 45

Annex 7: Implementation and Monitoring Arrangements ..................................................... 54

Annex 8: Project Preparation and Appraisal Team Members ............................................... 57

Annex 9: Environmental and Social Safeguards Framework ................................................ 60

Annex 10: Economic and Financial Analysis ........................................................................... 67

Annex 11: Documents in Project Files ...................................................................................... 71

Annex 12: Statement of Loans and Credits .............................................................................. 72

Annex 13: Country at a Glance ................................................................................................. 74

Annex 14: Maps........................................................................................................................... 75

6

WARCIP-Guinea

PROJECT PAPER

Africa

Basic Information

Director of Regional Integration: Yusupha B.

Crookes

Country Director: Ousmane Diagana

Sector Director: Jose Luis Irigoyen

Sector Manager: Philippe Dongier

Team Leaders for WARCIP APL 1B:


Team Leader for WARCIP Guinea: Boutheina

Guermazi

Project ID: P122402

Expected Effectiveness Date: September 30,

2011

Lending Instrument: Emergency Recovery

Grant

Sectors: Telecommunications (50%); General

Information and Communications sector

(50%)

Themes: Regional integration (40%);

Infrastructure services for private sector

development (40%); Regulation and

competition policy (20%)

Environmental category: B

Expected Closing Date: March 31, 2016

Joint IFC:

Joint Level:

Project Financing Data

[ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other:

Proposed terms:

Financing Plan (US$m)

Source Total Amount (US $m)

Total Project Cost:

Cofinancing:

Borrower:

Total Bank Financing:

IBRD

IDA:

New

Recommitted

34.00

34.00

Client Information

Recipient: Republic of Guinea (represented by the Ministry of Economy and Finances)

Responsible Agency: Ministry of Posts, Telecommunications and New Information

Technologies

Contact Person: Mr.Oye Guilavogui

Telephone No.: 224-60-23-75-00

Email: [email protected]

mailto:[email protected]

7

Estimated disbursements (Bank FY/US$m)

FY 2012 2013 2014 2015 2016

Annual 17.3 4.8 8.5 3.4 0

Cumulative 17.3 22.1 30.6 34.00 34.00

Project Development Objective and Description

Project development objective:

The project development objective of WARCIP-Guinea is to increase the geographical reach of

broadband networks and reduce costs of communications services in the territory of Guinea

Project description:

The project will have 3 components:

(i) Infrastructure component to improve connectivity: international connectivity

through access to ACE submarine cable (main focus – US$24.2 million) and

Regional connectivity (secondary focus – US$ 1 million).

(ii) Technical Assistance component to create enabling environment (US$6.8

million) and

(iii) Implementation support including contingency (US$ 2 million).

Safeguard and Exception to Policies

Safeguard policies triggered:

Environmental Assessment (OP/BP 4.01)

Natural Habitats (OP/BP 4.04)

Forests (OP/BP 4.36)

Pest Management (OP 4.09)

Physical Cultural Resources (OP/BP 4.11)

Indigenous Peoples (OP/BP 4.10)

Involuntary Resettlement (OP/BP 4.12)

Safety of Dams (OP/BP 4.37)

Projects on International Waterways (OP/BP 7.50)

Projects in Disputed Areas (OP/BP 7.60)

[ X ]Yes [ ] No

[ X ]Yes [ ] No

[ ]Yes [ X ] No

[ ]Yes [X ] No

[ X ]Yes [ X ] No

[ ]Yes [ X ] No

[ X]Yes [ ] No

[ ]Yes [ X ] No

[ ]Yes [ X ] No

[ ]Yes [ X ] No

Does the project require any exceptions from Bank policies?

Have these been approved by Bank management?

[ ]Yes [X ] No

[ ]Yes [ ] No

Conditions and Legal Covenants:

Financing

Agreement

Reference

Description of Condition/Covenant Date Due

8

Art 5.01 (a) GUILAB has been fully established and

operational, in form and substance satisfactory to the

Association, in the territory of the Recipient, including

through the appointment of its Director General and the

adoption of its shareholders‟ agreement and its by-

laws.

(b) With Sotelgui‟s acquiescence, the ACE

Consortium has transferred to GUILAB all the rights

and obligations of Sotelgui in the Construction and

Maintenance Agreement and has fully substituted

Sotelgui with GUILAB as the member of the ACE

Consortium.

(c) The Contractual Arrangement, in form and

substance satisfactory to the Association, has been

entered into between the Recipient and GUILAB.

(d) The Recipient shall have established the PIU

under terms of reference and with staff in number and

with qualifications satisfactory to the Association. As

part of such staffing, there shall be in place for the PIU:

(i) the Project coordinator; and (ii) a financial

management specialist and a procurement specialist, all

of them under terms of reference and with

qualifications and experience satisfactory to the

Association.

(e) The Recipient shall have adopted the Project

Implementation Manual in form and substance

satisfactory to the Association.

By effectiveness

Schedule 2

Section 4 (b)

Set up a financial and accounting computerized system

for the Project

By disbursement

of components 1 b,

2 and 3

9

Schedule 2

Section 2 C (4)

Schedule 2

Section 1(D)

Schedule 2

Section 1 (D)

Recruit an external auditor for the PIU on the basis of

terms of reference and with qualifications and

experience satisfactory to the Association.

Guinea shall:

(a) Prepare, consult upon and disclose the ESIA,

ESMP, and/or the RAP, as the case may be, as

approved by the Association;

(b) Ensure that the construction of the landing station

related to component 1.a of the Project does not

commence until and unless: (i) the Association shall

have approved the ESIA, ESMP, and/or the RAP, as

the case may be, and the same documents have been

consulted upon and disclosed as approved by the

Association; and (ii) shall have verified, through its

own staff, outside experts, or existing

environmental/social institutions, that the activities

under component 1.a of the Project meet the

environmental and social requirements of appropriate

national and local authorities and that they are

consistent with the Association‟s applicable

environmental and social assessment and safeguard

policies and comply with the environmental and social

review procedures set forth in the Project

Implementation Manual;

(c) take all measures required on its behalf to carry out,

or to ensure that GUILAB carry out, the ESIA, ESMP,

and/or the RAP, as the case may be, in accordance with

the provisions of the ESSAF; and

(d) ensure that the relevant mitigation and monitoring

provisions of the ESIA, ESMP, and/or RAP, as the

case may be, are appropriately implemented.

4 months after the

Effective Date

Not later than one

hundred twenty

(120) days after

the Effective Date

10

A. Introduction

1. This Project Paper seeks the approval of the Executive Directors to provide a grant

in an amount of SDR 21 million (US$34 million equivalent) to the Republic of Guinea for

its participation in the West Africa Regional Communications Infrastructure Program

(WARCIP- Guinea).

2. Guinea's telecommunications policy was updated in 2004 to create a more

competitive environment. Reforms resulted in an impressive growth in mobile cellular

penetration from 2 % in 2005 to about 35% in 2011, with a coverage area of about 73% of the

population. Despite significant growth in mobile penetration, the sector faces numerous

challenges. Access to Internet services remains very limited and very expensive. Guinea is one of

a handful of countries in the ECOWAS region which is not connected to global broadband fiber

optics infrastructure and relies on expensive satellite for international connectivity. Broadband

services are still very limited and expensive, with cost of bandwidth between US$4,000-5,000

for 1 Mbit (compared with about, US$200 in the US, and approximately US$500 in East Africa)

resulting in high connectivity cost. The proposed project seeks to contribute to lowering the cost

and improving quality of connectivity in Guinea. In order to reach this objective, the project

proposes an integrated approach focusing on (i) the connection of Guinea to global broadband

fiber optics infrastructure through covering the cost of Guinea‟s membership in the Africa Coast

to Europe (ACE) submarine cable, (ii) creating an enabling environment, dealing with

transactional issues related to the ACE cable and institutional strengthening to remove existing

bottlenecks for private sector participation in both national and regional infrastructure

development.

3. The key outcomes of the Project would include: (a) Increase in Volume of

international traffic (11 Kbit/s per person), (b) Improved Access to telephone services (47.5%),

(c) Improved Access to internet services (0.7%) and (d) Reduction in Average monthly price of

wholesale international E1 capacity link from capital city to Europe (US$ 2,000).

4. Partnership arrangements: This project is developed in partnership with the Islamic

Development Bank (IsDB) and other donors interested1 to develop the national backbone in

Guinea. The specific modalities of cooperation and amounts are still under discussion. Financing

by the IsDB is specific to the national connectivity aspect only. International connectivity is fully

covered by this grant and does not depend on the IsDB for financing or other donors, although

the two activities complement each other. Achieving this grant‟s project development objectives,

however, does not depend on the other Donors‟ financing.

B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for

Proposed association-financed Emergency Project.

1 Those include the European Development Bank as well as the Chinese Government.

11

COUNTRY CONTEXT

5. Following a military coup in 2008, Guinea returned to civilian rule through the

election and inauguration of President Alpha Condé in December 2010. Guinea gained

independence from France in 1958. From this period until the early 1990s Guinea was governed

by one-party and military governments. Following a military coup in 2008, Guinea returned to

civilian rule through the election and inauguration of President Alpha Condé in December 2010.

Guinea is endowed with vast natural and geological resources, including over half of the world‟s

bauxite reserves, as well as iron ore, gold, diamonds, uranium and hydropower. Poor

governance, corruption and political instability have led to a low economic growth rate. Between

2005 and 2008 Gross Domestic Product (GDP) growth averaged 3%, and in 2009 a negative

growth rate of -0.3% was recorded. Guinea remains one of the poorest countries in the world

because growth, which comes mainly from extractive industries and agriculture (industry

represented 53% of GDP in 2010), has not been equitable. In 2010, the country ranked 156 out of

169 countries in 2010 in the United Nations Human Development Index.

6. Since 2008, economic growth strongly decelerated, to become negative in per capita

terms. Cumulatively, GDP per capita declined by 4.6 % between 2008 and 2010. While

agriculture continued to grow modestly, the mining sector - historically a major driver of growth

contracted in real terms by 6 % between 2008 and 2010 in spite of rising world commodity

prices. The regulatory business environment worsened with political uncertainty and deteriorated

security situation.

7. New developments in the political landscape following the success of the elections in

2010 are bringing a new hope for the country. The goal of the new Government is to

dramatically improve governance in order to bring the country within a few years onto a rapid

development path. The first phase of this program focuses on addressing institutional and

sectoral dysfunctions to prepare the stage for a subsequent phase of reform and fast growth, and

it is articulated around efforts to improve governance, stabilize the economy, and initiate a

recovery plan to deliver early wins in terms of better services and more jobs.

OPPORTUNITIES AND CHALLENGES IN THE ICT SECTOR

8. Guinea embraced full liberalization since 2004. Guinea's telecommunications policy

was updated in 2004 to create a more competitive environment and the Government has pledged

to put an appropriate legal framework and relevant regulations in place and to reform

SOTELGUI-Guinea‟s incumbent national telecommunications company. These actions are

needed to enable continued liberalisation of the sector, to ensure non-discriminatory access to

services by all operators and to promote universal access.

9. Results of reforms translated in high growth of mobile penetration. With six

competing mobile networks, Guinea's mobile voice sector has shown rapid growth rates for three

consecutive years, boosted by the entry of two well-resourced international operators, MTN and

Orange, which have invested in new infrastructure. As a result, in January 2011, mobile

penetration stands at about 35%, with a coverage area of about 73% of the population. However,

as in most other African countries, mobile penetration is much higher in the capital city. This is

not only related to the lower rural income levels but also due to the lack of a national

12

transmission backbone which would reduce the cost of calls, and the absence of a full fledged

universal access strategy.

10. Fixed line penetration remains very limited despite early privatization of

SOTELGUI. There are very few fixed lines in the country (only 1.1 per hundred inhabitants).

The fixed line sector has evolved under a joint venture with Telekom Malaysia in which it

initially retained 60% of shares in SOTELGUI. Since 2005, Telekom Malaysia withdrew from

SOTELGUI. A second attempt to re-privatize SOTELGUI was launched again in 2009 but was

put on hold due to the deterioration of the political situation. Despite the uncertainties,

SOTELGUI has been very active multiplying its investments in its mobile operation and looking

to introduce Asymmetric Digital Subscriber Line (ADSL) and Code Division Multiple Access

(CDMA) technologies to modernize its network and respond to the pressures of competition.

SOTELGUI has a fiber optic Metropolitan Area Network (MAN) in Conakry where it leases

dark fiber to other customers such as the mobile operators.

11. Internet is still a luxury in Guinea. There are relatively few Internet subscribers in

Guinea (about 33,000 were estimated in 2010), which reflects a penetration rate that is amongst

the lowest in the region. However Internet usage reached almost 33% through shared access

(especially cybercafés and in the workplace). Although computers are still expensive compared

to income levels, as are monthly Internet subscriptions, the network and quality of cybercafés

allow Guineans to obtain Internet access at prices that are in line with the sub-region. ADSL and

dialup were the technologies used by most Internet subscribers, until the introduction of General

Packet Radio Service (GPRS) and Enhanced Data Rates for GSM Evolution (EDGE) services by

the private mobile operators in 2008/2009, allowing them to gain more than 60% of the market.

Some large companies use their own Very Small Aperture Terminal (VSAT) links.

12. The sector suffers from the lack of adequate international connectivity. Guinea is

one of a handful of countries in the ECOWAS region which is not connected to global broadband

fiber optics infrastructure and relies on expensive satellite for international connectivity.

Broadband services are still very limited and expensive, with cost of bandwidth between

US$4,000-5,000 for 1 Mbit (compared with about, US$200 in the US, and approximately

US$500 in East Africa) resulting in high connectivity costs in general and high prices for

international calls.

13. The sector suffers from a high level of fraud for international communications and

an inadequate response to combat the grey market. In an attempt to respond to fraud in

international communications, the regulatory authority introduced a new system of control using

specific equipment installed and operated, by an intermediary operator, on the national operator‟s

premises so as to monitor international traffic. A new tax on international incoming traffic was

also introduced by Joint Decree A/2009/1135/MCNTI/MEF/SGG of May 29, 2009. Results of

these measures have been detrimental for the sector as it has increased further by-pass or grey

market termination of international traffic. Those measures created an economic space, allowing

for arbitrage between official high price and lower actual costs. In addition, it created further

strain on the operators as they have seen a significant decrease in the volume of incoming traffic

and foreign currency receipts (a decrease of 15% in traffic is reported). Longer term effects

impact operator‟s profitability and by consequence the level of taxation from the sector.

13

14. Several regulatory constraints prevent the sector from playing its role in the

economic and social development of Guinea. The new regulatory authority, Authority of

Regulation of Post and Telecoms (ARPT), was created in 2008 to regulate the communications

sector and ensure fair competition. The Authority is still in its early development phase with

significant needs for capacity strengthening to play its role of ensuring fair competition in the

market. ARPT is still not fully operational, functioning without an established Board. ARPT

needs to build capacity in a number of areas including regulating broadband services,

interconnection and spectrum reforms. Overall private sector confidence in the governance of

the sector is quite limited given a complex and volatile environment and concerns about

unilateral decisions affecting license terms and conditions. ARPT needs to restore investor

confidence in the regulatory function through more consultation with the operators before new

rules are adopted.

15. Guinea is making credible attempts at improving the policy and regulatory

environment. The Government of Guinea (GoG) is committed to deepening sector reforms. A

new communications law reflecting ECOWAS guidelines has been developed and awaiting final

approvals. Policy direction of the sector embraces full competition in all segments of the market.

The GoG is also committed to increase investor confidence in the sector.

RATIONALE FOR THIS EMERGENCY PROJECT

16. Without urgent support from the World Bank, Guinea will likely lose the

opportunity to be connected to international communications infrastructure made

available through the ACE submarine cable. In all likelihood, beyond a domestic connection

to the ACE cable, there are no other opportunities for Guinea to connect to another submarine

cable for many years to come. SOTELGUI, a 100% Government owned fixed line operator

signed the ACE Construction and Maintenance Agreement (C&MA) on June 5, 2010 but was not

in a position to meet its payment obligations to ACE. To date, payment by SOTELGUI to ACE

is around US$ 4.3 million. The other parties to the C&MA have by April 2011 paid about US$

11.5 million each, as required under the C&MA. ACE has given SOTELGUI a limited

opportunity to keep its membership status in ACE. SOTELGUI managed to secure third party

financing of US$3. 5 million by March 17, 2011 to secure a branching Unit. The Management

Committee of ACE gave SOTELGUI an additional grace period until May 30, 2011 to pay an

additional US$3.5 million. Guinea has a very tight schedule to catch up with the rest of ACE

Consortium members in terms of the payment schedule. A new payment schedule has been

discussed with ACE to take into account the effectiveness of the project.

17. Earlier World Bank support could not be extended to Guinea due to the arrears

situation. Given the recent macroeconomic situation in the country, the GoG has not been in a

position to provide financial support to SOTELGUI to make the payments for connection to the

ACE cable. Earlier requests for World Bank support could not be acted upon because of

suspension of relationship with the de facto Government, and subsequently due to the suspension

related to payment arrears with the Bank. This project will allow Guinea to make the required

payments to ACE and normalize its position vis-a-vis the cable consortium. If Guinea were to

miss the opportunity of the international connectivity through ACE, Guinea‟s information and

communications technology (ICT) sector would remain under-developed and the price of

14

communications would remain high, thereby limiting opportunities for growth, job creation and

development, and Guinea‟s ability to trade competitively with the rest of the world.

18. Project is eligible for Processing under OP/BP 8.00: The emergency situation was

reported to management on March 9, 2011, in line with the provisions OP/BP 8.00. In line with

the provisions of paragraph 2 of OP 8.00, the proposed assistance from the Association will

consist of an emergency grant that will allow the Association to provide a rapid response to

Guinea‟s request for urgent assistance to maintain its participation in the ACE cable.

19. Significant gains are expected from the connectivity to ACE. The ACE submarine

cable system has the potential to substantially address the urgent need for high capacity access to

the international backbone at substantially lower cost than currently available in Guinea via

satellite. Participation of Guinea in the ACE cable is expected to reduce broadband prices by as

much as 75% by 2015. Preliminary assessment indicates that significant savings are expected to

be accrued. Estimated conservative annual savings would be over US$5 million. The operation

is also expected to result in increased penetration of mobile telephony from 35 % today to 50%

by 2017, and will likely lead to the take off of Internet penetration from nearly 0% to at least 3%

by 2017. Wider benefits are likely to be significant as better and cheaper access to broadband

lead to improved competitiveness of small and medium size enterprises, facilitate access to new

trade opportunities, help to diversify economies and create jobs.

C. Bank Response: The Project

20. Guinea is included in the WARCIP Program: In order to respond to the GoG request

to improve international connectivity and support immediate reforms in the sector, Guinea is

included in the second round of countries under the first phase of the West Africa Regional

Communications Infrastructure Program (WARCIP APL 1B). WARCIP Guinea is fully in line

with the WARCIP program in terms of objectives, components and results framework. The

Program was approved by the Board on January 2011 and included Guinea as a candidate for

inclusion of APL 1-B. Guinea met the readiness triggers to join The WARCIP Program.

These triggers include (i) government commitment to liberalization and open access principles,

(ii) existence of PPP framework (or willingness to formulate one as part of preparatory

activities), and (iii) government commitment to increased sector competition as evidenced by

pro-competitive policy and regulatory frameworks. The decision of including Guinea in second

series of projects under the first phase of the Program is based on detailed analysis of country

readiness and commitment to additional sector reforms. This inclusion is also prompted by the

urgent request by Guinea to meet tight deadlines for participation in the ACE cable.

Project Development Objectives (PDO) and PDO Indicators

21. The project development objective of WARCIP-Guinea is to increase the

geographical reach of broadband networks and reduce costs of communications services in

the territory of Guinea2.

2 All the other countries that are covered by the various APL phases of WARCIP have the same PDO.

15

22. The PDO-level results indicators are below.

Table 1: PDO level results indicators

Outcome Indicators At closing of the project

Volume of international traffic (Kbit/s per person)

Access to telephone services (%)

Access to internet services (%)

Average monthly price of wholesale international E1 capacity link from capital

city to Europe

Number of direct project beneficiaries, of which female

11 kbit/s per person

47.5 %

0.7%

U$2,000

5.6 million (51%)

Summary of Project Components

23. The project will have 3 components (i) Infrastructure component to improve connectivity,

(ii) Technical Assistance component to create enabling environment, and (iii) Implementation

support.

Component 1 – Supporting Connectivity (US$25.20 million)

24. The main focus of the project is to connect Guinea to ACE. Improving international

connectivity through funding access to ACE submarine cable is the main focus of WARCIP-

Guinea. Other connectivity priorities are treated as a secondary focus.

a) International connectivity: US$24.2 million

25. International connectivity will be improved through financing Guinea’s consortium

fee to the ACE submarine cable. The bulk of this component (US$24.2 million) will be used to

finance Guinea‟s participation in ACE. The ACE project is proceeding quickly, with substantial

payment requirements of its members. Guinea has already made two payments amounting to

US$4.3 million since June 2010 through the state operator SOTELGUI. The project will help

Guinea finance the balance due to ACE for a total of US$24.3 million. Given the schedule of

payments, World Bank support of US$3.5 million will be made under retroactive financing (to

cover the payment already made on March 17 through third party financing), an additional

US$3.5 million through PPA resources (due on May 30, 2011) and the remaining funds will take

the form of direct disbursement to ACE.

26. GoG payments to ACE will be made on behalf of GUILAB (Guinea Broadband

Company- La Guinéenne pour la Large Bande”) and partly reimbursed by GUILAB’s

private participants before the cable becomes operational. GUILAB was created as a Special

16

Purpose Vehicle (SPV) company to finance and manage the access to ACE capacity and the

landing station in Conakry, as well as potentially other infrastructure investments (e.g. national

backbone network). Discussion with operators revealed high level of interest from the private

sector (both from mobile operators and from Internet Service Providers) to co-finance the

landing station and to be associated with operating and managing the facility and cable capacity.

The Remaining GoG shares will be made available to other parties under a divestment plan.

Original shareholders of GUILAB could also be offered the opportunity to increase their shares

in GUILAB and acquire additional capacity. Orange Guinea is also a signatory to the ACE

Consortium through their parent company Orange. Discussion is ongoing between GUILAB and

Orange Guinea for collocation of equipment at the landing station.

b) Regional connectivity (US$ 1 million)

27. While international fiber optic links could potentially facilitate better and cheaper access

to communications in Guinea, the full benefits of this access cannot be achieved without further

investments in national infrastructure and effective use of ICT for critical services. IDA

resources will therefore be used to fund a (i) national Internet Exchange Point (IXP) and (ii)

development of high speed government virtual network for selected Government institutions in

Conakry.

Component 2- Creating an Enabling Environment for improved connectivity (US$6.80

million)

28. This component will provide Technical Assistance (TA) and the capacity building

necessary to support the successful implementation of Component 1 of the project. Specifically, Component 2 will focus on the transaction design and operating model for

ownership and management of international, regional and national infrastructure using PPP

frameworks consistent with open access principles to create an enabling environment for

improved connectivity.3 The PPP frameworks would focus on principles of open and non-

discriminatory access while maximizing the role of the private sector. This component will also

see the strengthening of the policy and regulatory environment to promote further sector reform

in order to maximize benefits from access to international capacity. Most of the activities under

enabling environment are included as part of the Project Preparation Advance (PPA).

29. Specifically the following activities will be implemented.

(i) Support to optimize the governance, ownership and financing issues related to

the operation of the landing station and provision of networks and services

emanating from the ACE cable. This support will take the form of establishing the

SPV and defining the PPP framework for cable landing

(ii) Legal and regulatory safeguards for open access

(iii) Supporting regulatory reforms and strengthening the capacity of ARPT

3 Open access is broadly defined as an equal opportunity for operators to have unfettered access to given

infrastructure or services under similar terms and conditions

17

(iv) Strategic plan for repositioning SOTELGUI in the market and implementation

support

(v) Support for MPTNTI in key strategic issues on PPP and open access for backbone

financing and management and related regulatory instruments and building

capacity of MPTNTI

(vi) Development of legal, regulatory framework to promote cross-border and national

flows of information and data in broadband networks and provision of

institutional strengthening for creating additional demand through increased usage

of the broadband infrastructure including domain name regulation and capacity

strengthening of AGETIC. (Agence des Technologies de l‟information et des

télécommunications-Agency for ICT)4.

Component 3: Project implementation (US$ 2 million).

30. This component will include support for setting up the Project Implementation Unit

(PIU), support for environmental and social studies, communications and M&E as well as

initial support to GUILAB.

31. The project will have a contingency of US$500,000 for unexpected expenses.

Consistency with Regional and Country Strategies

32. The proposed operation is part of a broader World Bank re-engagement strategy for

Guinea. The operation is included in the Interim Strategy Note as one of the first operations for

re-engagement, following the arrears clearance in April 2011. Given the Bank‟s key focus on the

stabilization of the economy and the resumption of growth, the proposed ICT operation will help

Guinea address key connectivity gaps and respond to the sector needs for reforms. The

Government of Guinea will also take advantage of Bank support to structure the connection to

ACE as a Public Private Partnership on an open access basis and to bring needed reforms to the

sector.

33. The proposed operation is fully in line with the March 21, 2011 Regional Integration

Assistance Strategy (RIAS) Update “ Partnering for Africa’s Regional Integration and the

West Africa Implementation Action Plan (2010). The RIAS seeks to create economies of

scale, facilitate intra-regional trade and exports and connect landlocked countries to regional and

global trade routes by reducing barriers to movement of goods and services between countries

and improve the regional business environment. WARCIP is featured as a flagship project in the

RIAS Update.

34. The proposed operation is fully in line with the March 2011 Africa Strategy

“Africa’s Future and the World Bank’s Support to It. By facilitating cheaper access to

internet and supporting the development of national and regional communications infrastructure,

4 This is the first ICT agency in Guinea. Established in 2011, this agency is tasked with the role of implementing the

ICT policy and supporting ICT applications in Guinea.

18

WARCIP Guinea will create sustainable employment (Pillar 1 Competitiveness & employment )

and will create a critical building block for ICT applications (Foundation Governance & Public

sector capacity). The program also focused on partnerships by leveraging private sector

investment in the ACE submarine cable.

Higher Level Objectives to which the Project Contributes

35. A full connectivity solution will promote cheaper access to communications and

more effective global integration. WARCIP Guinea proposes to contribute to a full

connectivity solution, building on new and existing communications opportunities. The proposed

project is expected to focus on catalytic financing for additional links to international and

national infrastructure (where gaps exist that cannot be addressed by the private sector, and

where there‟s clear evidence of positive externalities). By gaining access to international cables,

Guinea will have better and cheaper access to communications and be able to connect more

effectively with the rest of the world.

36. Intensification of broadband networks will stimulate investment and economic

growth. The contribution of broadband networks to economic growth is much more pronounced

than that of narrowband networks. Additional studies have confirmed that for every 10

percentage-point increase in high-speed internet connections, there is an increase in economic

growth of 1.3 percentage points.5 New businesses in the ICT and IT enable services sectors are

supported by improved access to high-speed internet. The mobile phone platform is highlighted

especially as the single most powerful way to reach and deliver public and private services to

hundreds of millions of people in remote and rural areas across the developing world.

37. WARCIP Guinea will increase access to ICT services, lower costs and improve

service quality. By addressing connectivity bottlenecks, the proposed project will support

Guinea in obtaining better and shared access to ICT services with improved quality and reduced

cost, allowing improved communications and information dissemination, better access to limited

public resources which could in turn facilitate a smoother transition from post-conflict recovery

to long-term development. By providing technical assistance to help the GoG create an enabling

environment for the ICT sector as well as resources to improve connectivity, the proposed

project would leverage the sector as a key driver of growth, competitiveness, and improved

governance. This could assist the GoG in achieving its vision, by using ICT to transform service

delivery in its priority areas of agriculture, energy, transport infrastructure, education, health, and

water/sanitation and helping to achieve its objective of increased growth and improved human

development.

D. Appraisal of Project Activities

Economic and financial analysis

38. A detailed financial analysis was carried out for the international connectivity

subcomponent to be financed under the project. Annex 10 provides a summary of the cost-

benefit analysis and a detailed report is available in the Project files.

5 Word Bank - Information and Communications for Development 2009: Extending Reach and Increasing Impact.

19

39. Connecting to ACE will see Guinea investment breakeven between 2014 and 2015

with a Net Present Value to 2025 of US $24.8 million. The IRR is 22.4% assuming an average

bandwidth sale price of $100/Mbit/s/month, and an IRR of 14.3%, assuming $50/Mbit/s/month.

The latter figure is likely to be more competitive and would stimulate more use, and takes into

account bandwidth pricing trends in other regions such as East Africa. The final breakeven year

will depend on actual capacity uptake and the wholesale price of bandwidth. After 2024 at the

latest, the project would be cash-flow positive and substantial revenues would be made if these

wholesale pricing levels are maintained. Investment data was calculated based on a discount rate

of 15%. On this basis, membership in ACE, if accompanied by robust regulation to ensure

competitive pricing releases demand and stimulates national backbone development, has

potential to provide low cost international access to a broad range of the population in Guinea.

Technical

40. Technical design of the project reflects lessons learned in the ICT sector and

international best practices. For most developing countries, a major obstacle to the uptake of

ICT remains the lack of adequate access to ICT infrastructure. A lack of investment in ICT

infrastructure and access networks, coupled with inefficient provision of services, are the most

important factors undermining the development of networked economies. The main lesson

derived is that success is mainly market driven. Creating a predictable legal and policy

environment is key to improving investor confidence and restoring trust in the ICT sector. The

focus of the proposed project is to create a PPP framework for international connectivity. The

project will establish an enabling institutional and regulatory environment to help attract and

sustain investment in the telecommunications sector.

41. The ACE cable is deemed to be technically qualified and structured according to

best practice in the industry. The team‟s assessment is that the ACE consortium is being

structured in a manner consistent with international good practices in the industry, and is led by

major industry players. Given the experience of key consortium members in designing,

commissioning and operating submarine cables, the implementation risk is minimal. As with all

cables, there is, however, a risk of breaks in the operational system.

Legal and regulatory

42. (a) Transactional Issues. On the transactional side, this can be divided into the “wet”

segment and the domestic (cable landing station (CLS)) segment. The transactional issue on the

wet segment relates to (i) succession of the SPV vehicles from the parties to the existing C&MA,

and (ii) the ability of the GoG to divest their interests in the SPVs that are making the investment

into the ACE consortium, as well as unbundling the equity interest in the consortium from the

capacity allocated to the SPV. The C&MA permits certain transfers of parties‟ rights in certain

circumstances. In other circumstances, transfers would require to be made possible either in a

specific amendment to the C&MA permitting SOTELGUI to transfer its rights to a SPV or by

obtaining the consent of the parties. The ACE C&MA permits a party to transfer its interest

(without the other parties‟ consent) to (i) a subsidiary (>50%), (ii) an entity that controls it

(>50%), or (iii) a sister company (i.e., an entity controlled by the same entity as controls the

original party (>50%)).

20

43. (b) Regulatory Issues. The main issue is ensuring “open access” (fair and transparent

pricing) to the capacity provided by the ACE cable at the domestic level once the capacity comes

on shore. This is primarily a domestic regulatory issue. A review of the agreement indicates

transparent access to known capacity at known prices. A review of the regulatory sector,

including licensing conditions, will be conducted at the national level. As indicated above, the

PPA was designed to include technical assistance to support these activities.

Social and environmental

44. Connection to the ACE cable is not expected to have significant environmental

impact. The proposed project is rated as a Category B project. The cable system is likely to have

a submerged or „wet plant‟ part, and a „dry plant‟ part which interfaces at proposed Landing

Stations. The Landing Station is the location where a submarine or other underwater cable makes

landfall. The landing (or termination) station can also be the point at which the submarine cable

connects into the land-based infrastructure or network. Sections of the cable (particularly both

wet and dry plants of each country‟s lateral connection to the main cable) lie within the territorial

waters of the landing parties while remaining sections lie in international waters, normally in

deep seas. The lateral connecting cable to Conakry is connecting to the main cable well beyond

the 2500 m isobath. Deep ocean fiber optic cables are no larger than 17-21 mm diameter – about

the size of a domestic garden hose- and are laid mainly upon the surface of the ocean floor.

45. Little evidence of environmental issues in deep ocean: Since much of the deep ocean

lies beyond national jurisdictions, few environmental impact assessments (EIAs) for any marine

activities have been undertaken in this zone and thus there is little evidence of any environmental

issues, except in cases of oil and gas exploration and very deep sea trawling. No specific

environmental studies are undertaken for submarine cables; however, prior to laying cables, a

detailed Cable Route Survey is done to ensure that the cable is not located in high risk locations

or geological features (e.g., thermal vents) that often harbour unique faunal assemblages at

abyssal depths. Most of the larger companies operating in the submarine cable industry typically

work to standards and quality management systems set by the International Organization for

Standards under the ISO 9000 and ISO 9001 schemes. Furthermore, the International Cable

Protection Committee (ICPC) publishes recommendations on key issues such as cable routing,

cable protection and cable recovery that are available to anyone on request. This very stringent

standard puts pressure on cable companies to adhere to strict environmental standards. The

general experience is that the section of the cable that lies in the deep sea has minimal impact on

marine mammals and fish. The extensive studies that are undertaken by the cable suppliers prior

to final cable laying tend to work as effective safeguards against any possible environmental

disruption, since in large part they are intended to identify routes for the cable that will avoid

seamounts, volcanoes, canyons, vents, seeps, deepwater reefs, dissected terrain – all areas that

tend to be associated with higher biological value than the general abyssal plain.

