Optic cable to spur outsourcing boom

By James Anyanzwa

The East Africa Marine System (Teams) project will attract up to $10 billion (Sh790 billion) worth of investments in special economic zones in the next three years.

Most of these will be Business Process Outsourcing firms, or BPOs in short. The laying of the fibre optic cable is expected to start on March 24, and be completed by end of June.

A vicious race and public relations war continues to rage between Teams, and another private sector-driven submarine cable project, Seacom, for bragging rights over who will land first in Mombasa.

Seacom has said it will be operational by June 30.

Teams is a government-owned special purpose vehicle, created to develop a fibre-optic sea cable connecting the East Africa through Mombasa to the world’s fibre-optic communications backbone via Fujairah in the United Arab Emirates.

It was initiated by Kenya’s Ministry of Communications, when it became clear that a regional submarine optic cable project known as the East Africa Submarine Systems (Eassy) would be delayed.

The Government remains optimistic that the project will remain on course, despite dealys by some of the private investors in honouring their Sh6.98 billion in commitments. Information Permanent Secretary, Bitange Ndemo, confirmed that only Treasury had paid for its 20 per cent stake estimated at $22.10(Sh1.75 billion). Ndemo, however allayed fears that the $110.5 million (Sh8.73 billion) fibre optic project, could stall.

According to documents in our possession, the outstanding amount stands at $88.4 million (Sh6.98billion under current exchange rates).

"There is no risk at all," Ndemo told reporters yesterday at Treasury building in Nairobi.

He said the private investors who signed their cable ownership agreements are expected to settle their dues in the next three months starting from yesterday. Among the shareholders in Teams are Treasury (20 per cent), Safaricom Ltd (20 per cent), Econet Wireless Kenya Ltd (10 per cent), Telkom Kenya (20 per cent) and Kenya Data Networks (10