46. The cable is not expected to have any perceptible effect on the quality of the coastal

waters of the Atlantic Ocean or on marine species or habitat: As the cable gets closer to the

shores in water depths shallower than 1,500m, the cable‟s diameter may increase to about 40-50

mm due to the need to add protective wire armoring. The small environmental disturbances

caused by laying connecting cable from the shore in Guinea to a deep sea submarine fiber optic

cable are not expected to have any perceptible effect on the quality of the coastal waters of the

21

Atlantic Ocean or on marine species or habitat. For the cable and associated equipment onshore,

there may be some temporary, low to moderate environmental and social impacts including

localized impacts to near shore marine life and local fishermen access.

47. Given the emergency nature of the project an ESSAF has been developed and will

be followed by an ESIA, ESMP and/or RAP not later than one hundred twenty (120) days

after effectiveness of the Financing Agreement. In accordance with OP/BP. 8.00 an

Environmental and Social Screening and Assessment Framework (ESSAF) for the proposed

operation has been conducted. A preliminary safeguard assessment has been undertaken which

concludes that the environmental and social impacts are minimal. The site selected for cable

landing or Terminal Station is approximately 700 meters from the Beach Man hole (BMH) at the

beach. The land currently has no permanent structures. The landing station is expected to take

about 45m x 25m land space with approximately half of this space for equipment and the balance

for maintenance, training, and office spaces.

48. Preliminary assessment shows minimal social impact, if any. The project will not

cause any permanent or temporary structure to be demolished. It will only create temporary

inconveniences during the construction phase and limited economic disadvantages to business

concerns. There is no land acquisition issue as the site for the Landing Station is vacant state

property which has been allocated to the project for the purpose.

49. The ESSAF provides guidance on the approach to be taken during implementation

of the operation and the planning of mitigation measures, including consultation and

disclosure requirements, to ensure due diligence and facilitate consistent treatment of

environmental and social issues. Specific actions will include: a) incorporating environmental

considerations into its planning, management and operational activities; (b) having an

Environmental and Safety Coordinator/consultant to be directly responsible for environmental

and safety issues during construction and operation; (c) allocating and maintain resources for the

effective implementation of the ESIA/ ESMP; and, d) including relevant safeguard mitigation

measures in the tender documents for the connectivity components. OP/BP 7.50-on “Projects on

International Waterways” does not apply.

50. While the main cables are to be placed in non-territorial, deep sea locations, OP/BP 7.50,

Projects on International Waterways, does not apply. The types of waterways covered under the

policy do not contemplate an “open sea.” For purposes of the policy, international waterways

include semi-enclosed coastal waters, closed seas, national rivers flowing into those waters, and

transboundary groundwater. It should be noted that the definition of international waterways

under the policy is at variance with the definitions under the rules established by the

International Law Association, as well as the United Nations Convention on the Law of the Non-

Navigational Uses of International Waters Watercourses.

51. The proposed project is expected to have positive social benefits. The main social

impacts of the proposed project are the increased possibility of better access to ICT services for

the population and improved GoG service delivery. The project will contribute to (i) enabling

ICT to become a driver for sustainable economic growth; (ii) enabling the GoG to use ICT to

improve services; (iii) improving access and quality of ICT services for the general population,

22

businesses, and the GoG; and (iv)reducing isolation and enhancing economic activities in rural

areas

Lessons learned and reflected in Project design

52. The project builds on general lessons learned in the ICT sector. Key lessons learned

and applied to the project design are: (1) project development objectives should be realistic,

focused and achievable in the country, sector and implementing agency context; (b) project

components should support country priorities and have broad ownership among stakeholders; (c)

project design should be flexible to adapt to a rapidly changing environment; (d) implementation

support should be included in Project activities with a focus on retaining staff to ensure

continuity and an accumulation of capacity within the implementing agency; and (e) activities

should aim to yield quick returns, build basic building blocks to support transition from

emergency recovery to medium to long term reconstruction and development, and be sustainable

over the long term.

53. The Project builds also on specific lessons learned in preparation of phase of

WARCIP APL 1A. Specific lessons from WARCIP APL 1A include payment mechanisms for

membership fees for the ACE submarine cable, safeguard issues related to landing stations,

formulation of tailored public private partnership (PPP) arrangements and open access principles.

E. Institutional Arrangements and Financing Plan

54. A PIU will be established within the MPTNTI and will be responsible for the overall

coordination, implementation, and supervision of the project. The PIU will be headed by a

Project Coordinator who will report to the Minister. The PIU will be assisted by a core project

team composed of a Procurement, a Financial Management Specialist, an accountant and support

staff. The PIU will also have a consultant on a part time basis dealing with M&E and

environment specialist to support with the elaboration and implementation of safeguard plans.

The PIU will be in charge of (i) day-to-day activities under the project, in particular,

procurement and monitoring activities; (ii) coordination with the other entities responsible for

project implementation; (iii) preparation of annual work programs, budgets, and procurement

plans under the project; (iv) dissemination of external audit reports; and (v) implementation of

their recommendations.

55. The PIU will implement the project with support of a focal points forum. The PIU

will be assisted by a project team called focal points forum, composed of one representative from

MPTNTI, MoF, ARPT, SOTELGUI and the Private sector. The focal points are not consultants

hired under the project. They are professionals from their respective entities. The project does

not take into account their remuneration.

Project costs and financing plan

56. This Project will be financed by an IDA Grant. The lending instrument is an

Adaptable Program Loan (APL). WARCIP -Guinea is part of WARCIP (WARCIP APL 1B) the

second series of projects under the first phase of APL 1-B of the regional WARCIP program.

The objectives of WARCIP-Guinea are fully in line with the objectives of the WARCIP

program.

23

57. The costs of this Project by component, including refinancing of the PPF advance, are

below.

Table 3: Component costs.

Activities

Estimated cost (in US$

million) Component 1 – Supporting Connectivity 25.2

Component 2- Creating an Enabling Environment for improved connectivity 6.8

Component 3: Project implementation and contingency 2.0

Total 34

Results Monitoring and Evaluation

58. The PIU will monitor and evaluate the project. The Project Implementation Unit (PIU)

will bear the primary responsibility for project Monitoring and Evaluation (M&E) of both project

progress and project outcomes, and, as such, will establish standard formats and guidelines for

data collection and reporting, and will organize training sessions for project stakeholders in their

use. The PIU will submit to MPTNTI the M&E quarterly report that will include the updated

Results Framework and the Action Table, listing the corrective actions to be implemented with

deadlines and persons responsible clearly identified. The report will be sent to the Bank for

information.

59. The views of direct beneficiaries will be brought into the monitoring and evaluation

process. Comprehensive M&E reporting will be needed to monitor the results and performance

of the proposed project. It will involve mainly the direct beneficiaries of project activities, but

will be extended to other beneficiaries such as telecommunications operators and private ICT

firms, which ultimately are the main beneficiaries of the proposed project‟s outcomes. The PIU

will review and validate the reports on performance indicators and recommend corrective actions

if necessary. There will be focal points who will be responsible for providing relevant

information and monitoring progress, using relevant performance indicators.

Financial Management Arrangements

60. In line with the guidelines stated in the Financial Management Practices Manual issued

by the Financial Management Sector Board on March 1, 2010, a financial management

assessment of the Ministry of Post and Telecommunications was conducted. The financial

management risk rating for the PIU is Substantial (Medium – Impact).

61. The project financial management is weakened by: (i) lack of experienced financial

management staff, (ii) inexistence of adequate administrative, accounting and financial

procedures manual and appropriate accounting software, (iii) no previous experience of the staff

and the Ministry of Post and Telecommunication with IDA financed-projects and IDA fiduciary

procedures, (iv)weak internal control environment.

24

62. To mitigate the country and entity risks, (i) a new stand-alone PIU will have the overall

FM responsibility of the project and will work closely with Focal Points in charge of technical

execution of the different Project‟s components. (ii) a Financial Management Specialist with

competence and experience satisfactory to the Bank will be recruited to handle the fiduciary

function. (iii) an administrative, accounting and financial procedures manual covering all

fiduciary aspects of the project will be used, (iv) a new computerized accounting system will be

purchased to process financial data and produce accurate and reliable financial statements, (iv)

an external independent auditor with TORs acceptable for IDA will be recruited to perform, on

annual basis, the audit of the project.

Procurement

63. IDA funding for component 1 (a) on international connectivity does not go towards

a procurable item subject to compliance with World Bank procurement guidelines. This is

because such funding is for membership fees (paid in different instalments) against a set of rights

including use of a certain amount of capacity at preferred rates and a share of ownership of an

indivisible cable infrastructure asset.

64. For other project components (1 b, components 2 and 3), IDA procurement

guidelines will apply and Procurement activities will be carried out by the Project

Implementation Unit (PIU) to be created in the Ministry. This PIU will be staffed by a Project

Coordinator, a Procurement Specialist, a Financial Management Specialist, Monitoring and

Evaluation Specialist. Meanwhile, the fiduciary function for WARCIP Project Preparation

Advance is entrusted to the “Education Pour Tous” project team, attached to the Ministry of

Education. This PIU is currently implementing the PPA on an interim basis until the PIU under

the MPTNTI is established.

65. An assessment of the capacity of the MPTNTI to implement procurement actions

for the project has been carried out on April 14th, 2011. The assessment reviewed the

organizational structure for implementing the project and concluded that the overall project risk

for procurement is substantial. Risks and mitigation measures are detailed in annex 6 related

to procurement.

25

Implementation support

66. Implementation support missions will be conducted at least twice a year. The GoG,

through the PIU, may perform evaluations jointly with the World Bank team and conduct

supervision or implementation support missions at least twice a year. Missions will be based on

the latest quarterly implementation and financial monitoring reports prepared and submitted by

the Ministry.

F. Key Risks and Mitigating Measures

67. The key Project risks and planned mitigations processes are outlined below and are

expanded in the Operational Risk Assessment Framework (ORAF) included in Annex 4. The

table below focuses on project risks only.

Table 4: Main risks and Mitigation measures

Main risks Mitigation measures

Inadequate interest from Private sector to

finance connectivity PPPs

PPA has been approved to support PPP structures that will make it

attractive for private investment. Private sector already signaled

significant interest under transparent conditions. GUILAB is

already created with participation from SOTELGUI, Government,

mobile operators and ISPs for the landing station.

Delays in Government implementation of

divestiture of SPV shares to private

operators

Targeted support will be provided under Technical Assistance

component of the project as well as supporting a financial

engineering approach linking purchase of capacity to share

allocation the process and ensure success.

Potential "veto" by existing private licensees

and government operators over different

aspects of the program.

Detailed due diligence to identify incentives for existing operators

to willingly participate in the proposed infrastructure is part of this

project.

Limited institutional capacity TA program included both the PPA and under the project to

enhance capacity of stakeholders, including capacity support to

SOTELGUI, ARPT, MPTNTI, GUILAB and the PIU

Difficulties changing ACE CMA signatory

and handing over rights and responsibilities of

SOTELGUI to GUILAB

Discussion with ACE ongoing at management level

Risk of delays could result in penalty to

clients for missing ACE payment milestone

Discussion with ACE Consortium on flexibility of installment

payments

Main Risks Mitigation measures

Project commercially not viable due to

insufficient demand for services

Early results of traffic assessment were conducted during project

preparation confirming viability of the project. Additional demand

stimulating approaches will be explored during project

implementation

Risk of national backbone not materializing

for lack of financing from other donors

Government Discussions with Islamic Development Bank are quite

advanced. The European investment Bank is also interested in this

area. Other bilateral donors have expressed interest as well.

68. In IDA‟s assessment, the potentially high benefits of the proposed operation outweigh the

risk of the project and warrant IDA‟s assistance for implementing critical reforms and policy

actions in a coordinated fashion with other donors, while supporting risk mitigation actions to

maximize the sustainability of the reform agenda.

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G. Terms and Conditions for Project Financing

A. The proposed IDA financing would be provided on Standard IDA grant terms. The IDA

grant would finance 100 percent of project expenditures, including taxes. The Government had

secured a Project Preparation Facility (PPF) advance of US$5 million to support Project

preparation activities.

B. Effectiveness conditions/covenants

A. Effectiveness conditions:

(a) GUILAB has been fully established and operational, in form and substance

satisfactory to the Association, in the territory of the Recipient, including through the

appointment of its director general and the adoption of its shareholders‟ agreement and its

by-laws.

(b) With Sotelgui‟s acquiescence, the ACE Consortium has transferred to GUILAB

all the rights and obligations of Sotelgui in the Construction and Maintenance Agreement

and has fully substituted Sotelgui with GUILAB as the member of the ACE Consortium.

(c) The Contractual Arrangement, in form and substance satisfactory to the

Association, has been entered into between the Recipient and GUILAB.

(d) The Recipient shall have established the PIU under terms of reference and with

staff in number and with qualifications satisfactory to the Association. As part of such

staffing, there shall be in place for the PIU: (i) the Project coordinator; and (ii) a financial

management and a procurement specialist, all of them under terms of reference and with

qualifications and experience satisfactory to the Association.

(e) The Recipient shall have adopted the Project Implementation Manual in form and

substance satisfactory to the Association.

B. Disbursement Conditions:

Set up a computerized financial and accounting system: By disbursements for component 1.b, 2

and 3

C. Legal covenants:

1. The Recipient shall:

(a) not later than one hundred twenty (120) days after the Effective Date, prepare,

consult upon and disclose the ESIA, ESMP, and/or the RAP, as the case may be, as

approved by the Association;

(b) ensure that the construction of the landing station related to component 1.1 of the

Project does not commence until and unless: (i) the Association shall have approved the

ESIA, ESMP, and/or the RAP, as the case may be, and the same documents have been

consulted upon and disclosed as approved by the Association pursuant to the provisions

of paragraph (a) of this Section D; and (ii) it shall have verified, through its own staff,

outside experts, or existing environmental/social institutions, that the activities under

27

component 1.a of the Project meet the environmental and social requirements of

appropriate national and local authorities and that they are consistent with the

Association‟s applicable environmental and social assessment and safeguard policies and

comply with the environmental and social review procedures set forth in the Project

Implementation Manual;

(c) take all measures required on its behalf to carry out, or to ensure that GUILAB

carry out, the ESIA, ESMP, and/or the RAP, as the case may be, in accordance with the

provisions of the ESSAF; and

(d) ensure that the relevant mitigation and monitoring provisions of the ESIA, ESMP,

and/or RAP, as the case may be, are appropriately implemented.

2. To facilitate the carrying out of component 1.a of the Project, the Recipient shall take all

action required: (i) to ensure the proceeds of the Grant allocated from time to time to

component 1.1 are transferred to GUILAB in an efficient and timely manner; and (ii) to

have in place a suitable legal framework to ensure the Grant is used for the intended

purposes.

3. The Recipient shall, not later than four (4) months after the Effective Date, recruit an

external auditor for the PIU on the basis of terms of reference and with qualifications and

experience satisfactory to the Association.

28

Annex 1: Detailed Description of Project Components

GUINEA

WARCIP 1B

1. The project will have 3 components (i) Infrastructure component to improve connectivity

(ii) Technical Assistance component to create enabling environment, and (iii)

Implementation support.


2. The main focus of the project is to connect Guinea to ACE. Improving international

connectivity through funding access to ACE submarine cable is the main focus of

WARCIP- Guinea. Other connectivity priorities are treated as a secondary focus.

International connectivity: US$24.2 million

3. For purposes of international connectivity along the coast of West Africa and with the rest

of the world, the most attractive and efficient viable option for Guinea is to connect to the

ACE, which is anticipated to be an approximately 17,000 km submarine cable system from

Europe to potentially South Africa and connecting 23 countries, including a landing station

in Conakry for Guinea. In all likelihood, there are no other opportunities for Guinea to

connect to another submarine cable for many years to come.

4. In total Guinea will pay US $25 million for a 2.8% share of capacity on the submarine

cable. The total estimated cost of the ACE submarine cable is around US$700 million

based on the final basic system configuration with 21 landing points and is to be

operational in mid -2012. On June 5, 2010, SOTELGUI signed the Construction and

Maintenance Agreement (C&MA) of the ACE consortium and committed to paying its

contribution of US$25 million. SOTELGUI was only able to pay US$840,000 initially. An

additional US$3.5 million was made by March 17, 2011 through third party financing. The

current security situation prevented the GoG to make payments due to ACE. Earlier

requests for World Bank support could not be acted upon as the Bank was not in a position

to engage with the de facto Government. The GoG has made a request to the Bank for

support to secure Guinea‟s participation in ACE as neither SOTELGUI nor the GoG is in a

position to cover the entirety of the US$25 million without concessional financing.

Honoring the entirety of the US$25 million will ensure that a cable landing station is

constructed in Conakry and that Guinea thereby gains access to the international capacity

to be made available by ACE‟s planned submarine fiber optic cable.

5. Given default of payment so far, project funding will be made in several installments

agreed with the ACE consortium. A first installment of US$3.5 million will be made under

PPA resources (by May 30, 2011); another installment will be made immediately after

project effectiveness to bring Guinea up to date with its payment obligations. The final

installments will follow the original milestone agreed with the members. The project will

also cover the payment made by the Government on March 17, 2011 under retroactive

financing.

29

6. GoG payment for ACE will be made on behalf of GUILAB and partly reimbursed by

GUILAB‟s private participants before the cable becomes operational. GUILAB is in the

was created as a special purpose vehicle (SPV) to finance and manage the access to ACE

and the landing station in Conakry as well as potentially other infrastructure investments

(national backbone network). Discussion with operators revealed high level of interest

from the private sector (both from mobile operators and from Internet Service Providers) to

co-finance the landing station and to be associated with operating and managing the

facility. The Remaining GoG shares will be made available to other parties under a

divestment plan. Original shareholders of GUILAB could also be offered the opportunity

to increase their shares in GUILAB and acquire additional capacity.

7. Pre-purchase discounted bandwidth for ministries and designated institutions will be

implemented as the need arises. GoG could consider making advance payment for the cost

of obtaining discounted price for Internet capacity (Internet access). In return for obtaining

this advance from GoG, GUILAB would provide subsidized Internet access to specific

ministries and / or institutions to be designated from time to time by GoG. Price paid by

the designated ministries and institutions for this service would be a discounted price,

lower than the normal wholesale or retail price for Internet access, possibly equal to the

actual costs of operation of GUILAB during the period in which the Internet service is

provided.

Regional connectivity (US$1 million)

8. Broadband will be provided to improve priority services. While international fiber links

could potentially facilitate better and cheaper access to communications in Guinea, the full

benefits of this access cannot be achieved without further investments in national

infrastructure and effective use of ICT for critical services. IDA resources will therefore be

used to fund a national Internet Exchange Point (IXP) and establish a virtual network

connecting key ministries in Conakry.

9. IDA resources will be further complemented by funding projected to come from the

Islamic Development Bank and possible the European Development Bank, for additional

national and cross-border infrastructure in Guinea. Funding is expected to be made in

parallel and likely to finance terrestrial broadband backbone fiber networks and broadband

connections within and between Guinea and its neighbors. GoG is still in the process of

finalizing discussions on this funding. It is important to note that the international

connectivity component of the project will be financed fully by WARCIP -Guinea project

and will not depend on availability of funding from the Islamic development Bank or other

donors.

Component 2- Creating an Enabling Environment for improved connectivity (US$6.80

million)

10. This component will provide Technical Assistance (TA) and the capacity building

necessary to support the successful implementation of Component 1 of the project.

Specifically, Component 2 will focus on the transaction design and operating model for

ownership and management of international, regional and national infrastructure using PPP

frameworks consistent with open access principles to create an enabling environment for

30

improved connectivity.6 The PPP frameworks would focus on principles of open and non-

discriminatory access while maximizing the role of the private sector. This component will

also see the strengthening of the policy and regulatory environment to promote further

sector reform in order to maximize benefits from access to international capacity. Most of

the activities under enabling environment are included as part of the Project Preparation

Advance (PPA).


Support to optimize the governance, ownership and financing issues related to the operation of

the landing station and provision of networks and services emanating from the ACE cable

(US$500,000).

Under this activity legal and financial advisory services will be provided to put in place an

optimal structure for the landing station. Those services will include (i) designing and

negotiating instruments and contracts and related stakeholders agreements, (ii) defining the

rights and obligation of different equity stakeholders (GoG, SOTELGUI, private

operators…), and (iii) defining appropriate risk sharing and commensurate financial

rewards between parties.

12. Because of the urgency to secure participation in the ACE submarine cable and lead time

needed to put in place the structure for ownership and management of the landing station,

the proposed approach is to have GoG pre-finance the participation on behalf of GUILAB

and get re-imbursed partly before the project closes and ideally before ACE becomes

operational. The remaining GoG shares in GUILAB will also be divested. This activity will

support the GoG to put in place the divestiture strategy for Government shareholding. In

particular it will define the scope of the exit clauses, valuation of public shares, as well as

timing and transition process for divestiture.

Legal and regulatory safeguards for open access (U$350,000)

13. This activity will finance a detailed assessment of current legal and regulatory actions

needed to ensure open and non discriminatory access to cable landing facility and cable

capacity, including issues related to licensing of GUILAB: International gateway facilities,

fully liberalized international gateway (landing station), Open access regime (national and

international backbone essential facilities), Wholesale price cap control mechanism and

Quality outsourcing of O&M. Detailed development of instruments will be conducted

under the project.

Supporting regulatory reforms and strengthening the capacity of ARPT (US$ 1,500,000)

14. This activity has three sub-components (a) undertake an assessment of the sector regulator

ARPT and (b) support ARPT to develop key regulatory instruments and (c) provide



31

capacity building support to ARPT with the objective to help put in place an effective

regulatory regime ahead of the cable landing.

(a) ARPT Assessment The assessment will cover organizational and functional matters

of ARPT. A sector fiscal study will also be conducted with the objective of defining

financing needs of ARPT and propose a new resource sharing mechanism between

ARPT and Government. This will also include a review of the incoming

international traffic and national interconnection tax and propose way forward

(b) Support on key regulatory priorities: Two priorities have been identified including

Technical Assistance to ARPT to implement effective broadband regulation and

Technical Assistance to ARPT to strengthen interconnection regulation. Support in

the area of broadband regulation aims at creating enabling environment for fair and

effective competition in broadband services. It will include (i) Wholesale access to

international and national capacity for ISPs, (ii) Price squeeze tests to ensure fair

competition between ISPs and operators, (iii) strengthening of frequency

management by ARPT to avoid interferences in the provision of broadband

services, etc. Support in the area of interconnection aims to strengthen

interconnection regulation. It will (i) review interconnection reference agreements

according to international best practice, (ii) implement appropriate cost models to

set cost oriented interconnection rates (possibly with a glide path approach), (iii)

recommend appropriate actions on operational issues raised by operators, etc.

(c) Capacity building: This activity could take several forms including study tours,

twinning arrangements, workshops, international advisors to support ARPT with

discussions with operators, and to support with resolution of disputes about

interpretation of license terms and conditions, etc. A training and capacity building

plan will be developed and implemented during the project

Strategic plan for SOTELGUI and support to implement the strategic plan (US$1,350,000)

15. The arrival of the ACE submarine cable will create a new dynamic in the sector. A

strategic study will help the GoG position SOTELGUI in the new environment and adopt a clear

action plan for the repositioning of SOTELGUI in the sector ahead of the landing of the cable.

SOTELGUI has been privatized in the past but this is widely considered as an unsuccessful

experience as the strategic partner (Telecom Malaysia) pulled out in 2008. Soon after, the

MPTNTI launched a privatization strategy: 3 operators have been selected after the pre-

qualification stage, but the process came to a hold when the political climate deteriorated.

Support for MPTNTI on key policy issues and building capacity at Ministry of Posts,

Telecommunications and New Information Technologies (MPTNTI) (US$ 1,600,000)

16. The project will support the MPTNTI in key activities related to the development of a

strategic framework for backbone financing, development and management to secure open

access and will provide support to (support to the MPTNTI in the area of ICT policy formulation

and implementation complementing support provided by other donors in the sector. The project

32

will also include capacity building support to the ministry through training, study tours and

hiring of advisors.

Support to the Government to create and enabling environment for improved cross-border and

national flows of information and data in broadband networks (US$ 1,500,000)

17. This project will bring much needed high speed bandwidth for Guinea. To ensure adequate

safeguards around its use and promote the cross-border flows of information and data in

broadband networks, the project will support the government to create an enabling legal and

regulatory environment in line with international standards. Key elements needed include e-

contracting and e-commerce, cyber-security (including cyber crime), data privacy protection,

freedom of and access to information, etc. This component will support the GoG to develop a

policy and institutional framework and management for Internet level domain name and

implement a management policy for Internet domain names. It will finally provide capacity

building support to the AGETIC (Agence des Technologies de l‟Information et de la

Communication) recently created to support the development of e-applications in Guinea.

Component 3: Project implementation (US$ 2.0 million).

18. This component will include support for setting up the Project Implementation Unit (PIU),

support for environmental studies, communications and M&E as well as initial support to

GUILAB. The project will also have a contingency for US$ 500,000.

19. A PIU will be established within the MPTNTI and will be responsible for the overall

coordination, implementation, and supervision of the project. The PIU will be headed by a

Project Coordinator who will report the Minister. The PIU will be assisted by a core project team

composed of a Procurement and external Financial Management Specialist and representatives

from the MPTNTI. The PIU will be in charge of (i) day-to-day activities under the project, in

particular, procurement and monitoring activities; (ii) coordination with the other entities

responsible for project implementation; (iii) preparation of annual work programs, budgets, and

procurement plans under the project; (iv) dissemination of internal and external audit reports;

and (v) implementation of their recommendations.

19. Environmental studies This activity includes funding and disclosure of the ESSAF as well as

an Environmental and Social Management Plans (ESMP) and a Resettlement Action Plans

(RAPs) (if project affected persons (PAPs) are two hundred or more) or Abbreviated

Resettlement Action Plans (ARAPs) where the PAPs are less than two hundred will be prepared

in response to the OP 4.12 which has been triggered. These documents will be prepared through

consultations and will be reviewed and cleared by the World Bank. The ESSAF has been

prepared and disclosed. The ESMP and RAP will be prepared during project implementation.

20. Communications and M&E support. The PIU will recruit or designate a person responsible

for M&E, based on the capacity assessment of the PIU staff right after effectiveness. More

specifically, the person responsible for M&E will liaise with all the project‟s stakeholders

(through designated focal points) to gather relevant information and data regularly. Additional

activities would include conducting surveys to ensure a good monitoring and evaluation of the

33

project. The project will also cover the costs related to communications strategy for the project

and implementation of the strategy to reach out to the public and increase awareness of the

project.

34

Annex 2: Results Framework and Monitoring

GUINEA

WARCIP 1B

PDO: To increase the geographical reach of broadband networks and reduce costs of communications services in Guinea

Program/Project DO Level Results

Indicators* Co

re

Unit of

Measure

Baseline

(2010)

Cumulative Target Values**

Frequenc

y

Data

Source/

Methodolo

gy

Responsibili

ty for Data

Collection

YR 1 YR 2 YR3 YR 4 YR5

Indicator One: Volume of international

traffic: International Communications

(Internet, Telecoms, and Data)

bandwidth per person7

kbit/s per

person

5

[Dec

2010]

7 8 9 11 11 Yearly Operators PIU / ARPT

Indicator Two: Access to internet

services (Internet users per 100 people)

Number

per 100

0.3

[Dec.

2010]

0.4 0.5 0.6 0.7 0.7 6 months Operators PIU / ARPT

Indicator Three: Access to telephone

services (fixed mainlines plus cellular

phones per 100 people)

Number

per 100

34.7

[Sept.

2010]

39.9 43.5 45.5 47.5 4.75 6 months Operators PIU / ARPT

Indicator Four: average monthly price

of wholesale international E1 capacity

link from capital city to Europe8

US$/

month/2M

bit/s

US$8,000

[Sep.

2010]

Less than

US$8,000

Less than US$7,000

Less than

US$ 5,000

Less than

US$2,000

Less than

US$2,00

0

Yearly Operators PIU / ARPT

Indicator Five: Direct project

beneficiaries, of which female9

Number,

%

3.7million

51%

[Sept.

2010]

4.3million

51%

4.8million

51%

5.2million

51%

5.6million

51%

5.6millio

n

51%

Yearly Survey10 ARPT

INTERMEDIATE RESULTS

Intermediate Result (Component One):

7 This indicator measures the volume of international traffic

8 This indicator measures the average price of international communications 9 Number of active fixed and mobile subscribers (internet subscribers not counted to avoid double counting. Assumes % female on a pro-rata basis using the current figure in the total population for

YR1 till YR5: 51%

10 The Direct Project Beneficiaries survey will be coordinated by ARPT and will use different stakeholders of the ICT sector to collect information from a representative sample of beneficiaries.

35


Indicators* Co

re

Unit of

Measure

Baseline

(2010) Cumulative Target Values**

Frequenc

y

Data

Source/

Methodolo

gy

Responsibili

ty for Data

Collection

Intermediate Result indicator One:

Volume of available international

capacity: International Communications


bandwidth

In Gbit/s 0.15

[Dec.

2010]

0.15 5.9 5.9 5.9 5.9 Yearly ARPT

ARPT

Intermediate Result indicator Two:

Retail price of internet services (per

Mbit/s per Month, in US$)

US$/month $1,200

[Dec. 2010]

$1,200 $1,000 Less than

$800

Less than

$500 Less

than

$500

6 months Operators ARPT/PIU

Intermediate Result (Component Two):


Impact on Telecom sector of World

Bank technical assistance (composite

score)

1-low

impact to

5 –high

impact

0 1 2 3 3 3 Yearly ARPT PIU

36

Annex 3: Summary of Estimated Project Costs

GUINEA

WARCIP 1B

Activities Total (US$

million)

Component 1 – Supporting Connectivity 25.2

International connectivity (Financing GoG Participation in ACE) 24.200

Regional connectivity 1.000

Component 2- Creating an Enabling Environment for improved connectivity 6.8

Support to optimize the governance, ownership and financing issues related to the

operation of the landing station and provision of networks and services

0.500

Legal and regulatory safeguards for open access 0.350

Supporting regulatory reforms and strengthening the capacity of ARPT

ARPT Assessment

Support on key regulatory priorities

Capacity building

1.500

Strategic plan and implementation support for SOTELGUI repositioning in the

market

1.350

Support for Policy maker for backbone strategy and building capacity at Ministry

of Posts, Telecommunications and New Information Technologies (MPTNTI)

1. 600.

Development of legal/ regulatory framework increased cross border and national

use of ICT services capacity development for AGETIC

1.500

Component 3: Project implementation 1. 5 million

PIU set up and operating expenses 0.750

Communications, M&E and environnemental 0.250

Initial support to GUILAB 0.500

Contingency 0.500

Total (US$ million) 34

37

Annex 4: Operational Risk Assessment Framework (ORAF)

GUINEA

WARCIP 1B

Project Development Objective(s)

To increase the geographical reach of broadband networks and reduce costs of communications services in Guinea

PDO Level Results

Indicators: Volume of international traffic (Kbit/s per person)

Access to telephone services (%)


Average monthly price of wholesale international E1 capacity link from capital city to Europe


38

Risk Category

Risk

Rating

Risk Description Proposed Mitigation Measures

Project Stakeholder Risks

MI Lack of collaboration of stakeholders Divestment process less successful than anticipated Difficulties changing ACE CMA signatory and handing over rights and responsibilities of SOTELGUI to GUILAB

Support under PPA to develop PPP structures that will make it attractive for private investment. Private sector already signaled significant interest under transparent conditions. Detailed due diligence to identify incentives for existing operators to willingly participate in the proposed infrastructure is contemplated under APL 1-B of the project. Initial TA provided for Guinea already outlined a process for the discussion with ACE.

Implementing Agency Risks

MI The proposed arrangements (PPP, use of SPV) and the technical complexity of the project is new to all implementing agencies involved in this operation. Their respective low capacity may affect the implementation at the beginning of the project. The Financial Management staff is not yet in place and there is not a FM manual and an accounting software

Extensive preparation work and due diligence has been carried out by the Task Team and the client to ensure ownership and identification of potential implementation issues. The PPA will finance TA activities aiming at enhancing the implementing agencies’ capacity to mitigate risks of slow start and missing the ACE’s tight disbursement deadlines. A stand alone PIU will be established. FM action plan was agreed and will be implemented during the project including development of FM manual, acquisition of FM software and hiring of an FM specialist and an accountant.

39

Risk Category

Risk

Rating

Risk Description Proposed Mitigation Measures

Project Risks

Design

MI Non conformance with linkage conditionality (cross-effectiveness conditions and cross-suspension remedies) for regional cooperation Risk of delays could result in penalty to clients for missing ACE payment milestone Project commercially not viable due to insufficient demand for services. Design of the project is complex and risky (Public Private Partnership). This Program phase (APL 1-B) also involves Burkina Faso and the Gambia each of which have very different challenges. Some implementation delays/issues in any of these two countries could affect the overall execution of the entire Program.

Program structured so that if the Financing Agreement for any of the other two countries never enters into effect or if disbursements there under are suspended, this would only reduce the scope but not affect the overall implementation of the independent Gambia activities. The CMA provides for installment payments; The Gambia Government has already provided the first 3 and concessional financing will be arranged to cover the balance. Early results of traffic assessment confirm viability. Detailed traffic study will be conducted and Demand stimulating approaches will be explored to address potential risk Support to PPP arrangement from PPA. For all other project components, he project is not relatively complex. The components are dedicated to well-specified structures which will designate a focal point.

Social and Environmental

ML Possible environmental and social impacts including possible impacts on critical habitats and/or physical cultural resources. The institutional responsibilities for preparing the various safeguards instruments would lie with the PIU and GUILAB. Given the need to ensure compliance with safeguards instrument preparation there will be the need for capacity building.

Results of the ESSAF show that the project has limited environmental impact. An ESMP will be developed during implementation. Initial assessment also shows that a RAP or ARAP may not be needed. Finally, since the Program will involve PPP schemes, appropriate technical clauses will be prepared and included in the biddings/binding documents for the Private Entity when necessary, to ensure the execution of agreed environmental and social safeguards measures and implementation of the recommendations in the instruments.

Program and Donor

MI Potential difficulties securing funding for the national backbone .

Islamic Development Bank funding is a parallel financing for

national connectivity. While it has potential to hamper the

realization of the full benefits of international connectivity

nationally if it does not materialize, this failure would have no

effect on the implementation of the international connectivity

component for the project nor on the achievement on the

project‟s PDO.

Delivery Quality ML Key data collections and sharing, particularly from operators, may be difficult as the market is highly competitive.

Training and TA will be made available for monitoring and evaluation. The system will be designed in such a way as not to

affect the operators‟ competitiveness

40

Overall Risk Rating at Preparation Overall Risk Rating During

Implementation Comments

MI

MI

Major issues and risks will be dealt with by effectiveness through targeted activities financed by the PPA. The MI rating for implementation is mainly due to the risky country and institutional contexts, outside the project scope.

41

Annex 5: Financial Management and Disbursement Arrangements

GUINEA

WARCIP 1B

Introduction

1. The objective of the Financial Management Assessment is to determine whether the

implementing unit of WARCIP- Guinea, under the oversight of the Ministry of Post and

Telecommunications, has adequate financial management arrangements in place to take on the

project‟s fiduciary responsibility. These arrangements include accounting system and reporting,

auditing, and internal controls. The financial management arrangements of the implementing unit

are adequate if it : (i) is capable of recording accurately all transactions and activities; (ii)

supports the preparation of regular and reliable financial statements; (iii) safeguards its assets,

and (iv) is subjected to a satisfactory auditing process. The assessment complied with the

Financial Management Manual for World Bank-Financed Investment Operations that became

effective on March 1, 2010. It is worth noting that financial management and disbursement of the

PPA under WARCIP Guinea is being handled by the “Education Pour Tous” PIU. The existent

arrangements for the PPA are adequate and fulfill OP 10.02 requirements.

2. Payments will be made directly by the Project to ACE under direct disbursement. To

avoid missing ACE payment milestones, the setting up of a fully functional financial

computerized system will be a disbursement condition instead of an effectiveness condition.

Otherwise as a financial computerized system is not critical for direct payments (it is expected 3

or 4 directs payments to ACE), disbursements for component 1.a - Financing Participation in

ACE – will not be conditioned. But disbursements under others components 1.b, 2 and 3 will be

conditioned by a fully financial computerized system.

3. Retroactive financing is also included under this project. In order to meet the ACE

payment schedule, the Government of Guinea covered one payment of US$ 3.5 million.

Following project effectiveness, this payment will be reimbursed under retroactive financing.

The Government is negotiating with ACE to defer all other payments until effectiveness. In case

effectiveness is delayed, the Government will cover another payment to ACE. In this case, such

additional payment will also be reimbursed under retroactive financing. The total foreseen

amount of retroactive financing is US$ 7.5 million.

Funds flow and disbursement arrangements

Disbursement methods

3. Disbursements under the Grant would be transaction based. Direct Payment and SOE

(Statement of Expenditures) methods will apply as appropriate. The conversion to report-based

disbursements may be envisaged when the PIU has capacity to produce acceptable IFRs. IDA

will authorize an advance to the designated account of the PIU. Funds will be used for eligible

expenditures. The minimum value of Direct Payment and Special Commitment will be 20 % of

the designated account ceiling.

42

4. The project will submit on a monthly basis a Bank statement and a reconciliation of the

designated account, together with the withdrawal applications. All supporting documentation for

SOEs will be archived at the PIU and made available for periodic review by Bank‟ missions and

external auditors.

Designated Account

5. A designated account will be opened at a reputable commercial bank acceptable to the

Bank, in US Dollars and the allocation will cover approximately four months of expenditures.

The Designated Account will be managed according to the disbursement procedures described in

the Administrative, Accounting and Financial Procedures Manual and Disbursement Letter.

Withdrawal of Proceeds

Table 5.1: withdrawal of proceeds

Category

Amount of the

Grant Allocated

(expressed in US $

Percentage of

Expenditures to be

Financed

(inclusive of Taxes)

(1) Consortium Fee under Part

1.1 of the Project

20,700,000 100%

(2) Goods, works, services

(consultants‟ and non-

consulting), training and

workshops under the Project,

and Operational Costs

7,800,000 100%

(3) Refund of Preparation

Advance No. Q762-GUI

5,000 Amount payable

pursuant to Section

2.07 of the General

Conditions

(4) Unallocated 500,000

TOTAL AMOUNT 34,000,000

Since 2008, in application of the Country Financing Parameters for Guinea, all expenditures will

be financed at 100 percent.

43

Budgeting arrangements

7. The budgeting process will be clearly defined in the FM Procedures Manual and will be

adopted by Ministry of Post and Telecommunication or a designated representative before the

beginning of the year. Each Focal Point and the Project Coordinator will prepare budget relate to

their respective component. The project consolidated budget will be submitted to the IDA‟s

objection.

Accounting policies and procedures

8. Project accounts will be maintained on a cash basis, supported with appropriate records

and procedures to track commitments, expenditures and safeguard assets. Annual financial

statements will be prepared by the PIU in accordance with Accounting Standards in force in

Guinea.

Internal control

9. The FM manual, with a clear description of the approval and authorization processes in

respect of segregation of duties and rules, will be adopted. The Bank will pay attention to the

adequacy of internal control during supervision mission.

Reporting and Monitoring

10. The PIU would prepare an Interim Un-audited Financial Reports (IFRs) on a quarterly

basis and submit them to the Bank within 45 days following the end of the quarter. The IFR will

include i) sources and uses of funds by project expenditures classification, ii) a comparison of

budgeted and actual project expenditures (commitment and disbursement) to date and for the

quarter.

The PIU will produce Annual Financial Statements 11

comprising:

a Statement of Sources and Uses of Funds,

a Statement of Uses of funds by category,

Accounting Policies Adopted and Explanatory Notes,

a Management Assertion that project funds have been expensed for the intended

purposes as specified in the relevant financing agreements

Audit arrangements

External audit

11. The Financing Agreement will require the submission of Audited Financial Statements

for the PIU to IDA within six months after the end of the fiscal year. External auditor with

11

It should be noted that the project financial statements should be all inclusive and cover all sources and uses of funds and not only those provided through IDA funding. It thus reflects all program activities, financing, and expenditures, including funds from other development partners.

44

qualification and experience satisfactory to the World Bank will be appointed to conduct an

annual audit of the project‟s financial statements. A single opinion on the Project‟s Financial

Statements in compliance with International Standards on Auditing (ISA) will be required.

12. The external auditors will also prepare a Management Letter containing observations and

comments, and providing recommendations for improvements in accounting records, systems,

controls and compliance with financial covenants in the Financial Agreement.

The table below summarizes the auditing requirements:

Table 5.2: Auditing requirement dates

Audit report Due Date

single opinion on Project Financial Statements

and Management letter

June 30

Financial Management Action Plan

Table 5.3: Financial Management Action Plan

ACTION When By whom

1. Appoint a Financial Management Officer and an

accountant to handle FM and accounting activities:

PIU Draft the ToRs Done by negotiations

Appoint the FM officer By the effectiveness

2. Set up a computerized financial and accounting system By disbursements for

component 1.b, 2 and 3

PIU

3. Prepare and adopt the administrative, financial and

accounting procedures manual in the PIU

By the effectiveness PIU

4. External Audit

PIU Draft the ToR for the financial audit of the Project By the negotiation

Selection of the auditor 4 months after effectiveness

Conclusion of the assessment

13. The conclusion of the assessment is that the current financial management arrangements in

the Ministry do not meet Bank‟s minimum requirements under OP/BP10.02. An action plan has

been indicated above. Implementing the action plan will allow the Ministry to comply with the

Bank‟s minimum requirements. The overall fiduciary risk rating is assessed as Substantial

(Medium Impact).

45

Annex 6: Procurement Arrangements

GUINEA

WARCIP 1B

A) General

1. Procurement for the proposed project , except component 1.a would be carried out in

accordance with the World Bank’s “Procurement Guidelines”- “Under IBRD Loans

and IDA Credits” dated January 2011; the “Guidelines: Selection and Employment of

Consultants by World Bank Borrowers” dated January 2011, and the provisions

stipulated in the Legal Agreement. The general description of various items under

different expenditure category is described below. For each contract to be financed by the

Grant, the different procurement methods or consultant selection methods, the need for

prequalification, estimated costs, prior review requirements, and time frame are agreed

between the Recipient and the Bank project team in the Procurement Plan. The

Procurement Plan will be updated at least annually or as required to reflect the actual project

implementation needs and improvements in institutional capacity.

2. A Country Procurement Assessment Report, carried out in Guinea in February 2002

flagged the main issues such as the lack of capacity regarding the Recipient's staff, the

absence of standard bidding documents at the national level, the insufficient capacity

of local contractors for contracts subject to ICB, and corruption. Recommendations

were made to address these issues. The Bank, through an IDF (TF 55853) signed in

November 2005, provided support on the public procurement reform. The main objectives

are to : i) enhance transparency of the Procurement system, ii) put in place the new

institutional framework (Public Procurement Directorate controlling procurement

transactions, Public Procurement Regulatory Body including an appeal committee for

complaints, iii) an update of the procurement code, iv) design of standard bidding

documents. In March 2009, the legal framework has been revisited and the procurement law

and the new procurement code have been drafted and is expected to be approved by the

government, civil society and private sector by end of May 2011.

3. For National Competitive method (NCB), the borrower may ensure that the following

special requirements are taken into account : ((i) the Recipient shall use standard bidding

documents for the procurement of goods, works and non-consulting services acceptable to

the Association; (ii) in accordance with paragraph 1.16(e) of the Procurement Guidelines,

each bidding document and contract financed from the proceeds of the Grant shall provide

that the bidders, suppliers, and contractors, and their sub-contractors, agents, personnel,

consultants, service providers or suppliers, shall permit the Association to inspect all their

accounts, records and other documents relating to the submission of bids and contract

performance, and to have them audited by auditors appointed by the Association. Acts

intended to materially impede the exercise of the Association's inspection and audit rights

provided for in paragraph 1.16(e) of the Procurement Guidelines constitute an obstructive

practice as defined in paragraph 1.16(a)(v)(bb) of the Procurement Guidelines; and (iii) each

46

bidding document and contract financed from the proceeds of the Grant shall include

provisions on matters pertaining to fraud and corruption as defined in paragraph 1.16(a) of

the Procurement Guidelines and in "Guidelines on Preventing and Combating Fraud and

Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated

October 15, 2006 and revised in January 2011. The Association will sanction a firm or

individual, at any time, in accordance with prevailing Association's sanctions procedures,

including by publicly declaring such firm or individual ineligible, either indefinitely or for a

stated period of time: (A) to be awarded an Association-financed contract; and (B) to be a

nominated sub-contractor, consultant, supplier or service provider of an otherwise eligible

firm being awarded an Association-financed contract. "

4. Procurement of Works: No high value contract on civil works is expected to be financed

under this project. Nevertheless small civil works for the cable inland connection may be

procured.

5. Procurement of Goods: Goods procured under this project would include and are not

limited to Telecommunication Equipment and accessories, Vehicles, Internet Connectivity,

Office Furniture, Office Equipment (Office Space for WARCIP – PIU).

6. Most of the contracts are of small value and therefore ICB method is not likely to be

used. The procurement will be done using Bank‟s SBD for all ICB if any and for all NCB

subject to any adaptation as required. Small contracts for goods may be procured using the

shopping procedures as per paragraph 3.5 of the Procurement Guidelines.

7. Procurement of non-consulting services: These services may concern operating expenses

such as office maintenance, rent of Office Space for WARCIP PIU, equipment maintenance,

and non-consulting services related to the organization of workshops. The related contracts

will be at small value and they may be procured using the shopping procedures as per

paragraph 3.5 of the Procurement Guidelines.

8. Selection of Consultants: Consulting services will include but are not limited to i) Internet

Exchange Point Study, ii) selection of an Advisor to optimize the governance, ownership

and financing issues related to the operation of the landing station and provision of networks

and services emanating from the ACE Cable, iii) Selection of an Investment Bank to support

implementation of ownership and management of landing station including implementation

of divestiture strategy for Government shareholding, iv) Legal and regulatory due diligence,

safeguards for open access including gateway liberalization, v)privatization support to

SOTELGUI, vi) studies related to broadband regulation, Environmental Studies, vii)

recruitment of PIU‟s key staff, viii) Project‟s operation manual and financial audits.

9. Short lists of consultants for services estimated to cost less than $ 200,000 equivalent per

contract may be composed entirely of national consultants in accordance with the provisions

of paragraph 2.7 of the Consultant Guidelines.

47

10. Operational Costs: these costs may include office furniture, office maintenance, equipment

maintenance and cost related to the project coordination needs; they are either goods or non-

consulting services and they may be procured using the shopping procedures as per

paragraph 3.5 of the Procurement Guidelines. The project operational manual should

describe the procurement process for the related goods or non-consulting services.

48

B. Assessment of the agency’s capacity to implement procurement

11. IDA funding for component 1 (a) on international connectivity does not go towards a

procurable item subject to compliance with World Bank procurement guidelines. This

is because such funding is for membership fees (paid in different installments) against a set

of rights including use of a certain amount of capacity at preferred rates and a share of

ownership of an indivisible cable infrastructure asset.

12. For other project components (1 b, components 2 and 3), IDA procurement guidelines will

apply and Procurement activities will be carried out by the Project Implementation Unit

(PIU) to be created in the Ministry of Posts, Telecommunications and New Information

Technologies (MPTNTI) This PIU will be staffed by a Project Coordinator, a Procurement

Specialist, a Financial Management Specialist. Part time M&E and safeguards specialists will

be also be hired. Meanwhile, the fiduciary function for WARCIP Project Preparation

Advance is entrusted to the Education For All project team. This team comprises a qualified

procurement specialist who has both the technical expertise and the experience necessary to

carry out the procurement activities envisaged under the PPA.

13. An assessment of the capacity of the MPTNTI to implement procurement actions for

the project has been carried out on April 14th, 2011. The assessment reviewed the

organizational structure for implementing the project.

14. Most of the issues/ risks concerning the procurement component for implementation of

the project have been identified and include:

The PIU is not yet created, nor a procurement specialist appointed.

MPTNTI has not implemented a World Bank funded project, and has not past

experience on the World Bank procurement procedures. Therefore the

Ministry‟s Contract Committee members are not familiar with

international procurement procedures, and may obstruct or delay the

procurement process, especially the evaluation of bids and consultants’

proposals;

While the project will concern among others some technical studies for

SOTELGUI, ARPT and other beneficiaries, including the Ministry of

Finance, possible interactions between the PIU and the other actors

(MPTNTI, SOTELGUI, and ARPT) may affect negatively the procurement

process.

The MPTNTI doesn‟t have a Manual of Procedures or a PIM. In addition the

filing system needs to be improved

15. The corrective measures which have been agreed are:

Creation of a PIU within MPTNTI. The procurement function of the PIU will

be performed by a Procurement Specialist with qualification and experience

necessary to carry out the the procurement activities envisaged. This

procurement officer will be responsible for the coordination of all

49

procurement activities, including the following: (i) preparation and updating

of the procurement plan (ii) preparation, finalization and launching of the

Requests for Proposal and bidding documents; (iii) drafting of minutes of

opening of the bids/proposal and preparation of the evaluation reports; (iv)

quality control of procurement documents (TORs, RFP, bidding documents,

evaluation reports, contracts, etc.) before submission to the Bank when prior

review is required; (v) preparing the contracts, and overseeing the payments

to contractors; and (vi) drafting of procurement progress reports.

In addition the Procurement Specialist will be entrusted the role of

procurement capacity building to the technical staff of the project including

all actors of the MPTNTI involved in the project‟s implementation. This

approach would ensure that the technical specialists and experts will have

basic procurement capacity so as to properly handle technical responsibilities

in preparing procurement documents including terms of references and

technical specifications.

PIU will develop a Manual of procedures and will put in place a good filing

system

16. The overall project risk for procurement is substantial.

C. Procurement Plan

17. The Recipient has developed a Procurement Plan for project implementation which

provides the basis for the procurement methods. This plan will be reviewed by the Bank

and it is expected to be approved during appraisal. Once it is approved, the procurement plan

will be made available in the Project‟s database at the office of the Project Implementation

Unit and at the MPTNTI in Conakry and at the Bank‟s external website. The Procurement

Plan will be updated in agreement with the PIU annually or as required to reflect the actual

project implementation needs and improvements in institutional capacity.

D. Frequency of Procurement Supervision

18. In addition to the prior review supervision to be carried out from Bank offices, the capacity

assessment of the MPTNTI has recommended one supervision mission at least every six (6)

months to visit the field to carry out post review of procurement actions.

50

The procurement methods and prior review thresholds are indicated in the Tables below

Table 6.1: For Goods, works and non-consulting services

Procurement

Method

Prior Review

Threshold

Comments

1. ICB (Goods) = or >US$300,000 ICB for goods will be used for US$ 300,000 and above

2. NCB (Goods) The first contract,

irrespective of its cost

estimate

NCB for goods will be used for less than US$ 300,000

3. ICB (Works) = or >US$1,000,000 ICB for works will be used for US$ 1,000,000 and above

4. NCB (Works) The first contract,


estimate

NCB for works will be used for less than US$ 1,000,000

5. ICB (Non-

Consultant

Services), if any

= or >US$ 300,000

All contracts

ICB for non-consultant services will be used for US$300,000

and above

6. NCB (Non-

Consultant

Services)

The first contract,


estimate

NCB for non-consultants services will be used for less than

US$ 300,000

7. Shopping <US$50,000 and the

first contract under

US$50,000

Shopping for works, goods and non-consultant services will be

used for less than or equivalent to US$50,000. If more than

US$50,000, prior clearance is needed from IDA with relevant

justifications. The cost estimate will not exceed US$100,000.

8. Direct contracting All, irrespective of the

cost estimate

None

Table 6.2: For Consultant Services

Selection Method Prior Review

Threshold Comments

1. Competitive Methods (Firms)

= or

>US$200,000

All contracts

2 Competitive Methods (Firms) <US$200,000

The first contract,

irrespective of cost

estimate will be prior

reviewed

3. Single Source (Firms)

All, irrespective

of the cost

estimate

All contracts

4. Individual Consultants = or >US$

50,000 All contracts

5 Individual Consultants <US$ 50,000 All ToRs

6. Single source for Individual Consultants

All, irrespective

of the cost

estimate

All, irrespective of the

cost estimate

7.

Contracts for specific assignments such as contracts for the

elaboration of manual of the project implementation and the

manual of procedures, contracts for monitoring and evaluation

assignments; contracts for financial assistance assignments;

contracts for financial audit; contracts for technical audit;

contracts for environmental and social issues; contracts for legal

assignments

All, irrespective

of the cost

estimate

Those contracts are not

selection methods; but

due to their sensitivity,

they will be subject to

prior review

51

Details of the Procurement Arrangement

1. List of contract Packages for Goods and non consulting services.


List of contract Packages for Goods and non-consulting services. 1 2 3 4 5 6 7 8 9

Ref. No.

Contract

(Description)

Estimated

Cost

US$

Procurement

Method

Pre-

qualification

(yes/no)

Domestic

Preferenc

e

(yes/no)

Review

by Bank

(Prior / Post)

Expected

Bid-Opening

Date

Comments

COMPONENT 1: CONNECTIVITY

1 Provision of Local

Area Networks for

Government Connectivity(Tele

communication

Equipment and accessories

$650,000 ICB No No Prior Review March 15

2012

2 IXP equipment $ 150,000 NCB No No First contract-

Prior review

February 15,

2012

3 Equipment pour AGETIC

US$ 250,000 NCB No No Prior review February 20, 2012

COMPONENT 3. PROJECT IMPLEMENTATION, COMMUNICATIONS AND M & E

1

2 Vehicle US$ 49,000 Shopping No No Post Review October 05, 2011

1 vehicule

3 Internet

Connectivity

US$

30,000

Shopping No No Prior Review July 14 2011

4 Office Furniture US$ 30,000

Shopping No No Post Review July 11, 2011

5 Office

Equipment(PABX

System, Overhead Projector

US$

30,000

Shopping No No Post Review July 15 4

2011

6 Logistics (Laptop(5

Nos.), PC(1No.),USB

Flash Drives, etc

US$

25,000

Shopping No No Post review August 05

2011

PPA

7 Rent(Office Space

for WARCIP – PIU)

US$

30,000 per year

Shopping No No Prior Review June 06,

2011

PPA

8 Acquisition of FM

accounting software

US$

25,000

Shopping No No Post review August 15,

2011

PPA

List of Works

. 1 2 3 4 5 6 7 8 9

Ref. No.

Contract

(Description)

Estimated

Cost

US$

Procurement

Method

Prequalificatio

n (yes/no)

Domestic

Preferenc

e

(yes/no)

Review

by Bank

(Prior / Post)

Expected

Bid-Opening

Date

Comments

COMPONENT 3

1 Renovation of

GUILAB office

US$ 400,000 NCB No No Prior Review November

15, 2011

52

Consultancy Assignments with Selection Methods and Time Schedule

1 2 3 4 5 6 7 8 9

Ref. No.

Contract

(Description)

Estimated

Cost

US$

Procurement

Method

Prequalificatio

n (yes/no)

Domestic

Preference

(yes/no)

Review

by Bank

(Prior / Post)

Expected

Proposals

Comments

SUPPORTING CONNECTIVITY

1 Internet Exchange Point Study

US$50,000 CQ No No Prior Review November 25, 2011

2 Study for

Government connectivity

150,000 CQ No No Prior Review December

10, 2011

2. ENABLING ENVIRONMENT FOR IMPROVED CONNECTIVITY

1 SPV creation US$ 275,000 CQ No No Prior Review May 27

2011

PPA

2 Support for the divestiture of

Government shares

in the SPV

US$225,000 CQ No No Prior Review September 15 2011

PPA

3 Legal and regulatory

due diligence,

safeguards for open access

US$350,000 QCBS No No Prior Review September

20 2011

PPA

4 Study on ARPT and

sector taxation to improve effective

regulation ahead of

cable landing and related regulatory

strengthening

support

US$275,000 CQ No No Prior Review May 30,

2011

PPA

5 Strategic plan for Sotelgui

US$ 350,000 QCBS Prior review No No June 15 30, 2011

PPA

6 Study for ARPT to

implement effective broadband

regulation

US $ 450,000 QCBS Prior Review No No December 15

2011

7 Study for ARPT to

strengthen interconnection

regulation

US$ 450,000 QCBS Prior Review No No January 10

15 2012

8 Hiring an advisor to support privatization

of SOTELGUI

US 800,000 QCBS Prior Review No No January 25 2012

9 Study for domain

name framework

US 250,000 QCBS Prior Review No No February 07,

2012

10 Study for Backbone

development

US

1,000,000

QCBS Prior Review No No May 15,

2012

11 Legal and regulatory

framework for cross-border and

national flows of information and data

in broadband

networks

US$

750,000

QCBS Prior No No March 15,

2012


1 PIU Coordinator US$

140,000

IC Prior No No June 15,

2011

PPA

2 PIU Procurement Specialist

US$ 120,000

IC Prior No No July 10, 2011 PPA

3 PIU Financial

Management Specialist

US$

120,000

IC Prior No No June 30,

2011

PPA

4 PIU Accountant US$

480,000

IC Prior No No July 10,

2011

PPA

5 Support Staff (2) US$ 48,000 IC Post No No July 10, PPA

53

2011

Ref. No.

Contract

(Description)

Estimated

Cost

US$

Procurement

Method

Prequalificatio

n (yes/no)

Domestic

Preference

(yes/no)

Review

by Bank

(Prior / Post)

Expected

Proposals

Comments

6 Project Operational Manual and

procedures

US$ 70,000

CQ Post

No No July 10 2011 PPA

7 ESSAF US$

30,000

IC Prior No No May 15,

2011

PPA

8 ESMF and RPF and

additional field

surveys

US$

115,000

CQ Prior No No June 10,

2011

PPA

9 M & E US$ 50,000

IC Prior No No August 10, 2011

PPA

10 Legal advisor for

GUILAB

US$ 100,000 IC Prior No No October 5

2011

11 Communications U$ 75,000

IC Post No No August 10 2011

PPA

IV. Implementing Agency Capacity Building Activities with Time Schedule

No.

Expected outcome /

Activity Description

Estimated

Cost

Estimated

Duration

Start Date

Comments

1 Training for regulators(ARPT) 400,00 To be determined Sept 2011

2 Capacity building for PIU Staff 100,000 To be determined October 2011

Training for AGETIC 250,000 To be determined February 2012

3 Training for Ministry staff)

400,000

To be determined October 2011

4 Training for SOTELGUI 200,000 To be determined December

2011

54

Annex 7: Implementation and Monitoring Arrangements

GUINEA

WARCIP 1B

Implementation Arrangements

1. The proposed project will be implemented under the aegis of MPTNTI. Implementation

arrangements involve creation of a Project Implementation Unit (PIU) that will be supported by

five Focal Points. The PIU will be headed by a Project Coordinator who will report to the

Minister through the Permanent Secretary.

Figure 7.1: Implementing structure

2. The PIU will be composed of

A project coordinator

A procurement specialist

A financial management specialist

An accountant

Support staff

The process of hiring the project team started under the Project Preparation Facility (PPF). The

team is expected to be in place before effectiveness.

The PIU will also hire part time M&E consultant and part time social and environmental

specialist(s) to strengthen the PIU capacity on both monitoring and evaluation as well as in

implementation of environmental and social safeguards linked with the project.

Minister

MPTNTI

PIU

Focal Point MPTNTI

Focal ARPTFocalPoint

MoFFocal Point SOTELGUI

Focal Point GUILAB

55

3. The PIU will serve as the Grant Administrator of the project and will handle all

administrative matters in accordance with the Project Implementation Manual (PIM). It will also

ensure financial management and handle project disbursements, and include the preparation and

submission of replenishment requests to IDA. The Unit will also be responsible for (i)

maintaining an Management Information System (MIS) for tracking progress in all project

subcomponents, both in terms of financial performance and meeting implementation targets and

monitor the performance of all contractors under the project; (ii) preparing annual work

programs and budgets, and if necessary, reviewing, in consultation with IDA, the reallocation of

resources across the various components of the project as lessons emerge as to patterns of

demand and development impact.

4. The PIU will be assisted by a task team composed of five focal points.

o Focal point recommended by the Minister on issues related to policy matters and

overall coordination of the project;

o Focal point recommended by ARPT on issues related to regulatory component

o Focal point recommended by SOTELGUI on issues related to SOTELGUI

support

o Focal Point recommended by Ministry of Finance for all issues related to fiscal

aspects, Government participation in GUILAB and overall sector reform issues

o Focal Point designated by private sector for issues related to the GUILAB.

5. The focal points will be responsible for initiating activities related to their respective

components, including developing ToR and draft procurement documents, and will be the focal

points for monitoring progress of their components and for collecting and updating indicators for

the components they manage.


6. The PIU will monitor and evaluate national projects. The will bear the primary

responsibility for project monitoring and evaluation (M&E), and, as such, will establish standard

formats and guidelines for data collection and reporting, and will organize training sessions for

project stakeholders in their use.

7. An M&E system will be set up within the PIU to keep track of and evaluate

implementation progress of the proposed IDA project within the broader context of the

institutional framework for the telecommunications sector. Although increased geographical

reach and reduction of costs at the country level remains the hallmark of success of an enabling

environment, the project‟s M&E system will seek first to measure results that are closely

associated with project activities. Ultimately, improvement of laws and decrees by the project

activities (component 2) will have positive ripple effects on the whole sector and on service

delivery.

56


process. Comprehensive M&E reporting will be needed to monitor the results and performance

of the project. It will involve mainly the direct beneficiaries of project activities, but will be

extended to other beneficiaries such as telecommunications operators and private ICT firms,

which ultimately are the main beneficiaries of the project‟s outcomes. The PIU will review and

validate the reports on performance indicators and recommend corrective action if necessary.

57

Annex 8: Project Preparation and Appraisal Team Members

GUINEA

WARCIP 1B

Table 8.1: Project Preparation and Appraisal

Milestone Forecast Actual

Project Concept Note Review 1/6/2011

PID to Infoshop (PCN Stage) 2/10/2011

ISDS to Infoshop (PCN Stage) 2/10/2011

Decision Meeting 4/28/2011 5/03/2011

Authorization to appraise/negotiate 4/28/2011 5/03/2011

Updated PID to Infoshop 5/2/2011

Updated ISDS to Infoshop 5/2/2011

EA received by Infoshop na

Appraisal 5/2/2011 5/4/2011

Negotiations 5/9/2011 5/9/2011

Board Approval 6/21/2011

(b) Table 8.2: Team Members (Bank Staff and Consultants) who worked on the project: NAME TITLE UNIT

Boutheina Guermazi Sr. Regulatory Specialist ICT Sector Unit

Mavis Ampah Sr. ICT Policy Specialist ICT Sector Unit

Doyle Gallegos Lead ICT Policy Specialist ICT Sector Unit

Laurent Besancon Regional Coordinator/Sr. Regulator Specialist ICT Sector Unit

Michel Rogy Sr. ICT Policy Advisor ICT Sector Unit

Duncan Wambogo Omole Information Analyst ICT Sector Unit

Marc Lixi Sr. Operations Officer ICT Sector Unit

Sarah Brierly STC ICT Sector Unit

Michele Ralisoa Noro Sr. Program Assistant ICT Sector Unit

Kymberly A. Thompson Temporary ICT Sector Unit

Deo Ndikumana Sr. Operations Officer AFCRI

Claudia Pardiñas Ocaña Sr. Counsel LEGAF

Wolfgang Chadab Sr. Finance Officer CTRFC

Emmanuel Fiadzo Sr. Economist Guinea AFTP4

David Satola Sr. Counsel LEGPS

Bienvenu Rajaonson Sr. Environmental Specialist AFTEN

Lucienne M‟Baipor Sr. Social Development Specialist AFTCS

Enagnon Earnest Eric Adda ET Consultant ( financial Management) AFTFM

Sidy Diop Procurement Specialist AFTPC

Racky Dia Camara Program Assistant AFMGN

Thierno Hamidou Diallo Disbursement Assistant AFMGN

58

Implementation Support Plan

1. The Bank team members will be based either in Washington DC or in the Africa region, and

will be available to provide timely, efficient and effective implementation support to the

client. Formal supervision and field visits will be carried out semi-annually initially, with

possibility for annual visits in later years of the project. Detailed inputs from the Bank team

are outlined below:

Technical inputs. Technical telecommunications and regulatory related inputs are

required to review bid documents to ensure fair competition through proper technical

specifications and fair assessment of the technical aspects of bids. ICT Policy Specialists

and regulatory specialists will provide technical support and conduct supervision visits

whenever needed.

Fiduciary requirements and inputs. Training will be provided by the Bank‟s financial

management specialist and procurement specialist before the commencement of project

implementation as needed. The team will also help identify capacity building needs to

strengthen its financial management capacity and to improve procurement management

efficiency. Both the financial management and the procurement specialist will be based

in the region to provide timely support. Formal supervision of financial management will

be carried out semi-annually or annually, while procurement supervision will be carried

out on a timely basis as required by the client.

Safeguards. Inputs from an environment specialist and a social specialist may be

required, though the project‟s social and environmental impacts are limited and client

capacity is generally adequate. No field visits are likely to be required, but this will be

confirmed - the social and environmental specialists will be available on a need basis.

Operation. The Task Team will also provide day to day supervision of all operational

aspects, as well as coordination with the client and among Bank team members. If

needed, a consultant may be used to support this role.

The main focus of implementation support is summarized below.

Table 8.3: Implementation support

Time Focus Resource Estimate in Staff-Week(s) Partner

Role Project

duration

Team leadership, technical and procurement review of

the bidding documents and Institutional arrangement

and project supervision coordination

ICT Policy Specialist 15

SWs

NA

Procurement training Procurement specialist(s) 2 SWs NA

FM training and supervision FM specialist 2 SWs NA

Environmental and Social Issues

Social and environmental specialists

1SWs

NA

59

Staff skill mix required is summarized below.

`Table 8.4: Staff skills mix Skills Needed Number of Staff Weeks Number of Trips Comments

Task team leader 15 SWs annually Fields trips as required. DC based

Procurement 2 SWs annually Fields trips as required. Country office based

Social specialist 0.5 SWs annually Fields trips as required. Country office based

Environment specialist 0.5 SWs annually Fields trips as required. Country office based

Financial management

specialist

2 SWs annually Fields trips as required. Country office based

Legal support 1 SW Fields trips as required DC based

60

Annex 9: Environmental and Social Safeguards Framework

GUINEA

WARCIP 1B

1. As permitted under OP/BP 8.00 (Rapid Response to Crises and Emergencies), an

Environmental and Social Screening Assessment Framework (ESSAF) has been developed

for this project. The ESSAF describes the approach and principles to be followed to ensure

due diligence in managing potential adverse environmental and social impacts and risks

associated with the project. More specifically, the ESSAF addresses the following issues:

(i) minimization of environmental degradation; (ii) protection of human health; (iii)

prevention or compensation of any loss of livelihood; and, (iv) enhancement of positive

environmental and social outcomes.

2. The Infrastructure Component of the project includes connections to the ACE submarine

cable, an approximately 17,000 km submarine cable system which is expected to connect

South Africa to Europe, potentially connecting up to 23 countries.

3. The ACE submarine cable is configured into 4 segments as follows:

Segment 1: Between the Penmarch (France) and the Dakar (Senegal) Terminal Stations

Segment 2: Between the Dakar (Senegal) and the Abidjan (Cote D‟Ivoire) Terminal

Stations

Segment 3: Between the Abidjan (Cote D‟Ivoire) and the Santana (Sao Tome) Terminal

Stations, and

Segment 4: Between the Santana (Sao Tome) and the Cape Town (South Africa)

Terminal Stations (however the contract for this segment is not effective yet).

4. The physical cable system will comprise two fiber pairs that provide two separate bi-

directional paths (i.e., one fiber in each pair carries signals in the outbound direction and

the other fiber in the return or inbound direction). The cable system is likely to have a

submerged or „wet plant‟ part, and a „dry plant‟ part which interfaces at proposed Landing

Stations.

Compliance with Safeguards Policies

5. A preliminary safeguard assessment has been undertaken which concludes that the

environmental and social impacts are minimal. The project is set out in OP/BP 8.00 for

emergency project and classified as Category B. Specifically, the cable route will cross deep

sea as well shores and be connected with landing station and this position will have

environmental and social implications. For that, the project triggers: OP 4.01 (Environmental

Assessment), OP 4.04 (Natural Habitats), and OP 4.11 (Physical Cultural Resources), and

Involuntary Resettlement.

61

6. Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), and

Physical Cultural Resources (OP/BP 4.11). The project is expected to have minimal

environmental and social impacts. The section below explains in more detail the risks of

laying the fiber cable in the deep sea and coastal waters and onto the shore. The site

selected for cable landing or Terminal Station approximately 700 meters from the Beach

Man hole (BMH) at the beach. The land currently has no permanent structures. The landing

station is expected to take about 45m x 25m land space with approximately half of this

space for equipment and the balance for maintenance, training, and office spaces. The

project will not cause any permanent or temporary structure to be demolished. It will only

create temporary inconveniences during the construction phase and limited economic

disadvantages to business concerns. The fiber cable may be laid near or in fragile and

sensitive areas in the coastal sea and/or on land; it may also be laid close to or at cultural

areas/sites. The ESSAF thus includes an assessment of potential impacts on sensitive

habitats and cultural areas/sites, with guidance on mitigating such impacts. The project will

(i) minimize environmental degradation; (ii) protect natural resources; (iii) prevent or

compensate any loss of livelihood; and, (iv) enhance positive environmental and social

outcomes. Appropriate environmental and social mitigation assessment (ESIA) and

measures (ESMP) will be developed.

7. Involuntary Resettlement (OP/BP 4.12). The project also triggers OP 4.12 (Involuntary

Resettlement), as safety in vessels circulation, fishermen activities and land acquisition for

landing station and network distribution may occur during project implementation. The

potential social impacts of components under the proposed project will be site-specific. In the

event that people are physically or economically displaced because of the Project‟s activities,

the Bank will, in applicable circumstances, require a draft Resettlement Action Plan,

prepared in accordance with the requirements of OP 4.12, before the commencement of the

any relocation activities.

8. Preliminary assessment shows minimal social impact, if any. The project will not cause any

permanent or temporary structure to be demolished. It will only create temporary

inconveniences during the construction phase and limited economic disadvantages to

business concerns. There is no land acquisition issue as the site for the Landing Station is

on vacant state property which has been allocated to the project for the purpose.

9. The proposed project is expected to have positive social benefits. The main social impacts

of the proposed project are the increased possibility of better access to ICT services for the

population and improved GoG service delivery. The project will contribute to (i) enabling

ICT to become a driver for sustainable economic growth; (ii) enabling the GoG to use ICT

to improve services; (iii) improving access and quality of ICT services for the general

population, businesses, and the GoG; and (iv)reducing isolation and enhancing economic

activities in rural areas.

62

Safeguard issues on Deep Sea 12

Activities

9. In principle, deep ocean fiber optic cables are no larger than 17-21 mm diameter – about

the size of a domestic garden hose- and are laid mainly upon the surface of the ocean floor

(“surface laid”). Sections of the cable (including both wet and dry plants) lie within the

territorial waters of the landing parties while remaining sections lie in international waters.

According to the 1982 United Nations Convention on the Law of the Sea (UNCLOS), of

which Guinea is a signatory, international waters start 12 nautical miles from the coast.

Beyond the 12 nautical mile limit there is a further 12 or 24 nautical miles from the

territorial sea, a contiguous zone, in which a state could continue to enforce laws in four

specific areas: pollution, taxation, customs and immigration (see figure 1, below).

UNCLOS further provides for economic zones which could extend from the edge of the

territorial sea out to 200 nautical miles. In the exclusive economic zones, states have no

sovereign rights but can enforce laws on pollution, taxation, customs and immigration (see

figure below). Within their territorial waters, on the other hand, countries have sovereign

rights. Foreign nations have the freedom of laying submarine pipes and cables in the

exclusive economic zones. The seaward limit of coverage for the ESMP (to be prepared

during project implementation) in Guinea is the seaward limit of the EEZ, defined as

extending 200 nm (370 km) from the shorelines.

12

Deep Sea is mainly a technical term with no precise definition used to describe zone/areas beyond which cable

burial is not required (mainly because threats to the cable from trawling activities are non-existent. This starts

usually after 1000/ 1500 meters depth. Given this challenge, perhaps Bank environment focus should be on

territorial vs international waters, though it is acknowledged that maritime jurisdictional zones are not defined by

reference to water depth or marine ecology

63

Figure 9.1: Designated ocean zones according to UNCLOS.

Segment 1 countries – Already completed, results available

Segment 2 countries – Mid-October, results available Mid-November

Segment 3 countries – Early December, results available Mid-December

Segment 4 countries – TBC subject to availability of funding

10. In general, however, the section of the cable that lies in the deep sea has minimal impact on

marine mammals and fish. The threat of whale entanglements has diminished significantly

with improvements since 1956 in the design of cable and in the precision with which they

can be laid in close conformity with the seabed profile, and without loops and twists.

11. Generally speaking, there are no significant environmental issues concerning fiber cables in

the deep sea (significant issues are concentrated on shallow waters and the coastal

areas/beach). The extensive studies that take place prior to final cable laying tend to work

as effective safeguards against any possible environmental disruption, since in large part

they are intended to identify routes for the cable that will avoid seamounts, volcanoes,

canyons, vents, seeps, deepwater reefs, dissected terrain – all areas that tend to be

associated with higher biological value than the general abyssal plain.

http://en.wikipedia.org/wiki/File:Zonmar-en.svg

64

12. Because much of the deep ocean lie beyond national jurisdictions, few ESIAs for any

marine activities have been undertaken in this zone and thus there is little evidence of any

environmental issues, except in cases of oil and gas exploration and very deep sea trawling.

No specific environmental studies are undertaken for submarine cables; rather the detailed

Cable Route Survey effectively serves this purpose. At the surface, pollution of the high

seas by oil and wastes discharged from vessels can be effectively controlled if those vessels

observe compliance with maritime conventions.

Safeguard issues for Shallow Water Activities

13. As the cable gets closer to the shores in water depths shallower than 1,500m, the cable‟s

diameter may increase to about 40-50 mm due to the need to add protective wire armoring.

It may also be necessary to bury the cable to protect it.

14. It is possible, depending on the topology of the country that the 12 nautical miles of

territorial waters will straddle between shallow waters and deep sea. It is also likely that

there may be fishing and other maritime activities, particularly in the shallow waters which

could be disturbed during the route survey and cable laying process (but this is short-lived

as the duration of cable-laying operations is usually no more than a few days).

15. In accordance with OP. 8.00, the Government of Guinea has developed an Environmental

and Social Screening and Assessment Framework (ESSAF). The ESSAF provides guidance

on the approach to be taken during implementation of the operation and the planning of

mitigation measures, including consultation and disclosure requirements, to ensure due

diligence and facilitate consistent treatment of environmental and social issues.

Safeguard Screening and Mitigation

16. This ESSAF has been developed specifically for this proposed project to ensure due

diligence to avoid causing harm or exacerbating social tension and to ensure consistent

treatment of social and environmental issues by the Contractor and the Government of

Guinea. The purpose of this Framework is also to assist the Ministry and all concerned

sectors in screening all the activities for their likely social and environmental impacts,

identifying documentation and preparation requirements and piloting the investments.

Preliminary survey results, detailed marine cable route and information on the geology,

environment and oceanography of the landing area have to be made available to facilitate

the monitoring and evaluation of implemented activities. In addition this would help to

establish the guidelines for land acquisition and eventual compensation, codes of practice

for the prevention and mitigation of potential environmental impacts and safeguards

procedures for inclusion in the Technical Specifications of Contracts.

Responsibilities for Safeguard Screening and Mitigation

17. A number of Ministries and institutions are involved for the proposed project including

that of Transport, telecommunication, fishing, Port Authority, Guinean Navy, environment.

Each mentioned entity will be responsible for applying the safeguard screening and

mitigation requirements to its own tasks under the coordination of the Ministry of

65

Environment. Within each entity, a Safeguard Focal Point (SFP) might be identified to

facilitate the overseeing of the implementation of the Framework.

Capacity building and Monitoring of safeguard Framework Implementation

18. The Recipient has limited capacity for safeguards management. So, to ensure compliance –

from preparation to review to implementation – of safeguards instruments with Bank

policies, there will be the need for capacity building. As part of the capacity building

components of the project, the Safeguards Focal Point, service providers and relevant staff

of the concerned Ministries will also receive training in the ESSAF‟s application. To assist

in this capacity building and to provide subsequent guidance and review of the ESSAF‟s

application the World Bank and subsequently the Government of Guinea will contract

specialist services for environment and social matters to carry out the ESMP and RAP

studies. During supervision of these activities, the World Bank will assess the

implementation of the ESSAF, and the ESMP and RAP later on, and recommend additional

strengthening if required. Information sharing to the public will be part of the capacity

building plan, as the project is considered as public goods and thus will be conducted more

inclusively through various media sources.

Consultation and Disclosure

19. The Ministry will consult project affected group and local nongovernmental organizations

on the project‟s environmental and social aspects, and will take their views into account.

The Ministry will initiate these consultations as early as possible, and for meaningful

consultations, will provide relevant material in a timely manner prior to consultation, in a

form and language (s) that are understandable and accessible to the group being consulted.

The Ministry will provide these groups, when studies are completed, with a summary of the

EIA report‟s conclusions. In addition, the Ministry will make the draft reports publicly

available to project-affected groups, local nongovernmental organizations and countries

related to ACE network.

20. The elaboration and implementation of the ESSAF will require adequate participation of

relevant stakeholders in undertaking environmental and social assessments, and in

developing and implementing mitigation plans. The Ministry will make all reasonable

efforts to consult with relevant the affected entities, corporate, communities, and NGOs to

incorporate needs, and to resolve eventual conflicts.

21. Once completed, this ESSAF will be shared with concerned sectors, nongovernmental

organizations, development partners of Guinea and concerned corporate and communities.

It will be disclosed in Guinea in French and local language by the Ministry of Environment

and Communication and it will also be made available at the World Bank‟s Info shop.

Relevant activities and specific safeguard documents/mitigation plans prepared

subsequently will also be disclosed.

66

Implementation support

22. Regular review should be specified to assess progress on environment and social

safeguards, achievement of overall objectives, as well as the role of the different partners.

Guidelines on the type of information wanted and the presentation of feedback information

should also be highlighted.

23. During project implementation, Guinea will prepare an ESIA/ESMP (consistent with

national laws, any applicable treaty concerning international waters, and OP 4.01) and a

Resettlement Action Plan (RAP) for the lateral cables and any associated equipment that

will be laid from the junction with the main cable through territorial waters and onto the

national shores, and also for the fiber on transmission lines, as required. The seaward limit

of coverage for the ESMP is the seaward limit of each country‟s EEZ, defined as extending

200 nm (370 km) from the shorelines. The RAP will be prepared in case the project may

require land acquisition and resettlement, and/or restricted access to natural resources,

although this is not expected based on the preliminary Cable Route Survey work. Key

stakeholders for consultation will include current inhabitants (where applicable) of landing

sites, the Environmental Protection Agency Guinea, businesses and civil society.

67

Annex 10: Economic and Financial Analysis

GUINEA

WARCIP 1B

1. Connecting to ACE minimizes transit cost and is most cost-effective long-term option.

Financial analysis was performed for Guinea. The analysis examined a variety of satellite and

optic fiber options and finds that a submarine fiber link with local landing station is the best

overall option in terms of long-term cost effectiveness and bandwidth availability. More

specifically, considering the limited number of fiber alternatives and their higher cost, the

ACE project is the best fiber option for Guinea. The ACE cable has the potential to

substantially address by 2013 the urgent need for high capacity access to the international

backbones at substantially lower cost than currently available in Guinea via its existing

satellite links. Although up-front costs are higher, the key cost saving with ACE compared to

alternative options is the high cost involved in the purchasing of capacity to the global

backbones, either via satellite or from an existing landing station in another country. The cost

of capacity on existing African cables linking to Europe (e.g. MainOne or SAT-3) is between

US$280 and US$800/Mbit/s/month, and averages $500/Mbit/s/month. On satellite capacity

costs are at least $2000/month. By participating in ACE, which lands traffic directly in

Europe, transit costs to the global backbones are minimized. ACE also has an advantage over

a cross-border fiber option in terms of speed and costs, and is without the need for

independent management, planning and maintenance13

. The ACE cable design is both “state

of the art” and proven, and involves no significant technology risk. The choice of electronics

is conservative and has reasonable efficiencies carrying Internet Protocol (IP) traffic. High

capacity international connectivity will mitigate the existing technological marginalization of

Guineans and bridge the digital divide by expediting broadband rollout, e-Government and e-

Services, new media and ICT development in urban and rural Guinea, for the benefit of

ordinary Guineans14

. Specific steps would need to be taken, however, in particular to

establish a clear regulatory regime for the landing point, in order to ensure that Guinea fully

benefits from the potential connectivity that the cable offers.

2. Fiber cable has an advantage over satellite in terms of price and quality of service. The

fiber option has the advantage of high speed and quality, and low cost. There is a single point

of purchase and low local management overhead. In the ACE case, the Consortium is already

in place. The disadvantage of fiber connection in the ACE solution is the high capital

expenditure. However, this solution in the long term offers the lowest prices.

13 Although the Senegal based operator, Sonatel, has indicated that it will build a cross-border terrestrial fiber

link to its subsidiary, Orange Guinea, this is not likely to provide as cost-effective solution as ACE, because it will

be under the control of a single operator, and will still require high transit fees to exit from Africa via SAT-3 or ACE

in Dakar. Thus, while obtaining upstream bandwidth from an existing cable could reduce the initial investment

costs, similarly to use of satellite, this option also does not scale cost-effectively.

14 The remaining constraints being low income level and low literacy/education levels.

68

3. Assumptions of financial analysis. Financial comparisons of satellite versus fiber options

were done using the following assumptions:

Study period: 10 years

Capital costs for ACE: US$ 25m

Initial capacity of ACE: 5.9 Gbps, using an average of 2.5Gbps over the study period

Annual operating and maintenance costs: 3% of CAPEX

Average geostationary satellite transponder costs: $2000 per month per Mbit/s

Cost for capacity on existing cables: MainOne and SAT-3: $280-800 per month per

Mbit/s

4. Connecting to ACE will see Guinea breakeven between 2014 and 2015 with an NPV to

2025 of US $24.8 million. The IRR is 22.4% assuming an average bandwidth sale price of

$100/Mbit/s/month, and an IRR of 14.3%, assuming $50/Mbit/s/month. The latter figure is

likely to be more competitive and would stimulate more use, and takes into account

bandwidth pricing trends in other regions such as East Africa. The final breakeven year will

depend on actual capacity uptake and the wholesale price of bandwidth. After 2024 at the

latest, the project would be cash-flow positive and substantial revenues would be made if

these wholesale pricing levels are maintained. Investment data was calculated based on a

discount rate of 15%. On this basis, membership in ACE, if accompanied by robust

regulation to ensure competitive pricing releases demand and stimulates national backbone

development, has potential to provide low cost international access to a broad range of the

population in Guinea.

5. Previous experience with fiber cables shows a rapid increase in demand when price of

bandwidth decreases. The effect that lowering the cost of access has on the amount of

bandwidth sold can be modeled using a price elasticity curve. The SAT-3 example (SAT-3 is

between Portugal and South Africa) shows a clear relationship between volume and tariffs, if

the cost on SAT-3 were dropped to US$250 per month. The chart below compares the price

of access on SAT-3 (per E1 half-circuit to Sessimbra, Portugal) against the volume of

international bandwidth sold. This shows the effect that price decreases between 2004 and

2006 have had on the volume of bandwidth sold in each of four countries where comparable

data was available. The increase in international bandwidth demand increases because

broadband services first become more viable for operators to deploy, and secondly because

as retail prices decrease the service become increasingly affordable and penetration increases.

Réunion is included here as a particularly clear case which shows that when price was

US$20,466 per Mb the volume was just 4 Mbit/s, but when it decreased to US$1,967 volume

increased to 180 Mbit/s. If the price were to drop further to US$500 per Mb, it is projected

that the volume would increase to 1.656 Gbps. If the price were to decrease to US$250 per

Mbit/s per month, the volume is projected to grow to 5.02 Gbps. This increase comes about

because of the multiplier effects: monthly prices for broadband decrease, in turn improving

affordability and increasing uptake of services.

69

Figure 10.1: Bandwidth Price Elasticity

6. The predicted bandwidth demand for Guinea with fiber access is over 17,000 Mbit/s

compared to 900 with inclined orbit satellite. In this analysis it is assumed that there is no

effective limit on the amount of satellite bandwidth that can be purchased. This is unlikely

given that many countries in the region will be switching from satellite to fiber with the

launch of ACE and other cables, and satellites with West African footprints continue to be

launched. Extrapolating current usage and growth in users could provide an indication of

future bandwidth demand, however due to the current high cost of service (relative to income

levels) and the relatively slow speeds available, this would tend to substantially

underestimate pent-up demand when bandwidth availability improves and costs decrease.

Given the trends worldwide in broadband adoption levels, and especially encouraged by the

explosion of mobile broadband15

(3G), the estimates used appear relatively conservative,

especially toward the end of the analysis period (2021), by which date it is expected that

almost every mobile phone user would have access to broadband on their handset. However,

this is dependent on the introduction of high-bit-rate mobile services into the market, and

unless increased competition is introduced into the sector, the operators may not be

encouraged to introduce these types of new services.

7. Bandwidth requirement per user has the potential to advance rapidly with further

social and economic development, especially with the development of tourism and

BPO16

sector. There can be a wide divergence in forecasting bandwidth requirements per

user. The last 10 years has seen massive increases in end-user bandwidth demand resulting

from the popularity of social network, image and video sites such as FaceBook and

YouTube. Fortunately these bandwidth demands have kept pace with technology

15 3G data service uptake from the consumer has been massive and unprecedented in other developing

countries such as Kenya.

16 Business Process Outsourcing.

Price Elasticity On Sat-3

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

- 1,000 2,000 3,000 4,000 5,000

Volume (Mbps)

Pri

ce (

US

$ p

er

mo

nth

)Ghana Nigeria

Reunion South Africa

Nigeria PE South Africa PE

Ghana PE Reunion PE

70

developments which are now seeing domestic broadband services delivering 100Mbit/s and

even 1Gbps in some advanced countries. If we assume that Guinea will have the opportunity

catch up at least partially with these developments over the next decade then we can expect a

relatively high level of growth in bandwidth use. There are also some special sources of

additional demand which could also significantly increase international transmission

requirement: Tourism and development of Business Process Outsourcing (BPO) sector.

Although tourism is comparatively small in Guinea, it could increase significantly in future.

Tourism creates demand for international telecommunication services through demand of

administrative and marketing service as well as demand for internet access, international

calls and money transactions. BPO and Internet call centre service companies can generate

significantly more Internet traffic if bandwidth prices can be reduced and fiber connections

made available17

. Mining operations and export-led businesses in the agricultural sector also

require a correspondingly large amount of bandwidth. Sourcing channels for television

rebroadcasting is currently carried out by satellite but could be substituted by fiber if

bandwidth prices are sufficiently competitive.

8. Fast internet has been shown to boost the productivity of firms as well as generate

employment opportunities. New growth theory suggests that long-run economic growth

emanates from spillover arising from innovation and investment in new technologies. Fast

internet access can be considered one important new technology, and broadband is

increasingly recognized to promote productivity and boost aggregate economic growth

(OECD, 2003). Analytical studies have shown that firms using standard broadband (defined

as connection speeds above 256 Kbps (OECD, 2002)) were on average 10 percent more

productive than firms using dial-up internet access. Faster internet speeds are also causally

related to increased employment opportunities with analysis showing that for every one

percentage point increase in broadband penetration within a region, employment increases by

0.2-0.3 percent per year for the private, non-farm economy (Crandall et al, 2007). Indeed,

studies show a clear positive relationship between employment and broadband penetration in

the manufacturing and service industries, with business growth shown to be particularly

significant for larger businesses and for IT intensive sector (Lehr et al, 2006). The results of

these studies support the hypothesis that broadband penetration enhances economic activity.

Increased broadband speeds and less expensive data access have the potential to promote

economic activities in West Africa, supporting the growth and productivity of businesses and

gradual transfer of employment from agricultural to service industries and expansion of the

region‟s nascent ICT and Business Process Outsourcing sector.

17 The almost 1-second delays introduced by satellite connectivity significantly reduces performance of

international services and limits the types of services that can be provided, especially among high bandwidth

consuming interactive services such as BPO (Business Process Outsourcing) call centres and VPN (Virtual Private

Networks) networks.

71

ANNEX 11: DOCUMENTS IN PROJECT FILES

GUINEA

WARCIP 1B

1. National Backbone Study December 2009

2. Virtual PCN Review Meeting Package December 20, 2010

3. Cleared Minutes of PCN Review Meeting February 4, 2011

4. Revised Project Concept Note January 28, 2011

5. Project Information Document – PCN Stage January 2011

6. Integrated Safeguards Data Sheet February 8, 2011

7. Letter from Government of Guinea requesting WB support March 8, 2011

(ACE Participation)

8. World Bank response to GoG Request March 31, 2011

9. ACE Construction and Maintenance Agreement June 05, 2010

72

ANNEX 12: STATEMENT OF LOANS AND CREDITS

GUINEA

WARCIP 1B

IBRD/IDA/Grants

As of 4/7/2011

Closed Projects 66

IBRD/IDA *

Total Disbursed (Active) 15.56

of which has been repaid 0.00

Total Disbursed (Closed) 208.56


Total Disbursed (Active + Closed) 224.13


Total Undisbursed (Active) 41.56

Total Undisbursed (Closed) 0.00

Total Undisbursed (Active + Closed) 41.56

Active Projects

Project ID Project Name Development

Objectives Implementation

Progress Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd

P070878 GN-GEF Coastal Marine & Biodiversity Mg MU MU 2006 5 4.38380177 4.16713507

P091297 GN-APL 3 Urban Phase 2 MU MU 2008 15 11.8204942 10.6090014

P065129 GN-APL2 Village Comm Supp Program MU MU 2008 17 13.8768015 11.6129267

P098742 GN-Electricity Sec Eff Improv GEF (FY07) U U 2008 4.5

P081297 GN-GEF CB Land Mgmt SIL (FY06) MS MU 2006 7 6.1833939 5.91672722

P065126 GN-Health Sec Supt SIL (FY05) U U 2005 25 15.8601351 13.9068423

P113608 GN-Labor-Intensive Public Works MS MS 2009 2.5 0.021708 0.021708

P113268 GN: Agric. Productivity Support Project MS MS 2009 5 1.09823613 1.09823613

Overall Result 57 24 53.2445705 47.3325769

Original Amount in US$ Millions Disbursements a/

Difference Between

Expected and Actual

Supervision Rating

Last PSR

73

Statement of IFC Portfolios

FY Approval Company Loan Equity

**Quasi

Equity *GT/RM Participant Loan Equity

**Quasi

Equity *GT/RM Participant

2006/08 Simfer 0 1.27 33.73 0 0 0 1.27 30.74 0 0

Total Portfolio: 0 1.27 33.73 0 0 0 1.27 30.74 0 0

As of 2/28/2011

(In USD Millions)

* Denotes Guarantee and Risk Management Products.

** Quasi Equity includes both loan and equity types.

Committed and Disbursed Outstanding Investment Portfolio

74

ANNEX 13: COUNTRY AT A GLANCE

GUINEA

WARCIP 1B

2/25/11

Sub-

Key D evelo pment Indicato rs Saharan Low

Guinea Africa income

(2009)

Population, mid-year (millions) 10.1 819 828

Surface area (thousand sq. km) 246 24,242 17,838

Population growth (%) 2.4 2.5 2.2

Urban population (% of to tal population) 35 36 28

GNI (Atlas method, US$ billions) 3.8 897 389

GNI per capita (Atlas method, US$) 370 1,095 470

GNI per capita (PPP, international $) 940 1,981 1,131

GDP growth (%) -0.3 5.2 6.2

GDP per capita growth (%) -2.6 2.7 3.9

(mo st recent est imate, 2003–2008)

Poverty headcount ratio at $1.25 a day (PPP, %) 70 51 ..

Poverty headcount ratio at $2.00 a day (PPP, %) 87 73 ..

Life expectancy at birth (years) 58 52 57

Infant mortality (per 1,000 live births) 88 83 77

Child malnutrition (% of children under 5) 23 25 28

Adult literacy, male (% of ages 15 and o lder) 50 72 73

Adult literacy, female (% of ages 15 and o lder) 26 54 59

Gross primary enro llment, male (% of age group) 97 105 107

Gross primary enro llment, female (% of age group) 83 95 100

Access to an improved water source (% of population) 71 60 64

Access to improved sanitation facilities (% of population) 19 31 35

N et A id F lo ws 1980 1990 2000 2009 a

(US$ millions)

Net ODA and official aid 89 292 153 319

Top 3 donors (in 2007):

France 9 87 20 73

United States 8 0 26 43

European Commission 21 33 16 35

Aid (% of GNI) .. 11.6 5.0 9.6

Aid per capita (US$) 19 47 18 32

Lo ng-T erm Eco no mic T rends

Consumer prices (annual % change) .. 23.3 6.8 11.6

GDP implicit deflator (annual % change) .. 17.3 11.1 5.2

Exchange rate (annual average, local per US$) 19.0 660.2 1,746.9 5,314.4

Terms of trade index (2000 = 100) .. 145 100 106

1980–90 1990–2000 2000–09

Population, mid-year (millions) 4.6 6.1 8.4 10.1 2.8 3.1 2.0

GDP (US$ millions) .. 2,667 3,112 4,103 .. 4.4 3.0

Agriculture .. 23.8 20.3 17.2 .. 4.3 6.7

Industry .. 33.3 32.5 53.0 .. 4.9 4.4

M anufacturing .. 4.6 4.0 5.3 .. 4.0 3.1

Services .. 42.9 47.2 29.8 .. 3.6 -2.7

Household final consumption expenditure .. 66.9 77.7 75.2 .. 5.2 3.4

General gov't final consumption expenditure .. 11.0 6.8 8.0 .. -0.5 0.3

Gross capital formation .. 24.5 19.7 21.6 .. 0.1 -0.5

Exports o f goods and services .. 31.1 23.6 40.7 .. 0.3 2.3

Imports of goods and services .. 33.4 27.9 45.4 .. -1.1 0.5

Gross savings .. 14.6 13.3 0.2

Note: Figures in italics are for years other than those specified. 2009 data are preliminary. .. indicates data are not available.

a. A id data are for 2008.

Development Economics, Development Data Group (DECDG).

(average annual growth %)

(% of GDP)

10 5 0 5 10

0-4

15-19

30-34

45-49

60-64

75-79

percent of total population

Age distribution, 2009

Male Female

0

50

100

150

200

250

1990 1995 2000 2008

Guinea Sub-Saharan Africa

Under-5 mortality rate (per 1,000)

-2

0

2

4

6

95 05

GDP GDP per capita

Growth of GDP and GDP per capita (%)

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14°W

12°W 10°W 8°W

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GUINEASELECTED CITIES AND TOWNS

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REGION CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

PREFECTURE BOUNDARIES

REGION BOUNDARIES

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1

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: T7744-GM

REPUBLIC OF THE GAMBIA TECHNICAL ANNEX

ON A PROPOSED

GRANT

IN THE AMOUNT OF

SDR 21.6 MILLION

(US$ 35 MILLION EQUIVALENT)

TO THE REPUBLIC OF THE GAMBIA

AS PART OF SDR 56.8 MILLION (US$ 92 MILLION EQUIVALENT)

FOR THE SECOND SERIES OF PROJECTS UNDER THE FIRST PHASE OF WEST

AFRICA REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM (WARCIP

APL1B)

May 25, 2011

This document has a restricted distribution and may be used by recipients only in the

performance of their official duties. Its contents may not otherwise be disclosed without World

Bank authorization.

2

CURRENCY EQUIVALENTS

(Exchange Rate Effective date April 29, 2011

Currency Unit =

SDR 0.616921 = US$1

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

$

ACE

United States dollar, all dollars are US dollars unless

otherwise indicated

Africa Coast to Europe Submarine Cable

AfDB African Development Bank

AICD

APL

Africa Infrastructure Country Diagnostic

Adaptable Program Loan

AU

BP

African Union

Bank Procedures

CAS Country Assistance Strategy

C&MA

CPAR

CSOs

Construction and Maintenance Agreement

Country Procurement Assessment Review

Civil Society Organizations

ECOWAS Economic Community of West African States

ESMP Environmental and Social Management Plan

GAMTEL Gambia Telecommunications Company

Gbit/s

GDP

GLO-1

Gigabit per second

Gross Domestic Product

GlobaCom-1 Cable

GNIC

GoTG

Gambia National Insurance Company

Government of The Gambia

GPT General Purpose Technology

ICB

ICT

International competitive Bidding

Information and Communication Technology

IDA International Development Association

IFMIS

IFR

IRR

IsDB

ISP

Integrated Financial Management and Information System

Intermediate Financial reports

Internal Rate of Return

Islamic Development Bank

Internet Service Provider

3

ISPAG

ITU

Internet Service Provider Association of The Gambia

International Telecommunication Union

IXP

JAS

Internet Exchange Point

Joint Assistance Strategy

Kbit/s

Mb

Kilobit per second

Megabit

Mbit/s

M&E

MIS

MoF

MoICI

Megabit per second


Management Information System

Ministry of Finance

Ministry of Information and Communications Infrastructure

NGN

NICI

NPV

OD

Next Generation Network

National Information Communications Infrastructure

Net Present Value

Operational Directives

OM Operational Manual

PAD

PIM

PIU

Project Appraisal Document

Project Implementation Manual

Project Implementation Unit

PPA Project Preparation Advance

PPP

PPP

PRSP

PURA

Public-Private Partnership

Purchasing Power Parity

Poverty Reeducation Strategy Paper

Public Utilities Regulatory Authority

RAP Resettlement Action Plan

RPF Resettlement Policy Framework

SAT-3 South Atlantic Three cable

SLA

SOE

SPV

Service level Agreement

Statement of Expenditures

Special Purpose Vehicle

ToR

VoIP

VSAT

Terms of Reference

Voice Over Internet Protocol

Very Small Aperture Terminal

WASC West African Submarine Cable

WARCIP West Africa Regional Communications Infrastructure Project

WBG

UNDP

World Bank Group

United Nations Development Program

4

Vice President: Obiageli K. Ezekwesili

Director for Regional Integration:

Acting Country Director for The Gambia:

Yusupha B.Crookes

Benjamin McDonald

Sector Director:

Sector Manager :

Jose Luis Irigoyen

Philippe Dongier

Task Team Leaders for WARCIP APL 1B:

Task Team Leader for WARCIP-Gambia:


Boutheina Guermazi

5

Table of Contents

I. Strategic Context ..................................................................................................................... 1

A. Country Context ............................................................................................................... 1

B. Sectoral and Institutional Context .................................................................................... 2

C. Higher Level Objectives to which the Project Contributes .............................................. 6

II. Project Development Objectives............................................................................................. 7

A. PDO .................................................................................................................................. 7

i. Project Beneficiaries ........................................................................................................ 8

ii. PDO Level Results Indicators ...................................................................................... 8

III. Project Description............................................................................................................... 8

A. Project components .......................................................................................................... 8

B. Project Financing............................................................................................................ 12

i. Lending Instrument ........................................................................................................ 12

ii. Project Financing Table .............................................................................................. 12

C. Lessons Learned and Reflected in the Project Design ................................................... 13

IV. Implementation .................................................................................................................. 14

A. Institutional and Implementation Arrangements ............................................................ 14

B. Results Monitoring and Evaluation ................................................................................ 14

C. Sustainability .................................................................................................................. 16

V. Key Risks .............................................................................................................................. 16

VI. Appraisal Summary ........................................................................................................... 17

A. Economic and Financial Analysis .................................................................................. 17

B. Technical ........................................................................................................................ 18

C. Financial Management ................................................................................................... 19

D. Procurement ................................................................................................................... 20

E. Social and Environment ................................................................................................. 20

F. Legal conditions and covenants ......................................................................................... 21

Annex 1: Results Framework and Monitoring.............................................................................. 23

Annex 2: Detailed Project Description ........................................................................................ 25

Annex 3: Implementation Arrangements ..................................................................................... 30

Annex 4 Operational Risk Assessment Framework (ORAF) ....................................................... 48

Annex 5: Implementation Support Plan ........................................................................................ 51

Annex 6: Team Composition ........................................................................................................ 54

Annex 7: Economic and Financial Analysis ................................................................................. 55

1

I. Strategic Context

A. Country Context

1. The Gambia‟s service sector contributes over half of national gross domestic product,

even though almost three-quarters of the population still depend on agriculture for

their livelihood. The country has a population of about 1.8 million, and is territorially the

smallest one on the African continent (11,295 square km). The Gambia has limited natural

resources and its main domestically-produced exports are groundnuts, fish, and cotton lint.

Most of its earnings in merchandise trade are derived from re-exports. The Gambia has

sustained positive economic growth rates since 2003, averaging over 6 % per year up to

2010 with only a modest economic slowdown following the 2008 global financial crisis.

GNI per capita in 2009 was US$ 440. Recent poverty estimates still places 61 % of the

population below the national poverty line, with over 34 % living on less than US$1.25 a

day (PPP).1

2. Poverty Reduction Strategy. The country‟s first Poverty Reduction Strategy Paper (PRSP

I) was implemented between 2003 and 2005, and the second PRSP covers an

implementation period of five years (2007 – 2011). This second PRSP outlines an overall

policy framework for growth and poverty reduction based on five pillars: (i). Creating an

enabling policy environment to promote growth and poverty reduction, (ii). Enhancing the

capacity and output of productive sectors - agriculture, fisheries, industry, trade and tourism,

with emphasis on productive capacities of the poor and vulnerable populations, (iii).

Improving coverage of the basic social services and social protection needs of the poor and

vulnerable, (iv). Enhancing governance systems and building the capacity of local

communities and civil society organizations (CSOs) to play an active role in economic

growth and poverty reduction, and (v). Mainstreaming poverty-related cross-cutting issues

into poverty reduction. West Africa Regional Communications Infrastructure Program

(WARCIP) is aligned with this Poverty Reduction Strategy. as well as with the 2008-2011

Joint Assistance Strategy (JAS). Support for the development of a competitive ICT sector

with domestic access to international fiber optic cables resulting into affordable high speed

Internet services and lower communications cost has the potential to strengthen the

realisation of the PRSP pillars. Improvement of the availability and increased affordability

of high-speed Internet infrastructure will also allow the introduction of applications to

improve service delivery and strengthen economic management (JAS pillar 1). It will

accelerate growth and competitiveness (JAS pillar 2).

3. Regional integration is critical for The Gambia‟s sustained economic growth. The need

for greater regional economic and infrastructure integration is obvious and the lack of such

infrastructure holds The Gambia and other countries back from achieving greater economic

growth and making progress on the Millennium Development Goals. For instance, the

African Infrastructure Country Diagnostic (AICD) report posits that if West Africa‟s

infrastructure could be upgraded to the level of the best performing country in Africa

(Mauritius), the impact on per capita economic growth would be in the order of 5 percentage

points2. This estimate is important because The Gambia‟s growth is very dependent on

1 UN Development Indicators- http://hdr.undp.org/en/media/HDR_2010_EN_Table5.pdf

2 Africa Infrastructure Country Diagnostic Report – ECOWAS‟s Infrastructure: A Regional Perspective, April 2010

http://hdr.undp.org/en/media/HDR_2010_EN_Table5.pdf

2

addressing regional challenges and more effective regional integration. Regional cooperation

is high on the Government of The Gambia‟s (GoTG) national agenda, with a view to take

advantage of regional infrastructure, allowing the country to benefit from growing regional

trade and investment. The Gambia is an active member in the African Union (AU) and the

Economic Community of West African States (ECOWAS).

4. A regional telecommunications market is key for effective regional integration and

growth. Between 1995 and 2005, infrastructure improvements are estimated to have

boosted West Africa‟s growth by about one percentage point per capita per year. This

positive contribution to growth was almost entirely attributed to the Information and

Communication Technology (ICT) revolution while it is believed that a deficient power

infrastructure held back economic growth by about 0.1 percentage point per capita per year.3

5. The WARCIP will contribute to a comprehensive solution to address connectivity gaps

in The Gambia. The focus of WARCIP- The Gambia is to contribute to a comprehensive

solution to address connectivity gaps in the country, focusing on international, regional and

national connectivity to enable the creation of a fully integrated network which will provide

affordable high speed connectivity to the country. The project will improve connectivity in

the region as a number of neighbouring countries, notably Guinea Bissau, will also be able

to access to international cables through The Gambia connection.

B. Sectoral and Institutional Context

6. The Gambia is in the top ten countries in Africa in terms of cellular penetration. The

telecommunication sector in The Gambia has been competitive since 2001, and The

Gambia‟s mobile penetration is well above the African average. Mobile penetration has

soared from 16% in 2005 to 84% in 2009, and reached approximately 95% of the population

by the end of September 2010. Four mobile companies operate mobile services (Gambia

Telecommunication or GAMTEL competes as GAMCEL against QCELL, AFRICELL and

Comium). Nigeria‟s Globacom also received an authorisation to operate in 2010.

AFRICELL was the first private operator to enter the mobile market in 2001, and is now the

leading mobile operator with 45% share of the market with a mobile footprint that covers

91% of the country. QCELL offers 3G services and all other operators have authorization to

operate 3G networks.

7. Fixed-line penetration remains very low at 2.87%. GAMTEL was established as a state-

owned company in March 1984. GAMTEL is the only fixed-line operator. In 2007 the

company was partially privatized through the sale of a 50% stake to Lebanese

telecommunication company, Spectrum. The agreement also involved the sale of 50% of

GAMCEL, the state-owned mobile phone operator. This agreement was revoked by the

Government in November 2008 on the basis of a fundamental breach of contract. GAMTEL

continues to be a state owned, limited liability company, with The Gambia government

owning 99% of the shares, and Gambia National Insurance Company (GNIC) owning 1%.

GAMTEL plans an expanded and upgraded national fiber backbone, as part of its Next

Generation Network (NGN) strategy.

3 Africa Infrastructure Country Diagnostic Report – ECOWAS‟s Infrastructure: A Regional Perspective, April 2010

3

8. Internet penetration has only slowly been on the rise, despite competition and

introduction of new technologies. Internet services are available across the country

provided by two of the mobile operators and six major Internet service providers (ISPs). In

total there are about 15,000 Internet subscribers. The number is expected to increase with

the mobile operator's 3G service offerings.

9. The sector suffers from the lack of adequate international connectivity. The Gambia has

one of the first fiber element of backbones on the continent, however, for international

connectivity the country currently depends on a single unstable high-cost 155 Mbit/s

terrestrial link to neighbouring Senegal, which has also contributed to high prices at the

retail level and reduced the level of reliability. Additionally, international bandwidth is

accessed through satellite links to Europe and North America for a total of 14 Mbit/s.

International traffic is directed through Senegal and Guinea-Bissau using microwave radio

links. The country also has a satellite earth station- 1 Intelsat. Average satellite prices are

however between US$4,000-5,000 for 1 Mbit/s (compared with about, US$200 in the US,

and approximately US$500 in East Africa4) and result in high connectivity costs. Currently,

The Gambia uses about 155Mbit/s of bandwidth of which 60-70 % is sold onto private ISPs

who charge high end user prices. There are six commercial ISPs - Net Page Solution

(GAMTEL‟s ISP), QuantumNet, Lainix, Connexion Solutions and Unique Solutions- who

together form the ISP Association of The Gambia (ISPAG). Monthly packages for home

users with private ISPs are from US$30 per month for 128 Kbit/s plus an initial connection

and equipment costs of around US$500. This service represents roughly 120 % of GNI per

capita (2009). Higher speed services are US$150 per month (256 Kbit/s). Corporate

companies pay US$2500 per month for a 1 Mbit/s bandwidth data service.

10. The Gambia adopted a National Information and Communication Infrastructure

(NICI) policy focusing on the role of ICT to implement Vision 2020. The NICI policy

and plan were adopted in 2004 and the National ICT policy adopted in 2010. The policy

framework was designed to address the areas where ICT would facilitate the achievement of

the Vision 2020 overall objective, which is to transform the nation into a middle-income

country by 2020 through accelerating private sector development, restructuring economic

management, developing the human capital base, and institutionalizing decentralized and

democratic participatory government structures, processes and systems. The overall

objective for the policy is to “leapfrog” several stages of development by establishing a

participatory approach in building human resources and a conducive environment that

utilises ICT as a platform to exchange data, information, and knowledge and as a tool to

implement applications and provide services to achieve higher growth rates in all spheres of

socio-economic activities. An Information and Communications Act -ICT Act- enacted in

2009 provides for the restructuring, development and regulation of the information and

communication sector.

11. The GoTG has ambitious plans to support the uptake of the ICT sector. The Ministry

of Information and Communications Infrastructure (MoICI) has an ambitious program to

become the „Silicon Valley of Africa‟ focusing on human resource development, e-

4 After landing of the Seacom submarine cable in Kenya in July 2009, spot short-term pricing terms for 1 Mb were

in the range of $400 - $600/Mb while longer term (e.g. 15-20 year IRU basis) pricing terms were as low as $150 –

200/Mb. The Mombasa to London segment alone was estimated to be within the $50-$70/Mb price range.

4

education (including provision of Internet connections to all schools and tertiary

institutions), and community-use of ICTs. As part of this, MoICI is participating in the AU‟s

Panafrican e-network supported by the government of India, developing a Technology Park

with support from the governments of Egypt and Taiwan, China. MoICI is also working to

establish e-government applications, an Internet Exchange Point (IXP) and provision of ICT

training facilities. It is worth noting the government‟s grand plans for this comprehensive e-

apps vision cannot be realized unless there is higher quality and more cost effective

bandwidth capacity

12. The legal and regulatory environment encourages competition in the sector. The ICT

Act of 2009 aims to create a regulatory environment under which more competition will be

introduced to more sectors of the telecommunications market. Taking into account

convergence, the new law aims to foster a technology-neutral licensing environment, which

will also liberalise the use of Voice over Internet Protocol (VoIP) Internet telephony. The

Gambia Public Utilities Regulatory Authority (PURA) was established under The Gambia

Public Utilities Regulatory Authority Act, 2001 and is a multi-sector regulatory authority

that regulates the activities of providers of certain public services including communications

services. Currently, PURA and MoICI have been tasked with the regulation of certain

aspects of the telecoms sector. PURA however, remains in need for capacity strengthening

to assume its role in a fast changing ICT environment, and the institution faces limitations in

terms of human and financial resources.

13. Incomplete liberalization further contributes to high international connectivity costs.

While the new ICT Act has created the potential for a much more liberalized market

environment, in practice this has yet to occur. A major contributing factor to the difficulty of

obtaining bandwidth capacity at low prices is the monopoly on international fiber links by

incumbent state-owned operator. The monopolization on the international gateway by

GAMTEL promotes high prices and suppresses the demand of the country‟s nearly 2

million people. End users also experience an unreliable connectivity due to bandwidth

filtering by the state-operator. As a consequence of the monopoly on the international

gateway, outgoing international voice traffic is very low around 5 minutes per inhabitant

(the ECOWAS average is just over 11 minutes per inhabitant.) International call charges are

high, costing between US$$0.30-0.68 per minute depending on destination country. When

the international gateway was liberalized for one year in 2006 the price of international calls

dropped by 64%, demonstrating the high costs users are currently paying for international

calls. The existing monopoly for Spectrum (Company managing GAMTEL‟s international

gateway) will expire in early 2012 (before the cable becomes operational). The 2009

Communications Act prohibits new exclusivities on any segment of the market. In addition

the law includes a technology neutral definition of services. Operators applying for an

international gateway license have the option to either use satellite or cable technologies to

terminate/originate their traffic.

14. Poor telecommunications services constrain social and economic development. Despite

noteworthy developments since the initiation of the reform agenda, the sector‟s potential to

improve the competitiveness of The Gambia‟s economy, facilitate economic growth and

social reconstruction and ensure fuller integration of the country in the global economy is

constrained. The lack of access to international submarine cables has resulted in low

5

bandwidth and high price Internet service, which prevents The Gambia from benefiting

from the introduction of advanced ICT enabled applications. The lack of access to low price

and high quality telecommunications services is a factor that limits the potential of The

Gambia to create jobs, expand production of goods and services, and trade competitively

with the rest of the world.

15. The Africa Coast to Europe (ACE) cable represents a unique opportunity for

international connectivity in The Gambia. For purposes of international connectivity

along the coast of West Africa and with the rest of the world, the most attractive and

efficient viable option for The Gambia is to connect to the ACE submarine cable, which is

to be an approximately 17,000km submarine cable system connecting South Africa to

Europe and connecting 23 countries including a landing station in The Gambia. The ACE

cable is expected to become operational in the first half of 20125. An analysis of other

possible options for improving international connectivity in The Gambia clearly shows that

connecting to other cables will involve a higher cost than connection through ACE. Existing

cables like MainOne and the West Africa Submarine Cable (WASC) did not include

proposed landing stations in The Gambia. GAMTEL, the incumbent fixed line operator

signed the ACE submarine cable Construction and Maintenance Agreement (C&MA) on

June 5, 2010 and have made payments to cover the first three installments. The GoTG is

now seeking support from the Bank to cover the remaining payments, as neither GAMTEL

nor the GoTG is in a position to cover the full cost without concessional financing. The

GoTG is interested in replicating the approach followed by Liberia and Sierra Leone in

which the World Bank financed the cost of ACE membership fees for both countries.

16. The World Bank has already conducted legal and regulatory due diligence on the

ACE C&MA as part of project preparation of WARCIP APL 1-A for Liberia and

Sierra Leone. Similar to the cases of Liberia and Sierra Leone, a Special Purpose Vehicle

(SPV) company will be created for the purpose of participating as an ACE member and

managing and operating the landing station. In the case of The Gambia, support from the

World Bank requires a change of the ACE member signatory from GAMTEL to the new

SPV. The team started discussions with ACE and with GAMTEL to ensure timely

completion of the process before the project becomes effective.

17. The World Bank has approved a Project Preparation Advance (PPA) to help The

Gambia capitalize on the ACE opportunity. An initial PPA for US$ 2 million was

granted to The Gambia to support project preparation activities. Under this PPA, support is

being given to optimize the governance, ownership, and financing issues related to the

operation of the landing station and provision of networks and services emanating from the

ACE cable. Additional support for environmental and social safeguards acceptable to the

World Bank was provided under the PPA and allowed the development of an Environmental

and Social Management Plan (ESMP) and a Resettlement and Rehabilitation Plan (RRP) for

the project. The PPA also included policy, legal and regulatory environment technical

assistance to ensure open access6, the creation of a broadband policy and design of a

5 http://www.ace-submarinecable.com/preview/documents/ACECapacityMagazine.pdf



6

strategy to stimulate bandwidth demand, support for setting up the Project Implementation

Unit (PIU) as well as capacity building support for the PIU.

18. GoTG committed to open access principles beyond the landing station. In Parallel to

this support, The Gambia sought support from the Islamic Development Bank (IsDB) to roll

out a more comprehensive fiber backbone initially operated by GAMTEL and requested

World Bank support to help structure open access regime for the national backbone. The

GoTG is interested to develop a communications infrastructure strategy with medium term

targets looking at approaches for divesting the backbone and/or including private sector

management for the backbone. The possibility for the SPV that will be established for the

landing station to take more participation on backbone management was discussed and

could be implemented following results of the study and incorporating lessons learned from

the Public Private Partnership (PPP) experience in the landing station. This will dramatically

accelerate the implementation of NICI strategy and allow the country to fully leverage

connecting to ACE.

C. Higher Level Objectives to which the Project Contributes

19. A full connectivity solution will promote cheaper access to communications and

promote more effective global integration. WARCIP Gambia proposes to contribute to a

full connectivity solution, building on new and existing communications opportunities. The

project is expected to focus on catalytic financing for additional links to international and

national infrastructure (where gaps exist that cannot be addressed by the private sector, and

where there‟s clear evidence of positive externalities) as well as targeted technical assistance

to help The Gambia take full advantage of the resulting international connectivity. By

gaining access to international cables, The Gambia will have better and cheaper access to

communications and be able to connect more effectively with the rest of the world.

20. Intensification of broadband networks stimulates investment and economic growth.

The contribution of broadband networks to economic growth is much more pronounced than

that of narrowband networks. Additional studies have suggested that a 10 percent point

increase in the penetration of broadband in developing countries equates to a 1.4 % increase

in GDP per capita.7 The mobile platform is also highlighted especially as the single most

powerful way to reach and deliver public and private services to hundreds of millions of

people in remote and rural areas across the developing world. New businesses in the ICT

and IT enabled services sector often result from improved access to broadband.

21. In allowing business to communicate more efficiently WARCIP Gambia will increase

private business productivity and profitability. Furthermore, the project will assist in

improving private sector development. The telecommunications and ICT sectors have been

proven to improve business productivity and profitability. This, in turn has the potential to

generate more tax revenues for the government. In this context, policy makers and

regulatory officials in The Gambia will need to be well equipped to provide the most

conducive environment for the private sector to invest and use ICT. Empowering the

national regulator and key policy makers with adequate tools and skills to design,

7 World Bank, Information and Communications for Development 2009: Extending Reach and Increasing Impact.

7

implement, and upgrade the regulatory environment is a critical element for successful

sector reform and development.

22. Increased bandwidth access will provide the opportunity for The Gambia to take

advantage of the transformational impact of ICT. As a cross-cutting enabler of service

delivery, impacts of ICT have been well documented in particular in improving the quality,

efficiency, and reach of basic services such as health, education, and other essential services,

particularly to underserved and poorer communities. Availability of affordable

telecommunications infrastructure is a key requirement to develop and roll out applications

that benefit the poor and disenfranchised. For example in Kenya, a third of the population

now has access to basic banking services using mobiles– while less than five % of the

population previously had a bank account. As the cost of telecommunication services goes

down in The Gambia, similar applications are likely to also surface. In addition, with the

opportunity to obtain needed bandwidth to stimulate development of innovative applications

for use in government institutions, the project will assist in improving governance and

transparency of government functions.

23. The proposed operation is fully in line with the March 21, 2010 Regional Integration

Assistance Strategy (RIAS) Update Partnering for Africa’s Regional Integration and the

West Africa Implementation Action Plan (2010). The RIAS seeks to create economies of

scale, facilitate intra-regional trade and exports and connect landlocked countries to regional

and global trade routes by reducing barriers to movement of goods and services between

countries and improve the regional business environment. Helping The Gambia connect to

the global high speed Internet Networks very much support these objectives. In addition

WARCIP is featured as a flagship project in the RIAS Update.

24. The proposed operation is fully in line with the new World Bank Africa Strategy

Africa’s Future and the World Bank’s Support to It (2011). By facilitating cheaper access

to internet and supporting the development of national and regional communications

infrastructure, WARCIP The Gambia will promote sustainable employment

(Competitiveness & employment ) and will create a critical building block for ICT

applications (Governance & Public sector capacity). The program also focuses on

partnerships (a key element of the Africa Strategy) by leveraging private sector investment

in the ACE submarine cable.

II. Project Development Objectives

A. PDO

25. The project development objective (PDO) of WARCIP-The Gambia is to increase

the geographical reach of broadband networks and reduce costs of communications

services in the territory of The Gambia.8

8 All projects which are part of WARCIP APLs use the same PDO.

8

26. The project has three main components with the ultimate aim being to enhance The

Gambia economic integration. WARCIP-The Gambia seeks to contribute to lowering the

cost and improving quality of connectivity in The Gambia. In order to reach this objective,

the project proposes an integrated approach focusing on (i) the connection of The Gambia to

global broadband fiber optics infrastructure, (ii) creating an enabling environment, dealing

with transactional issues related to the ACE cable and institutional strengthening to remove

existing bottlenecks for private sector participation in both national and regional

infrastructure development. The ultimate objective of the project is to reduce isolation of The

Gambia‟s economy and support its participation in the global economy.

i. Project Beneficiaries

27. WARCIP will benefit the citizens of The Gambia. All over Africa, businesses,

governments, teachers, doctors, farmers, and fishermen, are using ICTs to communicate,

share information, improve productivity and service delivery, find better prices, improve

access to markets, and increase their bargaining power. The situation is the same in The

Gambia. The proposed project will therefore benefit the entire population of the country

including telecommunications operators, telecommunications users, universities, schools,

hospitals, banks, corporate users, and GoTG ministries and departments. However, for the

purpose of M&E, the PIU will define Direct Project Beneficiaries in a more restrictive way to

include Number of active fixed and mobile subscribers (internet subscribers not accounted to

avoid double counting).

ii. PDO Level Results Indicators

Table 1: PDO Level Results Indicators9

Outcome Indicators At closing of the project

Volume of international traffic (Kbit/s) per person

Access to internet services (% of population)

Average monthly price of wholesale international E1 capacity link from capital

city to Europe


30

3.0

Less than US$1,000

1.8 m (51%)

III. Project Description

A. Project components

28. WARCIP -The Gambia will have 3 components: (i) Infrastructure component to improve

connectivity, (ii) Technical Assistance component to create enabling environment related to

leveraging the international connectivity opportunity and transactional issues relating to the

ACE cable, and (iii) Implementation support component.

9 For WARCIP The Gambia, the indicator related to access to telecommunications services (fixed and mobile

services) will not be measured. The Gambia has a very high penetration rate (over 90%) and the project is not

expected to increase access further.

9

Component 1 Supporting Connectivity (US $25.75 million)

(a) International Connectivity- US $ 24.5 million

29. International connectivity will be improved through the financing of The Gambia‟s

consortium fee to the ACE submarine cable. The bulk of this component will be used to

finance The Gambia‟s participation in ACE. The ACE project is proceeding quickly, with

substantial payment requirements of its members. The Gambia has already made three

payments amounting to US$ 7.5 million since June 2010. Given the schedule of payments,

World Bank support of US$ 7 million will be made under retroactive financing, and the

remaining amount will take the form of direct disbursement to ACE.

30. GoTG payment for ACE will be made on behalf of the SPV and partly re-imbursed by

the SPV‟s private participants before the project ends The SPV is in the process of being

created to finance and manage the access to ACE and the landing station in Banjul. Legal

support was provided under the PPA to support the Government to set up the SPV with a

target date for establishment no later than July 2011. Discussion with operators revealed

high level of interest from the private sector (both from mobile operators and from Internet

Service Providers) to co-finance the landing station and to be associated with operating and

managing the facility and the resulting international connectivity capacity. The initial

shareholding approach includes participation from GAMTEL (30%), private operators

(AFRICELL, QCELL, Comium and the ISPAG for 51%). The remaining GoTG shares not

subscribed by the private participants will be made available to new participants under a

divestment plan. Original shareholders of the SPV could also be offered the opportunity to

increase their shares and acquire additional capacity. Support is provided under the PPA for

the establishment of the SPV. The GoTG also considers using a part of its shares (9%) to

provide capacity for government and social use. The final details of the shareholder structure

will be included in the shareholder agreement under preparation through PPA resources.

(b) Regional connectivity ( US$ 1.25 million)

31. Broadband will be provided to improve priority services. While international fiber links

could potentially facilitate better and cheaper access to communications in The Gambia, the

full benefits of this access cannot be achieved without further investments in national

infrastructure and effective use of ICT for critical services. IDA resources will therefore be

used to fund: (i) the national Internet Exchange Point (IXP), (ii) development of high speed

government virtual network for selected Government institutions and (iii) developing a

feasibility study for connection between The Gambia and neighboring countries to

commercialize excess capacity from ACE to less connected neighbors (i.e., Guinea Bissau).

Implementation of this connectivity could be financed by the proceeds from the private

sector participation in the SPV.

32. The GoTG is likely to complement IDA resources for the purpose of additional

national backbone infrastructure. It is expected that the GoTG will complement IDA

resources for the purpose of additional national broadband infrastructure by investing the

10

proceeds from the sale of GoTG shares in the SPV. Resources from the PPA are helping to

develop the framework, plans and support for the divestiture.

33. The IsDB will complement project funding. IDA resources will be further complemented

by funding projected to come from the IsDB for backbone development in The Gambia. The

IsDB funding is expected to be made in parallel. Funding from IsDB was approved on April

30, 2011 and will be provided to GAMTEL for backbone development and Next Generation

Network deployment. It is worth noting that for the international connectivity component

the World Bank funded facilities are feasible on their own and are not dependent on other

facilities being built by other donors. In addition, at the request of the GoTG, the project will

coordinate with the GoTG and IsDB to ensure that the backbone is governed by open access

principles to ensure that Gambian consumers benefit from lower cost connections.

Component 2 - Creating an enabling environment for connectivity (US$ 7.25 million).

34. Support to optimize the governance, ownership and financing issues related to the

operation of the landing station and provision of networks and services emanating

from the ACE cable. This component will provide Technical Assistance (TA) and the

capacity building necessary to support the successful implementation of Component 1 of the

project. Specifically, Component 2 will focus on the transaction design and operating model

for ownership and management of international, regional and national infrastructure using

PPP frameworks consistent with open access principles to create an enabling environment

for improved connectivity.10

The PPP frameworks will focus on principles of open and non-

discriminatory access while maximizing the role of the private sector. This component will

also focus on strengthening the policy and regulatory environment to promote further sector

reform in order to maximize benefits from access to international capacity and liberalized

international gateway. The creation of a new Broadband policy as well as a strategy to

stimulate bandwidth demand will be supported given the high bandwidth capacity that will

enter the country. A number of the activities under enabling environment have been

launched as part of the PPA.

35. Legal and regulatory safeguards for open access will be created. In addition to

transaction design, this component will focus on addressing policy and regulatory

bottlenecks at the national level to maximize the benefits of the proposed connectivity

agenda, and maximize benefits from access to international capacity and liberalized

international gateway. Specific steps would need to be taken, however, in particular to

establish a clear regulatory regime for access and operation of the landing station as well as

develop an open access regime for the national backbone including regulatory regime for

wholesale pricing, in order to ensure that The Gambia fully benefits from the potential

connectivity that the cable offers. Most of the activities under enabling environment are also

included as part of PPA. The activities have been designed so that key elements for the PPP

framework (i.e. SPV for the landing station) are in place for the investment component.

10

Open access is broadly defined as an equal opportunity for operators to have unfettered access to given


11

36. Broadband policy and demand stimulation strategy and implementation support. This

activity will support the Government in developing a comprehensive policy to promote

broadband use in The Gambia to facilitate uptake of demand and applications using the

capacity that will be available to The Gambia following ACE landing. Implementation

support will also be included under this activity to target key areas with significant growth

potential for The Gambia.

37. Implementation support for strategic repositioning of GAMTEL This component will

assist the company with options and strategy to reposition GAMTEL in the market

following the ACE landing with the objective of improving the efficiency, productivity,

customer service delivery, and provide technical and capacity building support to facilitate

overall financial and operational performance. The strategic repositioning could cover

restructuring, a management contract or opening the company to private investment.

38. Support for MoICI on key policy issues: The project will support the MoICI in three key

activities related to (i) development of a communications infrastructure strategy looking at

financing and management of communications infrastructure in general and backbone

infrastructure in particular , (ii) development of policy and institutional framework for Top

level domain name and (iii) support to cyber-security (including access to and freedom of

information, data protection and privacy, e-transactions and authentication, cybercrime and

related issues) to create enabling conditions for increased use of broadband services in The

Gambia and for cross-border communications. The project will also include capacity

building support to the ministry through training, study tours and hiring of advisors.

39. Strengthening the regulatory function. The project will include support to PURA, the

regulator to (i) develop a regulatory action plan, (ii) develop regulatory instruments in key

regulatory priorities, (iii) design the structural separation of GAMTEL between its wholesale

activities as a backbone service provider and its retail activities, (iv) formulate a license fee

regime and carry out taxation study. This activity will also provide capacity building support

including in-house training, study tours and financing of technical advisors.

Component 3: Project implementation including contingency (US$ 2 million)

40. Support to establish Project Implementation Unit (PIU) and build capacity. This

activity will provide support needed to strengthen capacity of the GoTG to implement the

connectivity project, including setting up the Project Implementation Unit and hiring

dedicated staff to work on the project. The component will also cover office equipment,

incremental operating costs, audits, monitoring and evaluation (M&E), communications and

environmental and social studies.

12

B. Project Financing

i. Lending Instrument

41. The lending instrument is an Adaptable Program Loan (APL). WARCIP -The Gambia

is part of the second series of projects under the first phase of WARCIP (WARCIP APL

1B). The objectives of WARCIP-The Gambia are fully in line with the objectives of the

WARCIP program.

42. The Gambia met the readiness triggers identified in the WARCIP Appraisal

Document. These triggers include (i) government commitment to liberalization and open

access principles, (ii) existence of PPP framework (or willingness to formulate one as part of

preparatory activities), and (iii) government commitment to increased sector competition as

evidenced by pro-competitive policy and regulatory frameworks. The decision to include

The Gambia is based on detailed analysis of country readiness and commitment to additional

sector reforms. For The Gambia inclusion is also prompted by the urgent request of the

Government to meet tight deadlines for participation in the ACE cable. GoTG is committed

to creating a public private partnership (PPP) framework to own and manage the landing

station and open access for cable and backbone capacity.

ii. Project Financing Table

Table 3: Project Financing Table

Activities Total (US$ million)

Component 1: Improving Connectivity 25. 75

Financing Participation in ACE 24. 5

Financing Regional Connectivity 1.25

Component 2: Enabling Environment for improved connectivity 7, 25

Support to optimize the governance, ownership and financing issues related to the

operation of the landing station and provision of networks and services emanating from

the ACE cable

0.7

Legal and regulatory safeguards for open access including gateway liberalization 0.75

Broadband policy and demand stimulation strategy and implementation 1

Supporting policy making activities to develop communication infrastructure strategy

and providing, legal and regulatory framework for increased use of ICT services and

capacity building support to MoICI

1.5

GAMTEL repositioning 1.1

Development of regulatory instruments and strengthening regulatory capacity 2.2

Component 3: Project implementation, communications, and M&E 1.705

PIU set up and operating expenses 1.205

Communications, M&E and environmental studies 0.250

Initial support to SPV 0.250

Contingency 0.295

Total 35

13

C. Lessons Learned and Reflected in the Project Design

43. Country commitment to the proposed project is important. The proposed project draws

on lessons learned from previous and ongoing World Bank-financed projects in ICT and

from ongoing efforts in countries in similar situations as The Gambia. Broad global

experience in ICT project implementation indicates that an ICT project success is primarily

contingent on strong country commitment to implementation. The proposed project design

has been guided by the telecommunications sector national policy. GoTG actively sought

support from the Bank to cover the remaining payments to connect to the ACE cable, as

neither the incumbent nor the GoTG is in a position to cover the full cost without

concessional financing. GoTG‟s request to include specific regulatory activity support as

part of the project design reflects its commitment to pursue the reform of the ICT sector and

accelerate the implementation of its NICI strategy.

44. Providing support for regulatory capacity building. Regulatory capacity is necessary to

enable fair competition as problems can and will develop over time. Building such capacity

takes time. At the same time, The Gambia could benefit from the extensive experience of

other countries in this area. The proposed project focuses on building this capacity in the

regulatory authority by using in-house training, study tours, twinning arrangements and

creating opportunities for peer-to-peer learning from more advanced regulators and the

sharing of experiences.

45. There is a need for limited catalytic public funding for infrastructure to improve access

to ICT. For most developing countries, a major obstacle to the adoption of ICT remains the

lack of adequate access to ICT infrastructure. A lack of investment in ICT infrastructure and

access networks coupled with inefficient provision of services are the most important factors

undermining the development of networked economies. Catalytic public funding for

infrastructure development is justified in infrastructure market segments that fail to attract

private investment. In this project, there were initial discussions about providing IDA

funding for the total cost of international connectivity to ACE by providing funding to

GAMTEL. This approach was rejected in favor of seeking contribution from private

operators and focusing efforts on project preparation to create a PPP framework.

46. Providing alternative solutions to the use of satellite capacity can ensure sustainability.

While the proposed project could finance long term purchase of satellite capacity, this would

not be sustainable in the long run, given the associated high prices of such service. The

proposed project therefore builds on the fiber opportunity provided by ACE. The Gambia‟s

decision to join ACE is the result of an analytical process comparing available and potential

connectivity options. The World Bank commissioned a due diligence review of the process

followed by Gambia to reach the decision to join ACE. The due diligence confirms that the

decision was in line with the principle of efficiency, transparency and adherence to good

practice in the industry, when considering options such as buying satellite capacity or

gaining access to fiber by joining submarine cable consortia. The due diligence also

confirms that the option selected is by far the most economical for The Gambia (For more

details see Annex 7).

14

47. The project builds on general lessons learned in the ICT sector. Key lessons learned and

applied to the project design are: (a) project development objectives should be realistic,

focused and achievable in the country, sector and implementing agency context; (b) project

components should support country priorities and have broad ownership among

stakeholders; (c) project design should be flexible to adapt to a rapidly changing

environment; (d) implementation support should be included in Project activities with a

focus on retaining staff to ensure continuity and an accumulation of capacity within the

implementing agency.

48. The Project builds also on specific lessons learned in preparation of phase of WARCIP

APL 1-A Specific lessons from WARCIP APL 1A include payment mechanisms for

membership fees for the ACE submarine cable, safeguard issues related to landing stations,

formulation of tailored public private partnership (PPP) arrangements and open access

principles.

IV. Implementation

A. Institutional and Implementation Arrangements

49. MoICI will coordinate the project. A PIU will be established within MoICI and will be

responsible for the overall coordination, implementation, and supervision of the project. The

PIU will be headed by a Project Coordinator who will report to the Minister of MoICI

through the Permanent Secretary.

50. A PIU will implement the project with support of a focal point forum. The PIU will be

assisted by a core project team composed of a Procurement and FM Specialist and a project

coordinator. The recruitment process for PIU staff is already launched under the PPA. The

PIU will be assisted by a project team called focal points forum, composed of one

representative from MoICI, Ministry of Finance (MoF), PURA, GAMTEL and the private

sector representing the SPV. The focal points are not consultants hired under the project but

rather staff of their respective institutions. The PIU will be in charge of:

(i) day-to-day activities under the project, in particular, procurement and monitoring

activities;

(ii) coordination with the other entities responsible for project implementation;

(iii) preparation of annual work programs, budgets, and procurement plans under the

project;

(iv) dissemination of internal and external audit reports; and

(v) Interaction with the World Bank for the requisite no objections of bidding

documents, RFPs and evaluation reports etc,

Procurement for key staff is at selection stage and being financed through the Project Preparation

Advance (PPA). In the interim the Integrated Financial Management and Information System

(IFMIS) PIU based at the Ministry of Finance is managing the PPA.

B. Results Monitoring and Evaluation

15

51. The PIU will monitor and evaluate the project. The PIU will bear the primary

responsibility for project Monitoring and Evaluation (M&E) of both project progress and

project outcomes, and, as such, will establish standard formats and guidelines for data

collection and reporting, and will organize training sessions for project stakeholders in their

use. The PIU will submit to the MoICI the M&E quarterly report that will include the

updated Results Framework and the Action Table, listing the corrective actions to be

implemented with deadlines and persons responsible clearly identified. The report will be

sent to the Bank for information.


process. Comprehensive M&E reporting will be needed to monitor the results and

performance of the proposed project. It will involve mainly the direct beneficiaries of project

activities, but will be extended to other beneficiaries such as telecommunications operators

and private ICT firms, which ultimately are the main beneficiaries of the proposed project‟s

outcomes. The PIU will review and validate the reports on performance indicators and

recommend corrective actions if necessary. There will be focal points as to who will be

responsible for providing relevant information and monitoring progress, using relevant

performance indicators.

53. Implementation support missions will be conducted at least twice a year. The GoTG,

through the PIU, may perform evaluations jointly with the World Bank team and conduct

supervision or implementation support missions at least twice a year.

16

C. Sustainability

54. The GoTG is very committed to the project thus enhancing sustainability. On the policy

front, the GoTG continues to emphasize the aim of placing ICT at the center of its new

growth strategy, as clearly demonstrated in its 2010 ICT policy. Additional commitment to

telecommunications reform is clear in the GoTG‟s effort to adopt a new Communications

law, the ICT Act in 2009.

55. Legal and regulatory reforms are expected to have sustainable impact. Support for legal

and regulatory reform is expected to have a sustainable impact. Predictability and

transparency of the legal and regulatory framework that is conducive to private sector

participation and competition will increase the demand for affordable quality ICT services,

including advanced applications. Given that a number of private operators already exist in

the market and that there is potential for additional players beyond the wireless sector, it is

likely that the regulatory authority will have sufficient resources and capacity through

license and regulatory fees to become a self-funded institution and sustain the required

regulatory capacity to supervise sector development.

56. Improved coverage and prices will be sustained through the implementation of

advanced applications. Improved service coverage and quality at more competitive prices

for international connectivity and for data services will be sustained as it will create

opportunities for increased use and the introduction of advanced applications.

57. Local capacity will be strengthened through training and technical assistance. The

proposed project will make significant investments in capacity-building efforts through

training and technical assistance to build technical expertise, social capital, and knowledge.

With the focus on building sustainable capacity in key institutions such as the MoICI and

PURA, the benefits of the proposed project are expected to last far beyond project

completion as such capacity will support the creation of ICT policy and regulatory know-

how to guide sector growth and applications in the future.

V. Key Risks

58. Potential risks are summarized in the Operational Risk Assessment Framework (see Annex

IV). The overall project risks are rated MI. Risks identified are manageable and mitigation

measures are in place.

17

Table 4: Key risks and mitigation measures

VI. Appraisal Summary

A. Economic and Financial Analysis

59. Connecting to ACE will see The Gambia breakeven between 2019 and 2020, depending

on the wholesale price adopted, with an NPV to 2025 of US $26.3 million. Using the

same methodology that was developed for the economic and financial analysis of WARCIP

1-A, the IRR is 28.8% assuming an average bandwidth sale price of $100/Mbit/s/month, and

an IRR of 19.9%, assuming $50/Mbit/s/month. The latter figure is likely to be more

competitive and would stimulate more use11

, and takes into account bandwidth pricing

11

It can be noted that the investment in the cable is a „sunk‟ cost that provides an initial fixed 5.9Gbit/s of

bandwidth, so downstream prices can be reduced as much as possible to maximize use of this available capacity.

Main risks Mitigation measures

Inadequate interest from Private

sector to finance connectivity PPPs

PPA approved to support PPP structures that will make it attractive for

private investment. Promise of liberalizing the international gateway

increases private sector appetite. Private sector already signaled significant

interest under transparent conditions. The legal expert hired under the PPA

is currently working with the different stakeholders to finalize the PPP

arrangements ahead of project effectiveness.

Delays in Government

implementation of divestiture of

SPV shares to private operators

Targeted support will be provided under PPA to guide the process and

ensure success.

Delays in implementation of

reforms including liberalization of

the international gateway

TA activities will be provided to address liberalization issues. Commitments

on opening up the sector and securing an enabling environment are being

discussed and addressed through Technical Assistance support and possible

inclusion in DPO under preparation.

Potential "veto" by existing private

licensees and government operators

over different aspects of the

program.

Detailed due diligence to identify incentives for existing operators to

willingly participate in the proposed infrastructure is included under this

project.

Limited institutional capacity TA program to create and sustain capacity included both in the PPA as well

as in component 2 of the project

Difficulties changing ACE CMA

signatory and handing over rights

and responsibilities of GAMTEL to

new SPVs

Initial TA provided for The Gambia already outlined a process for the

discussion with ACE. During the Lisbon Management Committee Meeting,

GAMTEL initiated the discussion on the change of signatory rights with the

other ACE members.

Risk of delays could result in

penalty to clients for missing ACE

payment milestone

Both the Bank and the GoTG are discussing with ACE Consortium

flexibility of installment payments.

Project commercially not viable

due to insufficient demand for

services

Early results of traffic assessment confirm viability. Detailed traffic study

will be conducted and Demand stimulating approaches will be explored

under the project

.Risk of national backbone not

materializing for lack of financing

from other donors

Financing secured for the backbone from the Islamic Development Bank.

The project will support the Government to put in place legal and regulatory

safeguards for open access to the backbone including support for structural

separation of GAMTELs wholesale and retail activities.

18

trends in other regions such as East Africa. The final breakeven year will depend on actual

capacity uptake and the wholesale price of bandwidth. After 2023 at the latest, the project

would be cash-flow positive and substantial revenues would be made if these wholesale

pricing levels are maintained. Investment data was calculated based on a discount rate of

15%. On this basis, membership in ACE, if accompanied by robust regulation by PURA to

ensure competitive pricing releases demand, has potential to provide low cost international

access to a broad range of the population.

60. Joining ACE represents the most cost-effective and effective way to improve

international telecommunication access in The Gambia. Countries and their companies'

decision to join ACE is the result of an analytical process comparing available and potential

connectivity options. The World Bank commissioned a due diligence review of the process

followed to reach the decision to join ACE. The due diligence confirms that it was in line

with the principle of efficiency, transparency and adherence to good practice in the industry,

when considering options of buying satellite capacity or joining submarine cable consortia.

Analysis of other possible options for improving international connectivity clearly shows

that connecting to other cables or satellites would ultimately result in a less compelling

business case than connection through ACE. Cables like MainOne and SAT-3/WASC did

not include proposed landing stations in The Gambia. The option of obtaining further

satellite capacity to connect The Gambia to satellite was also analyzed, but the significantly

lower bandwidth costs obtained through ACE compensate for the higher investment and

maintenance cost.

61. The project will increase access to internet, create jobs, improve education

opportunities and public administration and increase government revenues. The

Project will bring significant benefits to The Gambia in a number of ways including (i)

increased public access to Internet services (ii) a broad range of social benefits through

increased labor productivity, employment creation, learning opportunities for youth,

participation by women in the labor market, and improved public administration (iii) greater

fiscal returns due to new sources of revenue for the GoTG. It must be noted, however, that

the economic and financial benefits of a technical assistance component is generally difficult

to quantify because of the inadequacy of data available at the outset.

B. Technical

62. The proposed project recognizes that infrastructure and policy environment

bottlenecks need to be dismantled to ensure better communications access. Technical

design of the project reflects lessons learned in the ICT sector and international best

practices. For most developing countries, a major obstacle to the uptake of ICT remains the

lack of adequate access to ICT infrastructure. A lack of investment in ICT infrastructure and

access networks, coupled with inefficient provision of services, are the most important

factors undermining the development of networked economies. The main lesson derived is

that success is mainly market driven. Creating a predictable legal and policy environment is

key to improving investor confidence and restoring trust in the ICT sector. The focus of the

proposed project is to create a PPP framework for international connectivity. The project

will establish an enabling institutional and regulatory environment to help attract and sustain

investment in the telecommunications sector.

19

63. The ACE consortium is deemed to be technically qualified and structured according to

best practice in the industry. The team‟s assessment is that the ACE consortium is being

structured in a manner consistent with international good practices in the industry, and is led

by major industry players. Given the experience of key consortium members in designing,

commissioning and operating submarine cables, the implementation risk is minimal. As with

all cables, there is, however, a risk of breaks in the operational system.

64. Legal due diligence on ACE has been conducted for transactional and regulatory

aspects: The Construction and Maintenance Agreement (C&MA) permits certain transfers

of parties‟ rights in certain circumstances. In other circumstances, transfers would require to

be made possible either in a specific amendment to the C&MA permitting GAMTEL to

transfer its rights to a SPV or by obtaining the consent of the parties. The ACE C&MA

permits a party to transfer its interest (without the other parties‟ consent) to (i) a subsidiary

(>50%), (ii) an entity that controls it (>50%), or (iii) a sister company (i.e., an entity

controlled by the same entity as controls the original party (>50%)).

65. Regulatory Issues. The main issues are ensuring “open access” (fair and transparent

pricing) to the capacity provided by the ACE cable at the domestic level once the capacity

comes on shore, as well as ensuring full liberalization of the international gateway. This is

primarily a domestic regulatory issue. A review of the agreement indicates transparent

access to known capacity at known prices. A review of sector regulatory framework,

including licensing conditions, will be conducted at the national level. As indicated above,

the PPA was designed to include technical assistance to support these activities

C. Financial Management

66. A financial management assessment of the PIU of the WARCIP Project under the

oversight of the MoICI implementing the project was conducted. The conclusion of the

assessment is that financial management arrangements in MoICI have to be set up and do not

yet meet the Bank‟s minimum requirements under OP/BP10.02. The overall fiduciary risk

rating is assessed as Substantial (Medium Impact). Once mitigation measures included in the

action plan are implemented, the FM risk is expected to be moderate (Medium Likelihood).

67. The project financial management is weakened by a number of factors. These include :

(i) lack of fiduciary function: the FM staff is not yet in place and there is not a FM manual

and an accounting software, (ii) non-familiarity of the staff and the Ministry of Information

and Communication with IDA financed-projects and FM procedures, (iii) weak internal

control environment and low capacity of the national internal audit unit.

68. Mitigation measures have been identified: To mitigate the country and entity risks, i) a

new stand-alone PIU will have the overall FM responsibility on the project and will work

with Focal Points in charge of technical execution of the different components. (ii) A

Financial Management Officer with competence and experience satisfactory to the Bank will

be recruited to set up the fiduciary function. (iii) A computerized financial and accounting

system will be set up (iv) A consultant will carry out ex-post audits of the project with TORs

20

acceptable for IDA and will issue a quarterly report basis for strengthening the project

internal control environment within the first two years.

D. Procurement

69. IDA funding for component 1 (a) on international connectivity does not go towards a

procurable item subject to compliance with World Bank procurement guidelines. This

is because such funding is for membership fees (paid in different installments) against a set

of rights including use of a certain amount of capacity at preferred rates and a share of

ownership of an indivisible cable infrastructure asset.

70. For other project components (component 1b, components 2 and 3), IDA procurement

guidelines will apply and procurement activities will be carried out by the PIU to be created

in MoICI. This PIU will be staffed by a Project Coordinator, a Procurement Specialist, a

Financial Management Specialist and an accountant. Meanwhile, the fiduciary function for

WARCIP PPA is entrusted to the IFMIS project team at the MoF. This team comprises a

qualified procurement specialist who has both the technical expertise and the experience

necessary to carry out the procurement activities envisaged under the project and has been

recruited on a competitive basis for a part time position.

71. A procurement assessment has been carried out. An assessment of the capacity of the

MoICI to implement procurement actions for the project has been carried out on March 21st,

2011. The assessment reviewed the organizational structure for implementing the project.

72. The Procurement risk of the project is substantial. Risks have been identified and

mitigation measures agreed as detailed in Annex 3.

E. Social and Environment

73. Connection to the ACE cable is not expected to have significant environmental and

social impact. The proposed project is rated as a Category B project. The safeguards policy

triggered are Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Physical Cultural Resources (OP/BP 4.11) and Involuntary Resettlement (OP/BP 4.12). The

cable system is likely to have a submerged or „wet plant‟ part, and a „dry plant‟ part which

interfaces at proposed Landing Stations. The Landing Station is the location where a

submarine or other underwater cable makes landfall. The landing (or termination) station

can also be the point at which the submarine cable connects into the land-based

infrastructure or network. Sections of the cable (particularly both wet and dry plants of each

country‟s lateral connection to the main cable) lie within the territorial waters of the landing

parties while remaining sections lie in international waters, normally in deep seas. The

lateral connecting cable to Banjul connects to the main cable well beyond the 2500 m

isobath. Deep ocean fiber optic cables are no larger than 17-21 mm diameter – about the size

of a domestic garden hose- and are laid mainly upon the surface of the ocean floor.

74. . The final site of the Landing Station is already identified and the Environmental and

Social Management Plan (ESMP) has been prepared, consulted upon, and disclosed

before appraisal. This project will affect less than 50 persons and therefore, the equivalent

21

of an abbreviated Resettlement and Rehabilitation Plan (RRP), has been prepared, consulted

upon, and disclosed before appraisal, It provides a plan for the management of the few

resettlement issues which have been identified, even though these may seem to be of minor

significance (see Annex 3 for further details).

75. OP/BP 7.50-on “Projects on International Waterways” does not apply. While the main

cables are to be placed in non-territorial, deep sea locations, OP/BP 7.50, Projects on

International Waterways, does not apply. The types of waterways covered under the policy

do not contemplate an “open sea.” For purposes of the policy, international waterways

include semi-enclosed coastal waters, closed seas, national rivers flowing into those waters,

and transboundary groundwater12

.

76. The proposed project is expected to have positive social benefits. The main social

impacts of the proposed project are the increased possibility of better access to ICT services

for the population and improved GoTG service delivery. The project will contribute to (i)

enabling ICT to become a driver for sustainable economic growth; (ii) enabling the GoTG to

use ICT to improve services; (iii) improving access and quality of ICT services for the

general population, businesses, and the Government; and (iv)reducing isolation and enhance

economic activities in rural areas.

F. Legal conditions and covenants

77. Effectiveness conditions:

(a) The execution and delivery, on behalf of the Recipient, of the Construction and

Maintenance Agreement, in form and substance satisfactory to the Association, and

containing no prohibition of divestiture of the Recipient‟s shareholding, has been duly

authorized or ratified by all necessary governmental or corporate action.

(b) The SPV has been duly created, registered and made operational in the territory of the

Recipient, including through the appointment of its director general and the adoption of

its shareholders‟ agreement and its by-laws, in form and substance satisfactory to the

Association.

(c) With GAMTEL‟s acquiescence, the ACE Consortium has transferred to the SPV all the

rights and obligations of GAMTEL in the Construction and Maintenance Agreement and

has fully substituted GAMTEL with the SPV as the member of the ACE Consortium.

(d) The Contractual Arrangement, in form and substance satisfactory to the Association, has

been entered into between the Recipient and the SPV.

(e) The Recipient shall have established the PIU under terms of reference and with staff in

numbers and with qualifications satisfactory to the Association. As part of such staffing,

there shall be in place for the PIU: (i) the project coordinator; and (ii) a financial

12

It should be noted that the definition of international waterways under the policy is at variance with the definitions

under the rules established by the International Law Association, as well as the United Nations Convention on the

Law of the Non-Navigational Uses of International Waters Watercourses

22

management specialist and a procurement specialist, all of them under terms of reference

and with qualifications and experience satisfactory to the Association.

(f) The Recipient shall have adopted the Project Implementation Manual in form and substance

satisfactory to the Association

Disbursement Conditions:

78. Set up a computerized financial and accounting system for the Project for disbursements for


Legal covenants:

1. The Recipient shall take all action necessary on its behalf: (i) to carry out the RRP with due

diligence and efficiency and at all times provide the funds necessary therefore; (ii) to adequately monitor

and evaluate the carrying out of the activities provided in the RRP in the carrying out of the Project and in

the contracts to be concluded for the construction of the landing station there under; and (iii) to maintain

the Association suitably informed of the progress in the implementation of the RRP.

2. The Recipient shall take all measures necessary to carry out the Environmental and Social

Management Plan with due diligence and efficiency, ensuring that adequate information on the

implementation the mitigation measures to be implemented to minimize any potential negative impact

under the Project is suitably included in the Project Reports to be prepared pursuant to the provisions of

the Financing Agreement.

3. The Recipient shall: (i) not later than three (3) months after the Effective Date, initially recruit a

consultant to perform a quarterly review of the internal control system for the Project; and (ii) not later

than four (4) months after the Effective Date, recruit an external auditor for the PIU, both on the basis of

terms of reference and with qualifications and experience satisfactory to the Association.

4. The Recipient shall take all action required: (i) to ensure the proceeds of the Grant allocated from

time to time to component 1.1 are transferred to the SPV in an efficient and timely manner; and (ii) to

have in place a suitable legal framework to ensure the Grant is used for the intended purposes

23

Annex 1: Results Framework and Monitoring

THE GAMBIA

WARCIP 1B

PDO: To increase the geographical reach of broadband networks and reduce costs of communications services in The Gambia


Indicators*

Co

re Unit of

Measure

Baseline

2010

Cumulative Target Values**

Frequency Data Source/

Methodology

Responsibility

for Data

Collection

YR 1 YR 2 YR3 YR 4 YR 5

Indicator One: Volume of international

traffic: International Communications


bandwidth

In Kbit/s

per person

10

[Dec 2010)

10 10 39 30 30 Annual SPV PURA/PIU

Indicator Two: Access to internet

services (number of subscribers per 100

people)

Number

per 100

0.75

[Sept.

2010]

1 1.6 2.4 3.0 3.0 6 months Operators PURA/PIU

Indicator three : average monthly price

of wholesale international E1 capacity

link from capital city to Europe

US$/

month/2M

bit/s

$5,000

[Dec

2010]

Less than

$ 5,000

Less than

$ 4,000

Less than

$ 2,000

Less than

$ 1,000

Less than

$ 1,000

Yearly Operators PURA/PIU

Indicator four : Direct project

beneficiaries, of which female13

Number,

%

1.6 m

44%

[Sep

2010]

1.620

45%

1.650

45%

1.680

48%

1.8 million

51%

1.8 million

51%

Annual Survey14 PIU

INTERMEDIATE RESULTS

Intermediate Result (Component One):


Volume of available international

capacity: International Communications


bandwidth

In Gbit/s 0.155 0.155 5.9 5.9 5.9 5.9 yearly PURA PURA


Retail price of internet services (per

US$/month $1,500 $1,500 $1,000 Less than

700

Less than 500 Less than 500 yearly Operators PURA/PIU

13 Direct Project Beneficiaries are defined in section II paragraph 27 of the core text. Number of active fixed and mobile subscribers (internet subscribers not counted to avoid double counting. Assumes % female on a pro-rata

basis using publicly available ratio in the total population.

14 The Direct Project Beneficiaries survey will be coordinated by MoICI and will use different stakeholders of the ICT sector to collect information from a representative sample of beneficiaries.

24

Mbit/s per Month, in US$)

Intermediate Result (Component Two):


Impact on Telecom sector of World

Bank technical assistance (composite

score)

1-low

impact to

5 –high

impact

0 1 2 3 3 3 yearly

25

Annex 2: Detailed Project Description

THE GAMBIA

WARCIP 1B

1. WARCIP -The Gambia will have three components. WARCIP The Gambia will have 3 components (i)

Infrastructure component to improve connectivity ii) Technical Assistance component to create enabling

environment, and (iii) implementation support.


2. The main focus of the project is to connect The Gambia to ACE. Improving international connectivity

through funding access to ACE submarine cable is the main focus of WARCIP The Gambia. Other

connectivity priorities are treated as a secondary focus.

a) International connectivity: US$24.5 million

3. Connecting to ACE represents a unique window of opportunity. For purposes of international

connectivity along the coast of West Africa and with the rest of the world, the most attractive and

efficient viable option for The Gambia is to connect to the ACE project, which is anticipated to be an

approximately 17,000 km submarine cable system. The Cable system will connect 23 countries between

South Africa and Europe, including a landing station in The Gambia. In all likelihood, there are no other

opportunities for The Gambia to connect to another submarine cable for many years to come. Analysis has

confirmed that other submarine cable projects under preparation in the region are not viable options for

The Gambia. 15

4. In total The Gambia will pay US$25 million for a 2.8% share of total cable capacity. The total

estimated cost of the ACE submarine cable is around US$700 million based on the final basic system

configuration with 23 landing points and is to be operational in 2012. On June 5, 2010, the Government

of The Gambia (GoTG) signed the ACE Construction and Maintenance Agreement (C&MA) of the ACE

consortium via GAMTEL and committed to paying its contribution of US$25 million. The GoTG has paid

for the first three instalments of the ACE cable (a total of US$7.5 million) and is now seeking support

from the Bank to cover the remaining payments, as neither the incumbent nor the GoTG is in a position to

cover the full cost without concessional financing. Complete membership will ensure that a cable landing

station is constructed in Banjul and that The Gambia thereby gains access to the international

telecommunications capacity to be made available by ACE‟s planned submarine fiber optic cable.

5. Discussion with operators revealed high level of interest from the private sector (both from mobile

operators and from Internet Service Providers) to co-finance the landing station and to be

associated with operating and managing the facility and related international capacity. The

remaining GoTG shares will be made available to other parties under a divestment plan. Original

shareholders of the SPV could also be offered the opportunity to increase their shares and acquire

additional capacity. The initial shareholding structure includes participation from GAMTEL (30%),

15

Mike Jensen Report entitled „International Connectivity Options for The Gambia, Liberia and Guinea‟ for the World Bank (May

2010).

26

Private operators (51%) and Government (19%). Private sector will start with minimum equity and will

increase it as they make investment in capacity in the cable.

6. Part of the remaining Government shares in the SPV will be converted to capacity purchase- Pre-

purchase discounted bandwidth for ministries and designated institutions will be implemented as the need

arises. GoTG could consider making payments for the cost of obtaining discounted price for Internet

capacity (Internet access). In return for obtaining this advance from GoTG, the SPV would provide

subsidized capacity to specific ministries and / or institutions to be designated from time to time by

GoTG. Price paid by the designated ministries and institutions for this service would be a discounted

price, lower than the normal wholesale or retail price for broadband capacity, possibly equal to the actual

costs of operation of the SPV during the period in which the capacity is provided. Service level agreement

and associate legal and regulatory instruments will be developed under the project to ensure the success of

this activity.

7. The GoTG intends to divest its remaining shares to new entrants. This divestment approach will be

supported by the project. Existing operators could be given the right of first refusal to increase their

existing capacity following few years of operation of the cable.

Regional connectivity (US$1.25 million)

8. Broadband will be provided to improve priority services. While international fiber links could potentially

facilitate better and cheaper access to communications in The Gambia, the full benefits of this access

cannot be achieved without further investments in national infrastructure and effective use of ICT for

critical services.

9. The GoTG has expressed interest in the development of high speed government virtual private networks

for selected institutions within Banjul. The United National Development Programme (UNDP) has

provided some resources to undertake an initial needs assessment of these institutions. It is expected that

World Bank funding will leverage this preliminary work.

10. IDA resources will therefore be used to fund a national Internet Exchange Point (IXP). This would likely

include the hosting of shared time-servers, local Domain Name Servers (DNS) and caching servers. A

fully functional Internet Exchange could help The Gambia to exchange traffic locally, and avoid paying

high bandwidth prices.

11. It is expected that the GoTG will complement IDA resources for the purpose of additional national

broadband infrastructure by investing the proceeds from the sale of GoTG shares in the SPV. Resources

from the PPA are helping to develop the framework, plans and support for the divestiture.

12. In order to create more demand for the capacity and ensure better connection to its neighbours, GoTG

intends to use part of the funding under this component to undertake a detailed feasibility study for a fiber

link to Guinea Bissau. The study will identify funding needs as well as business plan for financing and

managing the link with possible financing from the proceeds from Private Participants in the SPV.

13. IDA resources will be further complemented by funding projected to come from the IsDB, for additional

national and cross-border infrastructure in The Gambia. The IsDB funding is expected to be made in

parallel and likely to finance terrestrial broadband backbone fiber networks and broadband connections

27

within and between The Gambia and its neighbours. The Bank is working closely with the IsDB to ensure

that open access principles apply to all communication infrastructure financed under both projects.

Component 2- Creating an Enabling Environment for improved connectivity (US$7.25 million)

14. Support to optimize the governance, ownership and financing issues related to the operation of the

landing station and provision of networks and services emanating from the ACE cable. This

component will provide Technical Assistance (TA) and the capacity building necessary to support the

successful implementation of Component 1 of the project. Specifically, Component 2 will focus on the

transaction design and operating model for ownership and management of international, regional and

national infrastructure using PPP frameworks consistent with open access principles to create an enabling

environment for improved connectivity.16

The PPP frameworks will focus on principles of open and non-

discriminatory access while maximizing the role of the private sector. This component will also include

the strengthening of the policy and regulatory environment to promote further sector reform in order to

maximize benefits from access to international capacity and liberalized international gateway. The

creation of a new Broadband policy as well as a strategy to stimulate bandwidth demand will be supported

given the high capacity that will enter the country. Most of the activities under enabling environment are

included as part of the PPA.


(i) Support to optimize the governance, ownership and financing issues related to the operation of

the landing station and provision of networks and services emanating from the ACE cable.

Under this activity legal and financial advisory services will be provided to put in place an optimal

structure for the landing station and access to the cable capacity. Those services will include (i) designing

and negotiating instruments and contracts and related stakeholders‟ agreements, (ii) defining the rights

and obligation of different equity stakeholders (Government, GAMTEL, private operators etc.), and (iii)

defining appropriate risk sharing and commensurate financial rewards between parties.

16. Because of the urgency to secure participation in the ACE cable and lead time needed to put in place the

structure for ownership and management of the landing station, the proposed approach is to have

Government take a controlling position on an interim basis while the final management arrangements are

being finalized. This activity will support the GoTG to put in place the divestiture strategy for

Government shareholding. In particular it will define the scope of the exit clauses, valuation of public

shares, as well as timing and transition process for divestiture.

(ii) Legal and regulatory safeguards for open access including gateway liberalization

17. This activity will finance a detailed assessment of current legal and regulatory framework and

identification of needed reforms to ensure open and non discriminatory access to cable landing facility

and associated cable capacity, including issues related to licensing of SPV: international gateway

facilities, fully liberalized international gateway (landing station), open access regime (national and

international backbone essential facilities), wholesale price cap control mechanism and quality

outsourcing of O&M. The detailed development of instruments will be conducted under the project. The

PPA financed the assessment and the action plan and Government policy statement. Additional support

16

Open access is broadly defined as an equal opportunity for operators to have unfettered access to given infrastructure or services

under similar terms and conditions

28

for full implementation will be secured under the project. The project will also support establishing an

open access regime for the national backbone infrastructure that will be financed through IsDB resources.

Support will include regulation of wholesale pricing and needed regulatory safeguards for open access.

(iii) Broadband policy and demand stimulation strategy and implementation support

18. This activity will support the GoTG to have a comprehensive policy to promote broadband use in Gambia

to facilitate uptake of demand and applications using the capacity that will be available to Gambia

following ACE landing. The policy and strategy will target a number of areas including additional

infrastructure requirements within the country, regulatory actions for broadband development, priority

areas where applications are likely to pick up. The activity will include specific implementation support.

The policy and strategy will target a number of areas including additional infrastructure requirements

within the country, regulatory actions for broadband development, priority areas where applications are

likely to pick up. The activity will also include specific implementation support on a pilot basis to

implement transformative applications in key areas. This could include programs to connect schools,

university, hospitals and or targeted support to areas of significant growth potential in The Gambia like

tourism, agriculture, etc. The priorities will be identified and validated under the demand stimulation

study.

(iv) Implementation support for Strategic repositioning of GAMTEL

19. This component will assist the company with options and strategy for improving the efficiency,

productivity, customer service delivery, and provide technical and capacity building support to facilitate

overall financial and operational performance. GAMTEL currently depends for much of its revenue on the

high international voice termination and outgoing rates it is able to charge as the sole /monopoly gateway.

As this revenue stream is expected to disappear when the international gateway is liberalised GAMTEL

will need to become more efficient and responsive to operator concerns, implement Service Level

Agreements and improve service levels.

(v) Strengthening the regulatory function of PURA, the regulator

20. Under this component five activities will be supported (i) development of a regulatory and organizational

action plan for PURA, (ii) development of key regulatory instruments in a number of areas related to

licensing reform, spectrum reform, quality of service, enforcement, consumer protection, cost based

pricing, interconnection numbering, (iii) conducting studies on license fees and taxation for the sector to

guide sector reforms, mobile number portability and definition of significant market power (iv) support to

implement structural separation between wholesale and retail markets and (v) capacity building and skill

strengthening in areas related to wholesale market regulation, PPP framework and other emerging

regulatory issues. Capacity building could take several forms including study tours, twinning

arrangements, workshops, etc

(vi) Support for MoICI on key policy issues and building its capacity:

21. The project will support the MoICI in three key activities related to (i) development of a communications

Infrastructure strategy looking at financing and management models for infrastructure in general and

backbone in particular that foster open and competitive access and guarantee lower ICT pricing to end

users, (ii) development of policy and institutional framework for Top level domain name and (iii)

Providing support to the MoICI to put in place cyber-security (including access to and freedom of

29

information, data protection and privacy, e-transactions and authentication, cybercrime and related issues)

for national and cross-border data communications. The project will also include capacity building

support to the ministry through training, study tours and hiring of advisors.

Component 3: Project implementation, communications and M&E including contingency (US$ 2

million).

22. This component will include support for setting up the PIU, support for environmental studies,

communications and M&E as well as initial support to the SPV that will manage the landing station.

23. A PIU will be established within the MoICI and will be responsible for the overall coordination,

implementation, and supervision of the project. The PIU will be headed by a project coordinator who will

report to the Minister. The PIU will be assisted by a core project team composed of a Procurement and

external Financial Management Specialist and representatives from the MoICI. The PIU will be in charge of

(i) day-to-day activities under the project, in particular, procurement and monitoring activities; (ii)

coordination with the other entities responsible for project implementation; (iii) preparation of annual work

programs, budgets, and procurement plans under the project; (iv) dissemination of internal and external

audit reports; and (v) implementation of their recommendations.

24. Environmental studies This activity included funding and disclosure of environmental studies prior to

appraisal of the project. Specifically an Environmental and Social Management Plans (ESMPs and a

Resettlement and Rehabilitation Plan (RRP). It also includes activities related to monitoring and

implementation of the said instruments, through hiring part time environmental consultant to the PIU.

25. Communications and M&E support. The PIU will recruit or designate a person responsible for M&E,

based on the capacity assessment of the PIU staff right after project effectiveness. More specifically, the

person responsible for M&E will liaise with all the project‟s stakeholders (through designated focal

points) to gather relevant information and data regularly. Additional activities would include conducting

the surveys to ensure a good monitoring and evaluation of the project. The project will also cover the

costs related to communications strategy for the project and implementation of the strategy to reach out to

the public and increase awareness of the project.

26. Initial support to the SPV: The project will provide initial support to SPV to cover immediate cost related

to its set up as well as to hire a local legal expert to help with the legal paperwork related to the SPV.

30

Annex 3: Implementation Arrangements

THE GAMBIA

WARCIP 1B

I. Project administration mechanisms

1. The proposed project will be implemented under the aegis of MoICI. Implementation arrangements

involve creation of a Project Implementation Unit (PIU) that will be supported by five Focal Points. The

PIU will be headed by a Project Coordinator who will report to the Minister through the Permanent

Secretary.

Figure 3.1 Implementation diagram

The PIU will be composed of

A project coordinator

A procurement specialist

A financial management specialist

An accountant

Support staff

PIU

MOICIFocal Point

MoF Focal Point

PURA Focal Point

SPV focal Point

GAMTELFocal Point

Minister

Permanent Secretary

31

2. The PIU will also hire M&E consultant and environmental and social specialist on a part time basis to

ensure good implementation of safeguards instruments developed under the project. The process of hiring

the project team started under the PPA. The FM and accountant position are at short listing stage, the

procurement position is already filled. The Terms of Reference (ToRs) for the project coordinator position

has been advertised.

3. The PIU will serve as the Grant Administrator of the project and will handle all administrative matters in

accordance with the Project Implementation Manual (PIM) that is currently under preparation by MoICI

under the PPA. It will also ensure financial management and handle project disbursements, and include

the preparation and submission of replenishment requests to IDA. The Unit will also be responsible for

(i) maintaining an Management Information System (MIS) for tracking progress in all project

subcomponents, both in terms of financial performance and meeting implementation targets and monitor

the performance of all contractors under the project; (ii) preparing annual work programs and budgets,

and if necessary, reviewing, in consultation with IDA, the reallocation of resources across the various

components of the project as lessons emerge as to patterns of demand and development impact.

Development of the PIM and establishment of the MIS will be financed under the PPA. The new PIU will

work closely with the IFMIS PIU handling the PPA to ensure a smooth transition.

4. The PIU will be assisted by a task team composed of five focal points.

o Focal point recommended by the Minister MoICI on issues related to policy matters and overall

coordination of the project;

o Focal point recommended by PURA on issues related to regulatory component

o Focal point recommended by GAMTEL on issues related to GAMTEL support

o Focal Point designated by MoF for issues related to the SPV.

o Focal point from the private sector designated by the SPV for issues related to component 1 (a)

5. The focal point will be responsible for facilitating activities related to their respective components,

including developing ToR and draft procurement documents, and will be the focal points for monitoring

progress of their components and for collecting and updating indicators for the components they manage. The

focal points are not hired under the project as consultants. They are nominated by their respective entities to

ensure effective implementation. The PIM will detail their respective roles and responsibilities.

32

II. Financial Management, Disbursements and Procurement

FINANCIAL MANAGEMENT

6. The objective of the Financial Management Assessment is to determine whether the implementing unit

of the WARCIP Project under the oversight of MoICI has acceptable financial management arrangements in

place to take on the project‟s fiduciary responsibility. These arrangements include accounting system and

reporting, auditing, and internal controls. The financial management arrangements of the implementing unit

are acceptable if: (i) it is capable of recording correctly all transactions and activities; (ii) it supports the

preparation of regular and reliable financial statements; (iii) it safeguards its assets, and (iv) it is subjected to a

satisfactory auditing process. The assessment complied with the Financial Management Manual for World

Bank-Financed Investment Operations that became effective on March 1, 2010. It is worth noting that the PPA

is being managed on an interim basis under IFMIS PIU established under the MoF. An assessment of this PIU

has been conducted and confirmed the interim PIU meets OP 10.02 requirements.

7. The GoTG has set in place an IFMIS software for public funds. The software can be extended to

projects and can capture project transactions and generate a general ledger. For example, the FM team of the

IFMIS Project can process the project‟s transactions on line in a separate ledger account and keep the project

bank accounts. But, IFMIS software is not fully customized to generate directly from system adequate

financial reports: quarterly reports, budget execution report, automated bank reconciliations and annual

financial statements. During The Gambia CPPR held on April 7, 2011, the IFMIS IT team committed to

configure IFMIS in a short term in order to cover all financial management aspects. So, it can be reasonable to

expect a full functional computerized financial management system before WARCIP effectiveness. For more

assurance, an application should be set as back up and will be used for producing financial reports on basis of

the general ledger generate from the IFMIS Software.

8. Payments to ACE will be made directly by the Project to ACE under direct disbursement. Setting up of a

fully functional financial computerized system will be a disbursement condition for components 1.b, 2 and 3.

Payments under component 1 (membership fee to ACE) will not have setting up the accounting system as a

disbursement condition.

9. In order to meet the ACE payment schedule, the GoTG covered a number of payments to ACE from the

National Budget. The project will cover a total of US$ 7million under retroactive financing to allow the

Government to recover the amounts paid.

Funds flow and disbursement arrangements

Disbursement methods

10. Disbursements under the Grant would be transaction based. Direct Payment and Statement of

Expenditures (SOE) methods will apply as appropriate. The conversion to report-based disbursements may be

envisaged when the PIU has capacity to produce acceptable IFRs. IDA will authorize an advance to the

designated account of the PIU. Funds will be used to honor eligible expenditures. The minimum value of

Direct Payment and Special Commitment will be 20 % of the designated account ceiling.

11. The project will submit on a monthly basis a Bank statement and a reconciliation of the designated

account, together with the withdrawal applications. All supporting documentation for SOEs will be retained at

the PIU and must be made available for periodic review by Bank‟ missions and external auditors.

33

Designated Account

12. The designated account will be located in the Central Bank and managed by the PIU. The currency of

the designated account will be the US Dollars and the allocation will cover approximately four months of

expenditures. The Designated Account will be managed according to the disbursement procedures described

in the Administrative, Accounting and Financial Procedures Manual and Disbursement Letter.

Withdrawal of Proceeds

Table 3.1: Withdrawal of Proceeds

Category

Amount of the

Grant Allocated

(expressed in US$)

Percentage of

Expenditures to be

Financed

(inclusive of Taxes)

(1) Consortium Fees under Part

1.1 of the Project

24,500,000 100%

(2) Goods, works, services

(consultants‟ and non-

consulting), training and

workshops under the Project,

and Operational Costs

8,500,000 100%

(3) Refund of Preparation

Advance No. Q758-GM

2,000,000 Amount payable

pursuant to Section

2.07 of the General

Conditions

TOTAL AMOUNT 35,000,000

In application of the Country Financing Parameters for The Gambia, all expenditures will be financed at 100 %.

Budgeting arrangements

13. The budgeting process will be clearly defined in the FM Procedures Manual and will be adopted by

Ministry of Information and Communications Infrastructure before the beginning of the year. Each Focal Point

and the Project Coordinator will prepare budget related to their respective component. The project

consolidated budget will be submitted to the IDA‟s no objection.

Accounting policies and procedures

34

14. Project accounts will be maintained on a cash basis, supported with appropriate records and procedures

to track commitments and to safeguard assets. Annual financial statements will be prepared by the PIU in

accordance with Generally Accepted Accounting Principles (GAAP).

Internal control

15. The FM manual will be set out with a clear description of the approval and authorization processes and

internal controls and should be approved by the MoICI or their representative.

Reporting and Monitoring

16. The PIU would prepare Interim Un-audited Financial Reports (IFRs) on a quarterly basis and submit

copies to the World Bank within 45 days following the end the calendar quarter. The IFR will include sources

and uses of funds by project expenditures classification. It will also include a comparison of budgeted and

actual project expenditures (commitment and disbursement) to date and for the quarter.

17. The PIU will produce Annual Financial Statements, and these statements will comply with The Gambia

and World Bank requirements. These Financial Statements 17

will comprise of:

a Statement of Sources and Uses of Funds,

a Statement of Commitments,

Accounting Policies Adopted and Explanatory Notes,

a Management Assertion that project funds have been expended for the intended purposes as

specified in the relevant financing agreements

Audit arrangements

Internal Audit

18. Internal audit function for the project will be assumed by a consultant who will carry out ex-post audits

within the oversight of the MoICI or their representative. The capacity of the Gambian internal audit unit will

also be developed through the CFAA‟s action plan in order to perform ex-post audits for this project.

External audit

19. The Financing Agreement will require the submission of Audited Financial Statements for the PIU to

IDA within six months after year-end. External auditor with qualification and experience satisfactory to the

World Bank will be appointed to conduct an annual audit of the project‟s financial statements. A single

opinion on the Audited Project Financial Statements in compliance with International Standards on Auditing

(ISA) will be required.

20. The external auditors will prepare a Management Letter giving observations and comments, and

providing recommendations for improvements in accounting records, systems, controls and compliance with

financial covenants in the Financing Agreement.

The table below summarizes the auditing requirements:

17

It should be noted that the project financial statements should be all inclusive and cover all sources and uses of funds and not only those provided through IDA funding. It thus reflects all program activities, financing, and expenditures, including funds from other development partners.

35

Table 3.2: Auditing report dates

Audit report Due Date

Financial Statements

Management letter

End of June

Financial Management Action Plan

Table 3.3: Financial Management Action Plan

ACTION When By whom

1. Appoint a Financial Management Officer to handle FM

and accounting activities:

PIU Process of appointment started By negotiation (Done)

Financial management officer appointed By effectiveness

2. Set up a computerized financial and accounting system By disbursements for


PIU

3. Prepare and adopt the administrative, financial and

accounting procedures manual in the PIU

By effectiveness PIU

4. External Audit

PIU Draft the ToR for the financial audit of the Project By the negotiation

Selection of the auditor 4 months after effectiveness

5. Internal Audit

PIU

Draft the ToR for internal audit to be performed

by a consultant

By the negotiation

Selection of the consultant to perform quarterly

review

3 months after effectiveness

Conclusion of the assessment

21. The conclusion of the assessment is that financial management arrangements in MoICI have to be set up

and do not yet meet the Bank‟s minimum requirements under OP/BP10.02. The overall fiduciary risk rating is

assessed as Substantial (Medium Impact). Once mitigation measures included in the action plan are

implemented, the FM risk is expected to be moderate (Medium Likelihood).

PROCUREMENT

A) General

22. Procurement for the proposed project under components 1b, 2 and 3 will be carried out in

accordance with the Procurement Guidelines: Guidelines of Goods, Works and Non-consulting

Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers of January

2011. The general description of various items under different expenditure category is described below.

For each contract to be financed by the Grant, the different procurement methods or consultant selection

methods, the need for prequalification, estimated costs, prior review requirements, and time frame are

agreed between the Borrower and the Bank project team in the Procurement Plan. The Procurement Plan

will be updated at least annually or as required to reflect the actual project implementation needs and

improvements in institutional capacity.

36

23. A Country Procurement Assessment Review carried out in The Gambia in October 1998, flagged

the main issues such as the lack of capacity regarding the Recipient's staff, the absence of standard

bidding documents at the national level, the insufficient capacity of local contractors for contracts

subject to International Competitive Bidding (ICB) and corruption. Recommendations were made to

address these issues. The Bank, through the Costal Biodiversity and Management Project , provided

support to strengthen the Recipient's capacity in procurement, modernize the procurement process and

improve regulation (approval of Gambia Public Procurement Act). Thanks to this plan, some of the issues

have been addressed, including: training staff responsible for procurement, designing standard bidding

documents, including provisions in the Code against corruption. Nonetheless, the situation remained

risky. A Country Procurement Issues Paper was prepared in 2005 as an update to the 1998 CPAR, and

giving an updated action plan. The GoTG has recently (March 2010) issued its own procurement report

along with a proposed action plan with several recommendations, including the need to strengthen

capacity in procurement management and the need for institutional reinforcement through the

establishment of a procurement regulatory body with an appeal committee, the strengthening of the

private sector and judiciary reinforcement.

24. For National Competitive method (NCB) can be used , subject to the following additional

requirements and modifications: (i) the Recipient shall use standard bidding documents for the

procurement of goods, works and non-consulting services acceptable to the Association; (ii) in accordance

with paragraph 1.16(e) of the Procurement Guidelines, each bidding document and contract financed from

the proceeds of the Grant shall provide that the bidders, suppliers, and contractors, and their sub-

contractors, agents, personnel, consultants, service providers or suppliers, shall permit the Association to

inspect all their accounts, records and other documents relating to the submission of bids and contract

performance, and to have them audited by auditors appointed by the Association. Acts intended to

materially impede the exercise of the Association's inspection and audit rights provided for in paragraph

1.16(e) of the Procurement Guidelines constitute an obstructive practice as defined in paragraph

1.16(a)(v)(bb) of the Procurement Guidelines; and (iii) each bidding document and contract financed from

the proceeds of the Grant shall include provisions on matters pertaining to fraud and corruption as defined

in paragraph 1.16(a) of the Procurement Guidelines. The Association will sanction a firm or individual, at

any time, in accordance with prevailing Association's sanctions procedures, including by publicly

declaring such firm or individual ineligible, either indefinitely or for a stated period of time: (A) to be

awarded an Association-financed contract; and (B) to be a nominated sub-contractor, consultant, supplier

or service provider of an otherwise eligible firm being awarded an Association-financed contract.

25. Procurement of Works: Works procured under this project would include small civil works for the cable

inland connection. No high value contract on civil works is expected to be financed under this project.

26. Procurement of Goods: Goods procured under this project would include and are not limited to:

Telecommunication equipment and accessories, vehicles, Internet connectivity, office furniture, office

equipment (Office Space for WARCIP – PIU)

Most of the contracts are of small value and therefore ICB method is very limited. The procurement will

be done using Bank‟s SBD for all ICB and for all NCB subject to any adaptation as required. Small

contracts for goods may be procured using the shopping procedures as per paragraph 3.5 of the

Procurement Guidelines.

37

27. Procurement of non-consulting services: These services may concern operating expenses such as office

maintenance, rent of Office Space for WARCIP - PIU, equipment maintenance, and non-consulting

services related to the organization of workshops. The related contracts will be at small value and they

may be procured using the shopping procedures as per paragraph 3.5 of the Procurement Guidelines.

28. Selection of Consultants: Consulting services will include but are not limited to (i) Internet Exchange

Point Study, ii) selection of an Advisor to optimize the governance, ownership and financing issues

related to the operation of the landing station and provision of networks and services emanating from the

ACE Cable, iii) Selection of an Investment Bank to support implementation of ownership and

management of landing station including implementation of divestiture strategy for Government

shareholding, iv) Legal and regulatory due diligence, safeguards for open access including gateway

liberalization, v) Broadband study strategy and demand stimulation strategy and action plan, vi)

Environmental Studies, vii) Restructuring of GAMTEL for the repositioning, viii) recruitment of PIU‟s

key staff, (ix) Project‟s operation manual, x) financial audits.

Short lists of consultants for services estimated to cost less than US $ 200,000 equivalent per contract may

be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the

Consultant Guidelines.

29. Operational Costs: these costs may include office furniture, office maintenance, equipment maintenance

and cost related to the project coordination needs; they are either goods or non-consulting services and

they may be procured using the shopping procedures as per paragraph 3.5 of the Procurement Guidelines.

The project operational manual should describe the procurement process for the related goods or non-

consulting services.

B. Assessment of the agency‟s capacity to implement procurement

30. IDA funding for component 1 (a) on international connectivity does not go towards a procurable

item subject to compliance with World Bank procurement guidelines. This is because such funding is

for membership fees (paid in different installments) against a set of rights including use of a certain

amount of capacity at preferred rates and a share of ownership of an indivisible cable infrastructure asset.

For other project components (1 b, components 2 and 3), IDA procurement guidelines will apply

and Procurement activities will be carried out by the PIU to be created in the MoICI. This PIU will

be staffed by a Project Coordinator, a Procurement Specialist, a Financial Management Specialist and an

accountant. A Monitoring and Evaluation consultant will also be hired under the project. Meanwhile, the

fiduciary function for WARCIP Project Preparation Advance is entrusted to the IFMIS project team. This

team comprises a qualified procurement specialist who has both the technical expertise and the experience

necessary to carry out the procurement activities envisaged under the project and has been recruited on a

competitive basis for a part time position.

31. An assessment of the capacity of the MoICI to implement procurement actions for the project has

been carried out. The assessment reviewed the organizational structure for implementing the project.

38

32. Most of the issues/ risks concerning the procurement have been identified and include:

The PIU is not yet created, nor a procurement specialist appointed. MoICI has not implemented

a former project under The World bank financing, and has not past experience on the World

Bank procedures. The Ministry‟s Contract Committee members are not familiar with

international procurement procedures, and may obstruct or delay the procurement process,

especially the evaluation of bids and consultants‟ proposals;

The prior review of the procurement documents and procurement decisions by the procurement

control body in the country may not be enforced for all contracts, in particular those under

foreign financing;

As the project includes activities related to GAMTEL, PURA and other beneficiaries, including

the Ministry of Finance, possible interactions between the PIU and the other actors (MoICI,

GAMTEL and PURA) may affect negatively the procurement process.

The MoICI doesn‟t have a Manual of Procedures nor a PIM but has an acceptable filing system

33. The corrective measures which have been agreed are:

As mentioned in the implementing arrangements, a PIU will be created. The procurement

function of the PIU will be performed by the Procurement Consultant of the IFMIS Project and

extended her support to the Project Preparation Advance. Since she has been recruited on a

competitive basis, and she has the necessary qualification and experience, at effectiveness, she

might be considered to fill the procurement position of the PIU. The PIU procurement

specialist will be assisted by the procurement officer under recruitment by MoICI so as to

definitely build the procurement capacity within MoICI and will provide procurement capacity

building to the technical staff of the project including all actors of the MoICI involved in the

project‟s implementation. This approach would ensure that the technical specialists and experts

will have basic procurement capacity so as to properly handle technical responsibilities in

preparing procurement documents including terms of references and technical specifications.

The procurement documents and procurement decisions might be submitted to the prior review

by the procurement control body, The Gambia Public Procurement Authority)

The control that will be exercised by the country procurement control body might help mitigate

any possible interference that may occur between the PIU and other actors.

PIU will develop a Manual of procedures and will put in place a good filing system

34. The overall project risk for procurement is substantial.

C. Procurement Plan

33. The Recipient has developed a Procurement Plan for project implementation which provides the

basis for the procurement methods. This plan was reviewed by the Bank and approved during appraisal

On May 13, 2011. Once it is approved, the procurement plan will be made available in the Project‟s

39

database at the office of the PIU and at the MoICI in Banjul and at the Bank‟s external website. The

Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect

the actual project implementation needs and improvements in institutional capacity.

D. Frequency of Procurement Supervision

34. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment

of the Implementing Agency has recommended one supervision mission at least every six (6) months to

visit the field to carry out post review of procurement actions.

40

Appendix:

The procurement methods and prior review thresholds are indicated in the Tables below.

For Goods, works and non-consulting services

Procurement

Method

Prior Review Threshold Comments

1. ICB (Goods) = or >US$300,000 ICB for goods will be used for US$ 300,000 and above

2. NCB (Goods) The first contract,


estimate

NCB for goods will be used for less than US$ 300,000

3. ICB (Works) = or >US$3,000,000 ICB for works will be used for US$3,000,000 and above

4. NCB (Works) The first contract,


estimate

NCB for works will be used for less than US$3,000,000

5. ICB (Non-

Consultant

Services), if any

= or >US$ 300,000 ICB for non-consultant services will be used for US$300,000 and above

6. NCB (Non-

Consultant

Services)

The first contract,


estimate

NCB for non-consultants services will be used for less than US$ 300,000

7. Shopping <US$50,000 and the first

contract under US$50,000

Shopping for works, goods and non-consultant services will be used for

less than or equivalent to US$50,000. If more than US$50,000, prior

clearance is needed from IDA with relevant justifications. The cost

estimate will not exceed US$100,000.

8. Direct contracting All, irrespective of the cost

estimate

None

9 Limited

International

Bidding

The first contract,


estimate or = >US$3,000,000

LIB for non consultant services will be used for US$300,000 and above

For Consultant Services

Selection Method Prior Review

Threshold Comments

1. Competitive Methods (Firms) = or

>US$200,000

The first contract,



reviewed

2. Single Source (Firms)

All, irrespective

of the cost

estimate

3. Individual Consultants = or

>US$100,000

The first contract,

irrespective of cost


reviewed

4. Single source for Individual Consultants

All, irrespective

of the cost

estimate

All, irrespective of the cost

estimate

5.

Contracts for specific assignments such as contracts for the elaboration of

manual of the project implementation and the manual of procedures, contracts

for monitoring and evaluation assignments; contracts for financial assistance

assignments; contracts for financial audit; contracts for technical audit;

contracts for environmental and social issues; contracts for legal assignments

All, irrespective

of the cost

estimate

Those contracts are not

selection methods; but due

to their sensitivity, they

will be subject to prior

review

41


List of contract Packages for Goods and non-consulting services.

1 2 3 4 5 6 7 8 9

Ref.

No.

Contract

(Description)

Estimated

Cost

US$

Procurem

ent

Method

Prequalificat

ion (yes/no)

Domestic

Preferenc

e

(yes/no)

Review

by

Bank

(Prior /

Post)

Expected

Bid-Opening

Date

Comments

COMPONENT 1: CONNECTIVITY

1 Provision of Local

Area Networks for

Government

Connectivity(Teleco

mmunication

Equipment and

accessories

US$

200,000

NCB No No Prior August 10 2011

2 IXP equipment US$150,000 LIB No No Post March 30, 2012

3 Servers for domain

name re-delegation

US$150,000 NCB No No Post February 15, 2012


1 Vehicle US$ 45,000 Shopping No No Post August 18 2011

2 Internet

Connectivity

US$

30,000

Shopping No No Post July 14 2011 PPA

3 Office Furniture US$

20,000

Shopping No No Post August 29 2011 PPA

4 Office

Equipment(Laptops,

PABX System,

Overhead Projector

US$

30,000

Shopping No No Post October 4 2011 PPA

5 Logistics (Laptop(5

Nos.),

PC(1No.),USB

Flash Drives, etc

US$

25,000

Shopping No No Prior April 18 2011 PPA

6 Rent(Office Space

for WARCIP –

PIU)

US$

150,000

Shopping No No Prior May 18 2011 PPA

7 Operational Support

for SPV

US$ 150,000 Shopping No No Post October20, 2011

8 Generator for PIU US$ 15,000 Shopping No No Post July 20, 2011

9 Other Operational

Cost

US$

105,000

Shopping No No Post Dec. 21 2011 Only the

items that

will need

procurement

procedures

are

concerned.

For example:

fuel and

vehicle

maintenance,

insurance,

building

security and

maintenance,

translation

services,

photocopies

and office

supplies.

42

Works

1 2 3 4 5 6 7 8 9

Ref.

No.

Contract

(Description)

Estimated

Cost

US$

Procurement

Method

Prequalificat

ion (yes/no)

Domesti

c

Preferen

ce

(yes/no)

Review

by Bank

(Prior / Post)

Expected

Bid-Opening

Date

Comm

ents

COMPONENT 3: PROJECT IMPLEMENTATION, COMMUNICATIONS AND M & E

1 Rehabilitation of

PIU office

US$ 16,000 Shopping No No Post Review July 11 2011

Consultancy Assignments with Selection Methods and Time Schedule

1 2 3 4 5 6 7

Ref Description of Assignment Estimated

Cost

US$

Selectio

n

Method

Review

by Bank

(Prior /

Post)

Expected

Proposals

Submission

Date

Comments

SUPPORTING CONNECTIVITY

1 Internet Exchange Point Study,

supply of IT and

Telecommunication Equipment

Implementation

US$50,000 CQS Post October 18,

2011

2 Feasibility study for improved

connectivity to neighboring

countries

US$ 400,000 QCBS Prior December 14,

2011

3 Design and implementation of

government connectivity

US$ 275,000 QCBS Prior February 14,

2012

2. ENABLING ENVIRONMENT FOR IMPROVED CONNECTIVITY(US$7.250MILLION)

1 International Advisor to optimize the

governance, ownership and financing

issues related to the operation of the

landing station and provision of

networks and services emanating

from the ACE Cable

US$200,000 IC Prior

Review

April 15,

2011

Done

2 Investment Bank to support

implementation of ownership and

management of landing station

including implementation of

divestiture strategy for Government

shareholding

US$500,000 QCBS Prior

Review

July 15, 2011

3 Legal and regulatory due diligence,

safeguards for open access including

gateway liberalization


Review

June 15, 2011

4 Implementation support for open

access to backbone

US$ 250,000 QCBS Prior

Review

September 29,

2011

5 Broadband study strategy and demand

stimulation strategy and action plan


Review

July 25, 2011 PPA

6

Implementation support for

broadband strategy implementation

US$ 500,000 QCBS Prior September 21,

2012

7 Communications Infrastructure

strategy

US$ 500,000 QCBS Prior September 15,

2011

8 Legal and regulatory support to

increase ICT use

US 500,000 QCBS Prior October 30,

2011

43

Ref

Description of Assignment

Estimated

Cost

US$

Selectio

n

Method

Review

by Bank

(Prior /

Post)

Expected

Proposals

Submission

Date

Comments

9 Consultancy for Domain name re-

delegation

US$ 200,000 QCBS Prior October 12,

2011

10 Regulatory and organizational action

plan for PURA

US$ 150,00 QCBS Post September 20,

2011

11 Development of key regulatory

instruments

US$ 900,000 QCBS Prior October 15,

2011

12 Fee and taxation study US$ 150,000 QCBS Post December

12, 2011

13 Structural separation (operational +

regulatory support)

US 700,000 QCBS Prior March 15,

2012

14 Strategic support for GAMTEL

repositioning

US$600,000 QCBS Prior January 16,

2012

15 Specific Management Consultancy

Services for GAMTEL

US$ 200,000 QCBS Prior November 15,

2011


1 PIU Coordinator US$150,000 IC Prior June 27 2011

2 PIU Procurement Specialist US$125,000 IC Prior June 27 2011

3 PIU Financial Management Specialist US$125,000 IC Prior June 20 2011

4 PIU Accountant US$75,000 IC Prior June 20 2011

5

Support Staff US$75,000 IC Post Sept 10 2011

6

Project Operational Manual including

accounting manual

US$50,000

CQS

Prior

June 10, 2011

7 Design and installation and training

of accounting software

US$ 25,000 IC Post August 16,

2011

8 ESMF and RPF US$54,000 CQS Prior April 11 2011 Done

8 M & E US$50,000 IC Prior Dec 22 2011

9 Communications U$100,000 IC Prior Dec 22 2011

10 Surveys US$ 46,000 IC Post April 4 2011

12 External Audit US 40,000 QCBS Prior Nov. 17 2011

11. Legal advisor for SPV US$ 100,000 IC Prior October 17

2010

Implementing Agency Capacity Building Activities with Time Schedule

No.

Expected outcome /

Activity Description

Estimated Cost

Estimated

Duration

Start Date

Comments

1 Training for regulators(PURA) 300,000 To be

determined

Sept 2011 A training plan will be

developed for each year and sent

to the Bank for review

2 Capacity building for PIU Staff 70,000 To be

determined

October 2011 A training plan will be



3 Capacity Building(Management

Technical and Skills Re-engineering)

US$300,000 To be

determined




4 Capacity building for Ministry US$ 300,000 To Be

determined




44

Anti-Corruption Action Plan: Guidelines on Preventing and Combating Fraud and Corruption in

Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and revised in

January 2011. The Bank team intends to maintain customary oversight and will carry out prior review

of all major contracts according to the established thresholds within the country may be reviewed and

adjusted as needed in the Procurement Plan. The following measures will be carried out to mitigate

corruption risk:

Training of fiduciary staff: Starting from the project launch periodical trainings on procurement will be

conducted at the country level for all PIUs‟ fiduciary staff

Prior review: Intensive and close supervision by Bank procurement accredited staff. In addition, all

contract amendments will be subject to prior approval by the Bank;

Publication of Advertisements and Contracts: All publications of advertisements and contract awards,

will be done in accordance with the Guidelines requirements and published through client connection

system, on external websites, i.e. UNDB and dgMarket websites;

Debarred Firms: Appropriate attention will be given to the need to ensure that debarred firms or

individuals are not given opportunities to compete for Bank-financed contracts;

Complaints: All complaints by bidders will be diligently addressed and monitored in consultation with

the Bank;

Evaluation Committee: The Bank will review and comment on qualifications and experience of

proposed members of the Evaluation committee(s) with a view to avoid that unqualified or biased

candidates are nominated. All members will require to sign a disclosure form (sample will be included

in Operational Manual)

Monitoring of contract awards: All contracts are required to be signed within the validity of the

bids/proposals and, in case of prior review contracts, promptly after the no objection is issued.

Procurement Plan format shall include information on actual dates (of no objections and award) and will

be monitored for cases of delay which will be looked at on a case-by-case basis to identify the reasons.

The PIU will maintain up to date procurement records and to be available to all concerned Bank staff,

auditors and INT members of the Bank.

Monitoring of Payments: All contracts shall include bank account information. The bank account shall

be in the name of the same supplier/consultant that submitted the bid and awarded the contract.

Payments to local suppliers -consultants shall be made in local currency only and paid to the accounts of

banks located within the country.

Timeliness of Payments: Payment to suppliers and consultants will be monitored through semi-annual

interim un-audited financial reports (IFRs) to ensure timely payments. The PIU will maintain a

system/database to ensure payments to the suppliers and contractors are made without delay according

to the conditions of the contract.

45

E. Environmental and Social safeguards

35. The proposed project is rated as a Category B project. The safeguards policy triggered are Environmental

Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Physical Cultural Resources (OP/BP 4.11) and

Physical Cultural Resources (OP/BP 4.11). The physical cable system will comprise two fiber pairs that

provide two separate bi-directional paths (i.e., one fiber in each pair carries signals in the outbound

direction and the other fiber in the return or inbound direction). The cable system is likely to have a

submerged or „wet plant‟ part, and a „dry plant‟ part which interfaces at proposed Landing Stations.

Safeguards for Deep Sea18

Activities

36. Deep ocean fiber optic cables are no larger than 17-21 mm diameter – about the size of a domestic garden

hose and are laid mainly upon the surface of the ocean floor (“surface laid”). Sections of the cable

(including both wet and dry plants) lie within the territorial waters of the landing parties while remaining

sections lie in the exclusive economic zones of such states. The Gambia is a party to the 1982 United

Nations Convention on the Law of the Sea (UNCLOS), and has declared exclusive economic zones of 200

miles. In the exclusive economic zones, states have no sovereign rights but can enforce laws on pollution,

taxation, customs and immigration (see figure 3.2, below). Within their territorial waters, on the other

hand, countries have sovereign rights. Foreign nations have the freedom of laying submarine pipes and

cables in the exclusive economic zones.

Figure 3.2: Designated ocean zones according to UNCLOS.

18 "Deep Sea", as used here, describes areas beyond which cable burial is not required (mainly because threats to the cable from trawling activities are non-existing).

This starts usually after 1000/ 1500 meters depth.

http://en.wikipedia.org/wiki/File:Zonmar-en.svg

46

37. In general, however, the section of the cable that lies in the deep sea has minimal impact on marine

mammals and fish. The threat of whale entanglements has diminished significantly with improvements

since 1956 in the design of cable and in the precision with which they can be laid in close conformity with

the seabed profile, and without loops and twists.

38. Generally speaking, there are no significant environmental issues concerning fiber cables in the deep sea

(significant issues are concentrated on shallow waters and the coastal areas/beach). The operation phase of

the submarine cable will not have any significant adverse impact on the bio-physical and social

environment except during cable repairs and recovery. There will be very limited maintenance of the

cable. The cable will have a passive influence on the environment. Impacts during cable repair and

recovery activities will be similar to impacts during the construction phase activities.

39. The extensive studies that take place prior to final cable laying tend to work as effective safeguards

against any possible environmental disruption, since in large part they are intended to identify routes for

the cable that will avoid seamounts, volcanoes, canyons, vents, seeps, deepwater reefs, dissected terrain –

all areas that tend to be associated with higher biological value than the general abyssal plain.

40. Given that much of the deep ocean lie beyond national jurisdictions, few EIAs for any marine activities

have been undertaken in this zone and thus there is little evidence of any environmental issues, except in

cases of oil and gas exploration and very deep sea trawling. No specific environmental studies are

undertaken for submarine cables; rather the detailed Cable Route Survey effectively serves this purpose.

At the surface, pollution of the high seas by oil and wastes discharged from vessels can be effectively

controlled if those vessels observe compliance with maritime conventions.

41. Based on these experiences, it may not be necessary The Gambia to conduct EIAs of the deep sea, though

this should not deter The Gambia from considering in the screening and scoping phases of their EIAs

whether there are areas of deep sea traversed by ACE and within the geographical limits of application of

its domestic EIA legislation to which attention should be paid.

Safeguards for Shallow Water Activities

.

42. The site selected for cable landing or Terminal Station is at Brusubi Phase III Institutional Area and

currently lies fallow. It is approximately 3km from the Beach Man Hole at the beach. The land currently

has no permanent structures and borders the Brufut-Sukuta Coastal road. The site is about 2,800m2 (40m

x 70m) and has the following coordinates N13o24.785‟ and W16o43.126‟. The major

facilities/infrastructure to be installed at the beach and the Brusubi sites include the Landing Station

building, Zero manhole, BMH, connections conduits and ducts, generators, fuel tanks, transformer, switch

board and cable drums. The cable station is expected to take about 45m x 25m land space with

approximately half of this space for equipment and the balance for maintenance, training, and office

spaces. GAMTEL/PIU is committed to ensuring that environmentally conscious practices are carried out

during construction and operation of the submarine and landing station project, including: (a)

incorporating environmental considerations into its planning, management and operational activities; (b)

Having an Environmental and Safety Coordinator/consultant to be directly responsible for environmental

and safety issues during construction and operation; and (c) allocating and maintaining resources for the

effective implementation of the ESIA/ ESMP.

47

43. This project will affect less than 50 persons and therefore the equivalent of an ARAP, an RRP, has

been prepared, consulted upon and disclosed before appraisal. It is a plan that will guide the

management of the few resettlement issues which have been identified, even though these may seem to be

of minor significance. The project will affect 27 persons and will not cause any permanent or temporary

structure to be demolished. It will only create temporary inconveniences during the construction phase

and limited economic disadvantages to business concerns. There are no land acquisition issues as the site

for the Landing Station is state property which has been allocated to the project for the purpose. Key

stakeholders for consultation included current inhabitants (where applicable) of landing sites, the

Environmental Protection Agencies. Limited funding is needed for compensation for inconveniences

resulting from the project

Monitoring & Evaluation

44. The PIU will monitor and evaluate national projects. They will bear the primary responsibility for project

monitoring and evaluation (M&E), and, as such, will establish standard formats and guidelines for data

collection and reporting, and will organize training sessions for project stakeholders in their use.

45. An M&E system will be set up within the PIU to keep track of and evaluate implementation progress of

the proposed IDA project within the broader context of the institutional framework for the

telecommunications sector. Although increased geographical reach and reduction of costs at the country

level remains the hallmark of success of an enabling environment, the project‟s M&E system will seek

first to measure results that are closely associated with project activities. Hence, the first order of

indicators that the M&E system will look at shall include lower indicators related to quality, quantity, and

time (see Annex 1). Ultimately, improvement of laws and decrees by the project activities (component 2)

will have positive ripple effects on the whole sector and on service delivery.

46. The views of direct beneficiaries will be brought into the monitoring and evaluation process. Comprehensive M&E reporting will be needed to monitor the results and performance of the project. It

will involve mainly the direct beneficiaries of project activities, but will be extended to other beneficiaries

such as telecommunications operators and private ICT firms, which ultimately are the main beneficiaries

of the project‟s outcomes. The PIUs will review and validate the reports on performance indicators and

recommend corrective action if necessary.

Role of Partners

47. The World Bank is collaborating with the IsDB to develop a seamless communications network for The

Gambia. The IsDB is in the process of assisting a number of countries in West Africa to build their

national backbone and to improve their connectivity to their neighbors. Support to The Gambia is already

approved.

48. The World Bank will also coordinate with the International Telecommunication Union (ITU). The

program will also coordinate with ITU in the area of capacity building for regional regulatory authorities,

given existing programs by ITU in this area.

48

Annex 4: Operational Risk Assessment Framework (ORAF)

THE GAMBIA

WARCIP 1B

Project Development Objective(s)

To increase the geographical reach of broadband networks and reduce costs of communications services in The Gambia

PDO Level Results

Indicators:

Volume of international traffic (Mbit/s per person)


Average monthly price of wholesale international E1 capacity link from capital city to Europe


Risk Category

Risk Rating Risk Description Proposed Mitigation Measures

Project Stakeholder Risks

MI Lack of collaboration of stakeholders

Divestment process less successful than anticipated

Difficulties changing ACE CMA signatory and handing

over rights and responsibilities of GAMTEL to the new

SPV

PPA approved and includes support for PPP structures that

will make it attractive for private investment. Private sector

already signaled significant interest under transparent

conditions.

Detailed due diligence to identify incentives for existing

operators to willingly participate in the proposed

infrastructure is contemplated under APL 1-B of the project.

Initial TA provided for The Gambia already outlined a

process for the discussion with ACE.

49

Risk Category

Risk Rating

Risk Description

Proposed Mitigation Measures

Implementing Agency Risks

MI

The Gambia implementing agencies have limited

experience with the envisaged complex project

arrangements. A very steep learning curve is anticipated.

The Financial Management staff is not yet in place and

there is not a FM manual and an accounting software

Extensive preparation work and due diligence has been

carried out by the Task Team and the client to ensure

ownership and identification of potential implementation

issues. The PPA put in place will finance TA activities

aiming at enhancing the implementing agencies‟ capacity to

mitigate risks of slow start and missing the ACE‟s tight

disbursement deadlines.

A stand alone PIU will be established. FM action plan was

agreed and will be implemented during the project including

development of FM manual, acquisition of FM software and

hiring of an FM specialist and an accountant.

Project Risks

Design

MI Non conformance with linkage conditionality (cross-

effectiveness conditions and cross-suspension remedies)

for regional cooperation

Risk of delays could result in penalty to clients for

missing ACE payment milestone

Project commercially not viable due to insufficient

demand for services.

Design of the project is complex and risky (Public Private

Partnership)

Program structured so that if the Financing Agreement for

any of the other two countries never enters into effect or if

disbursements there-under are suspended, this would only

reduce the scope but not affect the overall implementation of

the independent Gambia activities.

The CMA provides for installment payments; The Gambia

Government has already provided the first 3 and

concessional financing will be arranged to cover the balance.

Early results of traffic assessment confirm viability. Detailed

traffic study will be conducted and Demand stimulating

approaches will be explored to address potential risk

Support to PPP arrangement from PPA. For all other project

components, the project is not relatively complex. The

components are dedicated to well-specified structures which

will designate a focal point.

50

Risk Category

Risk Rating

Risk Description

Proposed Mitigation Measures

Social and Environmental

ML

Possible environmental and social impacts including

possible impacts on critical habitats and/or physical

cultural resources.

The institutional responsibilities for preparing the various

safeguards instruments would lie with the PIU and the

SPV Given the need to ensure compliance with

safeguards instrument preparation there will be the need

for capacity building.

The ESMP/EIA was developed and disclosed before

appraisal. In addition the equivalent of an ARAP, an RRP,

was developed to deal with inconvenience related to the

project to the 27 affected persons. Finally, since the Program

will involve PPP schemes, appropriate technical clauses will

be prepared and included in the binding documents for the

Private Entity when necessary, to ensure the execution of

agreed environmental and social safeguards measures and

implementation of the recommendations in the instruments.

Program and Donor

ML Potential difficulties securing funding for the national

backbone

Funding already secured from IsDB with coordination to

ensure open access for the backbone infrastructure and

capacity.

Delivery Quality

ML The Project expected results depend on many factors

sometimes outside the project‟s scope. This may also

affect the sustainability of the Program‟s achievements.

The Project includes M&E activities that have been

discussed in details with the clients during preparation. The

M&E system will ensure an efficient monitoring of results

achievement and should prevent major implementation

issues. The commitment of the Project‟s stakeholders to the

new PPP arrangements as well as the institutional and policy

framework improvement will ensure sustainability of project

results beyond its completion.

Overall Risk Rating at

Preparation

Overall Risk Rating During

Implementation Comments

MI MI

Major issues and risks will be dealt with by effectiveness

through targeted activities financed by the PPA. The MI

rating for implementation is mainly due to the risky

country and institutional contexts, outside the project

scope.

51

Annex 5: Implementation Support Plan

THE GAMBIA

WARCIP 1B

1. Policy, regulatory, environmental and social safeguards are being put in place prior

to full implementation PPA granted to The Gambia is expected to ensure that the

policy, regulatory, environmental and social safeguards, as well as requisite capacity are

in place before Board. The PPA is also expected to ensure that the Government has the

requisite Transaction, Legal and Regulatory experts to ensure open access, effective

structuring of PPPs to own and manage communications infrastructure. Additional

resources have been provided to support the Government to undertake environmental

assessments and to put in place mitigation measures. These activities are in various

stages of implementation and expected to be completed before project effectiveness.

2. The team has conducted preliminary assessments of the institutions expected to

execute the project. The strategic partnerships and collaboration, combined with active

client engagement and upfront preparatory work, are expected to facilitate achievement of

the PDO. Furthermore the team has conducted preliminary assessments of the institutions

expected to execute the Program to ensure that they meet the minimum requirements of

the World Bank‟s fiduciary obligations.

3. Payment to ACE will be through direct Disbursement. Beyond this, and to further

mitigate risks, the team is structuring the WARCIP Gambia to ensure that direct payments

are made to the Cable consortium which is managing the submarine cable construction on

behalf of consortium members. This will mean that at least 70% of funds will be paid

directly to the Cable Consortium, and the countries manage less than 20% of the targeted

funds which will be used primarily for institutional and implementation support and to

improve the enabling environment.

What would be the main focus in terms of support to implementation?

Table 5.1: Main focus of support to implement Time Focus Skills Needed Resource

Estimate

Partner Role

First twelve

months

Creation/Strengthening

of PIUs

Transaction/Legal

Advisory Work

Procurement, FM,

Program

Coordinators

Experienced

Transaction and

Legal Teams

US$ 100,000 NA

12-48 months Divestiture of Gov.

Shares in SPV

Transaction/Legal

Teams

US$ 100,000 NA

Other Strengthening of

regulatory and policy

capacity

Regulatory and ICT

specialists

US$ 100,000 NA

52

Implementation Support Plan

4. The Bank team members will be based either in Washington DC or in the Africa

region, and will be available to provide timely, efficient and effective implementation

support to the client. Formal supervision and field visits will be carried out semi-

annually initially, with possibility for annual visits in later years of the project. Detailed

inputs from the Bank team are outlined below:

Technical inputs. Technical telecommunications and regulatory related inputs are

required to review bid documents to ensure fair competition through proper technical

specifications and fair assessment of the technical aspects of bids. ICT Policy

Specialists and regulatory specialists will provide technical support and conduct

supervision visits whenever needed.

Fiduciary requirements and inputs. Training will be provided by the Bank‟s financial

management specialist and procurement specialist before the commencement of

project implementation as needed. The team will also help identify capacity building

needs to strengthen its financial management capacity and to improve procurement

management efficiency. Both the financial management and the procurement

specialist will be based in the region to provide timely support. Formal supervision of

financial management will be carried out semi-annually or annually, while

procurement supervision will be carried out on a timely basis as required by the client.

Safeguards. Inputs from an environment specialist and a social specialist may be

required, though the project‟s social and environmental impacts are limited and client

capacity is generally adequate. No field visits are likely to be required, but this will

be confirmed - the social and environmental specialists will be available on a need

basis.

Operation. The Task Team will also provide day to day supervision of all operational

aspects, as well as coordination with the client and among Bank team members. If

needed, a consultant may be used to support this role.

The main focus of implementation support is summarized below.

Table 5.2: Implementation support

Time Focus Resource Estimate in Staff Weeks Partner

Role Project

duration

Team leadership, technical and procurement

review of the bidding documents and

Institutional arrangement and project

supervision coordination

ICT Policy Specialist 15 SWs

NA

Procurement training Procurement specialist(s) 2 SWs

NA

FM training and supervision FM specialist 2 SWs

NA

Environmental and Social Issues

Social specialist 0.5 SWs

Environmental specialist(s) 0.5 SWs

NA

53

Staff skill mix required is summarized below.

`Table 5.3: Staff skill mix Skills Needed Number of Staff Weeks Number of Trips Comments

Task team leaders 15 SWs annually Fields trips as required. DC or Country office

based

Procurement 2 SWs annually Fields trips as required. Country office based

Social specialist 0.5 SWs annually Fields trips as required. Country office based

Environment specialist 0.5 SWs annually Fields trips as required. Country office based

Financial management

specialist

2 SWs annually Fields trips as required. Country office based

Legal support 1 SW Fields trips as required DC based

54

Annex 6: Team Composition

THE GAMBIA

WARCIP 1B

Name Title Unit

Boutheina Guermazi Sr. Regulatory Specialist ICT Sector Unit

Mavis Ampah Sr. ICT Policy Specialist ICT Sector Unit

Doyle Gallegos Lead ICT Policy Specialist ICT Sector Unit

Laurent Besancon Regional Coordinator ICT Sector Unit

Marc Lixi Sr. Operations Officer ICT Sector Unit

Sarah Brierley STC ICT Sector Unit

Michele Ralisoa Noro Sr. Program Assistant ICT Sector Unit

Gurcharan Singh Sr. Procurement Specialist ICT Sector Unit

Duncan Wambogo

Omole

Information Analyst ICT Sector Unit

Deo Ndikumana Sr. Operations Officer (AFCRI) AFCRI

Carlos Cavalcanti Country economist AFTP4

David Satola Sr. Counsel LEGPS

Harvey van Veldhuizen Lead Environmental Specialist MIGEP

Beatrix Allah-Mensah Social Development Specialist AFTCS

Bienvenu Rajaonson Sr. Environmental Specialist AFTEN

Sidy Diop Procurement Specialist AFTPC

Wolfgang Chadab Sr. Finance Officer CTRFC

Claudia Pardiñas Ocaña Sr. Counsel LEGAF

Alexandra Sperling Paralegal LEGAF

Maimouna Fam Sr. Financial Management

Specialist

AFTFM

Ngor Sene Financial Management

Specialist

AFTFM

55

Annex 7: Economic and Financial Analysis

THE GAMBIA

WARCIP 1B

1. Connecting locally to a submarine fiber-cable system minimizes transit costs and

is the most cost-effective long term option for The Gambia. The analysis to assess

the merit of The Gambia‟s connectivity options examined a variety of satellite and

optic fiber options. The analysis finds that in the case of The Gambia a submarine

fiber link with domestic landing station is the best overall option in terms of long-term

cost effectiveness and bandwidth availability. More specifically, considering the

limited number of fiber alternatives and their higher cost, the Africa Coast to Europe

(ACE) cable project is currently the best fiber option for this country. The cost of

capacity on ACE will be an order of ten times cheaper than the current cost of capacity

on existing African submarine cables linking to Europe (e.g. MainOne or SAT-

3/WASC), which is between US $280 and US$ 800/Mbit/s/month, and averages

$500/Mbit/s/month. The cost advantages of ACE are even greater when compared to

satellite capacity costs, which are at least US$ 4000/Mbit/s/month. Aside from low

bandwidth costs, the high quality of fiber bandwidth provided is also a factor which

has to be taken into account in comparing options.

2. Benefits of fiber-cable investment: low transit costs; lower prices; and increased

reliability in accessing international bandwidth. In the case of The Gambia,

although up-front costs are higher, the key cost saving with the ACE compared to

existing alternative fiber options is the high cost involved in the purchasing of capacity

from an existing landing station in Africa to the global backbones. The Gambia‟s

participation in ACE, which lands traffic directly in Europe, will ensure that transit

costs to the global backbones are minimized. ACE also has an advantage over a cross-

border fiber option in terms of speed and costs, and is without the need for

independent management, planning and maintenance. For international connectivity

the country currently depends on a single unstable high-cost 155Mbit/s terrestrial link

to neighbouring Senegal, which has contributed to high prices at the retail level and

reduced the level of reliability. A dedicated domestic landing station will both reduce

the cost of international bandwidth as well as increase reliability. To approximate the

relative savings produced by fiber compared to satellite consider that in 2010 The

Gambia used approximately 155 Mbit/s of international bandwidth. Purchased through

satellite this costs approximately US $3.7 million, compared to ACE which would be

US$558 000 (conservatively assuming US$ 300/Mbit/s/month). This cost savings

would also benefit the local economy as it also means much less funds would move

off-shore in payments to international satellite operators. If ACE pricing drops to

levels seen elsewhere on the continent for wholesale submarine fiber capacity, (US$

50-US$ 100/Mbit/s/month), the savings for operators would be correspondingly

greater.

3. Fiber cable systems that serve the West Africa region and the upcoming ACE

cable use well-proven technologies and involve no appreciable technology risk. The new ACE cable design is both “state of the art”, uses well-established procedures,

and involves no significant technology risk.

56

4. Fiber cable has an advantage over satellite in terms of price and quality of service. Use

of satellite bandwidth to meet international connectivity needs was eliminated as too

costly and suffering from lower quality than fiber. The latency factor introduced in

satellite links can be a problem with some communication services, especially high

data rate interactive multimedia applications. The almost 1-second delays introduced

by satellite connectivity significantly reduces performance of some services and limits

the types of services that can be provided, such as the use of secure Virtual Private

Networks (VPNs), which time out when performance is degraded by satellite links.

While it is possible to circumvent these problems to some extent through use of

sophisticated traffic shaping devices at each end of the link, this creates additional

capital and human resource costs for the user. And the perceived disadvantages of

satellite can limit foreign investment in the sector, especially among high bandwidth

consuming interactive services such as Business Process Outsourcing call centres and

VPN networks where companies are reticent to establish these on the end of a satellite

link because of the latency issue.

5. „Medium earth orbit‟ (MEO) satellites (MEO) and terrestrial microwave options are

relatively more costly compared to fiber option. There have been suggestions that a new

type of satellite service based on 'medium earth orbit' satellites (MEOs), which

provides lower levels of latency due to their greater proximity to earth, could meet

needs for improved international connectivity. However, the only proposed service of

this type, called 03B, has yet to launch any satellites and is still relatively costly when

compared to the fiber options, so it was also eliminated from further consideration as a

national solution, although in some remote areas it may have value for providing

connectivity where there is no fiber. In the same vein, improved terrestrial microwave

links could be considered another alternative, however as with satellite solutions, these

links do not scale economically to the levels of bandwidth that are expected to be

required at an international level. This is evidenced by the efforts of international

mobile operators to replace their existing international microwave links with fiber.

Table 7.1: Advantages and Disadvantages of submarine fiber cable compared to Satellite

Increased satellite capacity ACE Submarine Cable Systems

Advantages Lower CAPEX and O&M; Bandwidth purchases

grow in concert with demand growth;

Less risk of service being discontinued for long

periods

Future proof in terms of capacity available and superior quality through

higher performance (lower latency);

Much lower cost for bandwidth. Fixed cost for capacity investment

means prices go down as usage picks up .

Disadvantages Far higher cost for bandwidth;

High latency can limit the bandwidth quality and

applications that can be used.

Higher CAPEX required (effectively a pre-purchase of bandwidth, most

of which will be for future use); More expensive O&M; Slower repair

times means need for backup via alternative cross-border fiber route or

satellite in case of cable damage (if only one cable)

Socio/

Economic/

User Impact

Number of Internet users and extent of usage is

constrained by high bandwidth prices and slower

performance.

Reduced potential for development of local ICT

Number of Internet users and extent of usage grows rapidly, less

constrained by high bandwidth prices and slower performance. Increased

potential for development of local ICT industry and more BPO

opportunities. More extensive use by government as Internet penetration

reaches majority of people. improved educational opportunities through

57

industry and fewer BPO opportunities.

More limited potential value/use by government

due to reduced Internet penetration in the

population generally.

increase in access to information and education resources;

Development of a regional sense of community through greater equality

of Information sharing across geographical regions and across groups in

society

Economic benefits from the enhanced opportunities for new and small

enterprises that may have previously been excluded from technologies by

high costs; and macro-economic benefits of the potential expansion of

technology-reliant industries, such as information technology services

and software development businesses.

6. Assumptions of financial analysis. Financial comparisons of satellite versus fiber

options were made using the following assumptions:

ACE investment participation costs assumes US$12million in 2010,

US$11million in 2011, US$2million in 2013

A discount rate of 15%

Revenues from the cable begin in 2013 (they could start in mid 2012 if the

cable is commissioned on time)

Average geostationary satellite transponder costs: US$2000 per month per

Mbit/s.

Cost for capacity on existing West African cables landing in nearby countries

(MainOne/SAT-3): US$280-800 per month per Mbit/s.

7. Enhanced connections to West Africa‟s submarine fiber-cable systems for The

Gambia breakeven between 2019 and 2020 after which substantial revenues

would be made if wholesale pricing levels are maintained. The IRR is 28.8%

assuming an average bandwidth sale price of US$100/Mbit/s/month, and an IRR of

19.9%, assuming US$50/Mbit/s/month. For The Gambia, pricing capacity on ACE

for traffic with Europe in the US$50/Mbit/s/month range is likely to be sustainable

and would stimulate more use19

. This also takes into account bandwidth pricing trends

in other regions such as East Africa. For The Gambia, the final breakeven year will

depend on actual capacity uptake and the wholesale price of bandwidth. After 2024 at

the latest, the projects would be cash-flow positive and substantial revenues would be

made if these wholesale pricing levels are maintained.

19 It can be noted that the investment in the cable is a „sunk‟ cost that provides an initial fixed 5.9Gbit/s

of bandwidth, so downstream prices can be reduced as much as possible to maximise use of this available

capacity.

58

Table 7.2: Bandwidth demand forecast for The Gambia

Estimate Basis

International

Bandwidth

(Mbit/s)

Estimated number

of Subscribers

Penetration

(%population) Population

International

Kbit/s/ Subscriber

Bps/ total

population

Current Status in Gambia (2010) 155 15,000 0.82% 1,828,000 85

Senegal comparison (2009) 3,500 54,200 0.40 13,700,000 65 255

2021 Forecasts:

Expanded cross border link to Senegal 900 38,403 2 2,453,313 23 367

ACE Fiber 22,000 268,824 11 2,453,313 82 8,967

Bandwidth Requirement Estimates Based on (cross check):

Low Broadband Definition (256Kbit/s), Low Penetration Scenario (10%) 2,010 245,331 10.00 2,453,313 205 819

Low Broadband Definition (256Kbit/s), Low-Medium Penetration Scenario

(20%) 3,517 490,663 20.00 6,647,190 179 529

Medium Broadband Definition (1Mbit/s), Low Penetration Scenario (10%) 7,851 245,331 10.00 6,647,190 800 1181

Medium Broadband Definition (1Mbit/s), Low-Medium Penetration Scenario

(20%) 13,739 490,663 20.00 2,453,313 700 5600

Optimal Broadband Definition (20Mbit/s) Low Penetration Scenario (10%) 157,012 245,331 10.00 2,453,313 16000 64000

Medium Broadband Definition (1Mbit/s), Medium Penetration Scenario (40%) 19,627 981,325 40.00 2,453,313 500 8000

Optimal Broadband Definition (20Mbit/s) Medium Penetration Scenario (40%) 392,530 981,325 40.00 2,453,313 10000 160000

59

8. Previous experience with fiber cables shows a rapid increase in demand when price of bandwidth

decreases. As indicated above, lowering the cost of access has a strong impact on the amount of

bandwidth sold. This can be modeled using a price elasticity curve. The SAT-3 example (SAT-3 is

between Portugal and South Africa), for which the most data is available, shows a clear relationship

between volume and tariffs. The chart below compares the price of access on SAT-3 (per E1 half-circuit

to Sessimbra, Portugal) against the volume of international bandwidth sold. This shows the effect that

price decreases between 2004 and 2006 have had on the volume of bandwidth sold in each of four

countries where comparable data was available. The increase in international bandwidth demand

increases because broadband services first become more viable for operators to deploy, and secondly

because as retail prices decrease the service become increasingly affordable and penetration increases.

Réunion is included here as a particularly clear case which shows that when price was US$20,466 per

Mb the volume was just 4 Mbit/s, but when it decreased to US$1,967 volume increased to 180 Mbit/s. If

the price were to drop further to US$500 per Mbit/s, it is projected that the volume would increase to

1.656 Gbit/s. If the price were to decrease to US$250 per Mbit/s per month, the volume is projected to

grow to 5.02 Gbit/s, which translates to a 50% price reduction resulting in a 300% increase in bandwidth

demand. This increase comes about because of the multiplier effects: monthly prices for broadband

decrease, in turn improving affordability and increasing uptake of services.

Figure 7.1: Bandwidth Price Elasticity

9. The predicted bandwidth demand for The Gambia with direct access to fiber is 22,000 Mbit/s

compared to 900 Mbit/s with satellite or expanded cross border link with Senegal. Extrapolating

current usage and growth in users could provide an indication of future bandwidth demand, however due

to the current high cost of service (relative to income levels) and the relatively slow speeds available, this

would tend to substantially underestimate pent-up demand when bandwidth availability improves and

costs decrease. Given the trends worldwide in broadband adoption levels, and especially encouraged by

the explosion of mobile broadband20

(3G), the estimates used appear relatively conservative, especially

toward the end of the analysis period (2021), by which date it is expected that almost every mobile phone

20

3G data service uptake from the consumer has been massive and unprecedented in other developing countries such as Kenya.

Price Elasticity On Sat-3

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

- 1,000 2,000 3,000 4,000 5,000

Volume (Mbps)

Pri

ce (

US

$ p

er

mo

nth

)

Ghana Nigeria

Reunion South Africa

Nigeria PE South Africa PE

Ghana PE Reunion PE

60

user would have access to broadband on their handset21

. However, this is dependent on the introduction

of high-bit-rate mobile services into the market, and unless increased competition is introduced into the

sector, the operators may not be encouraged to introduce these types of new services in the near future.

Extrapolating current usage and growth in users could provide an indication of future bandwidth demand,

however due to the current high cost of service (relative to income levels) and the relatively slow speeds

available, this would tend to substantially underestimate pent-up demand when bandwidth availability

improves and costs decrease. Globally, the last 10 years has seen massive increases in end-user

bandwidth demand resulting from the popularity of social networks, image and video sites such as

FaceBook and YouTube. Fortunately these bandwidth demands have kept pace with technology

developments which are now seeing domestic broadband services delivering 100Mbit/s and even 1Gbit/s

in some advanced countries. Given the trends worldwide in broadband adoption levels, especially

encouraged by the explosion of mobile broadband22

(3G/4G/LTE), the estimates used in this analysis

appear relatively conservative, especially toward the end of the forecast period, when it is expected that

almost every mobile phone user would have access to broadband on their handset23

. This also follows

current trends which show that 2010 traffic in Africa and the Middle-East grew by 45%, this includes

many countries which already have fiber access, so the growth rates for those which will have access to

fiber for the first time are expected to be much higher.

10. Bandwidth requirement per user has the potential to advance rapidly with further social and

economic development, especially with the development of The Gambia‟s tourism and BPO sector.

There can be a wide divergence in forecasting bandwidth requirements per user. The last 10 years has

seen massive increases in end-user bandwidth demand resulting from the popularity of social network,

image and video sites such as FaceBook and YouTube. Fortunately, these bandwidth demands have kept

pace with technology developments which are now seeing domestic broadband services delivering

100Mbit/s and even 1Gbit/s in some advanced countries. If we assume that The Gambia will have the

opportunity catch up at least partially with these developments over the next decade then we can expect a

relatively high level of growth in bandwidth use. There are also some special sources of additional

demand which could also significantly increase international transmission requirement: Tourism and

development of Business Process Outsourcing (BPO) sector. Tourism is currently a significant part of the

economy in The Gambia (with the service sector contributed to over 50% of the economy), and tourism

in The Gambia and West Africa could increase significantly in future. Tourism creates demand for

international telecommunication services through demand of administrative and marketing service as

well as demand for internet access, international calls and money transactions. BPO and Internet call

centre service companies can generate significantly more Internet traffic if bandwidth prices can be

reduced and fiber connections made available. Sourcing channels for television rebroadcasting is

currently carried out by satellite but could be substituted by fiber if bandwidth prices are sufficiently

competitive. Finally, it is worth noting that also expected to contribute to increased bandwidth demand is

Ministry of Information and Communication Infrastructure (MoICI) ambitious program to become the

„Silicon Valley of Africa‟ focusing on human resource development, e-education (including provision of

Internet connections to all schools and tertiary institutions), and community-use of ICTs. As part of this

MoICI is participating in the AU‟s e-health network supported by the government of India, developing a

Technology Park with support from the governments of Egypt and Taiwan, China. MoICI is also

21

Brand new 3G capable smartphones are already being sold in Kenya for less than $100, and prices are expected to come down much further over

the next 10 years.

22 3G data service uptake from the consumer has been massive and unprecedented in other developing countries such as Kenya, and in Nigeria the

majority of Internet access now takes place via 3G.

61

working to establish e-government applications, an IXP and provision of ICT training facilities. Gambia

will also be hosting one of the network operations centers of the Regional African Satellite

Communications Organization‟s satellite system for which the government has already made land and

funds available.

11. Fast internet has been shown to boost the productivity of firms as well as generate employment

opportunities. New growth theory suggests that long-run economic growth emanates from spillover

arising from innovation and investment in new technologies. Fast internet access can be considered one

important new technology, and broadband is increasingly recognized to promote productivity and boost

aggregate economic growth (OECD, 2003). Analytical studies have shown that firms using standard

broadband (defined as connection speeds above 256 Kbit/s (OECD, 2002) were on average 10 % more

productive than firms using dial-up internet access. Faster internet speeds are also causally related to

increased employment opportunities with analysis showing that for every one percentage point increase

in broadband penetration within a region, employment increases by 0.2-0.3 % per year for the private,

non-farm economy (Crandall et al, 2007). Indeed, studies show a clear positive relationship between

employment and broadband penetration in the manufacturing and service industries, with business

growth shown to be particularly significant for larger businesses and for IT intensive sector (Lehr et al,

2006). The results of these studies support the hypothesis that broadband penetration enhances economic

activity. Increased broadband speeds and less expensive data access have the potential to promote

economic activities in West Africa, supporting the growth and productivity of businesses and gradual

transfer of employment from agricultural to service industries and expansion of the region‟s nascent ICT

and BPO sector.

KartungKartung

KalagiKalagi

SukutaSukuta

DiabuguDiabugu

FarafenniFarafenni

BrikamaBrikama

KerewanKerewan MansaMansaKonkoKonko

Basse Santa SuBasse Santa Su

BANJULBANJULN O R T H B A N K D I V I S I O NN O R T H B A N K D I V I S I O N

W E S T E R NW E S T E R ND I V I S I O ND I V I S I O N

L O W E R R I V E RL O W E R R I V E RD I V I S I O ND I V I S I O N

U P P E R R I V E RU P P E R R I V E RD I V I S I O ND I V I S I O N

C E N T R A L R I V E RC E N T R A L R I V E RD I V I S I O ND I V I S I O N

JanjanburehJanjanbureh

Kartung

Kalagi

Sukuta

Diabugu

Farafenni

Brikama

Kerewan

Janjanbureh

MansaKonko

Kanifing

Basse Santa Su

BANJUL

S E N E G A L

S E N E G A L

G U I N E A - B I S S A U

N O R T H B A N K D I V I S I O N

W E S T E R ND I V I S I O N

C I T Y O FB A N J U L

K A N I F I N GM U N I C I PA L I T Y

L O W E R R I V E RD I V I S I O N

U P P E R R I V E RD I V I S I O N

C E N T R A L R I V E RD I V I S I O N

Gambia

Gambia

ATLANTIC

OCEAN

To Kaolack

To Kaolack

To Kolda

To Kolda

To Bignona

To Bignona

14°N

13°N

14°N

13°N

17°W 16°W 15°W 14°W

17°W 16°W 15°W 14°W

THEGAMBIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 10 20 30

0 10 20 30 Miles

40 Kilometers

IBRD 33409R

NO

VEM

BER 2006

THE GAMBIASELECTED CITIES AND TOWNS

LOCAL GOVERNMENT AREA“DIVISION” HEADQUARTERS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

LOCAL GOVERNMENT AREA“DIVISION” BOUNDARIES

INTERNATIONAL BOUNDARIES

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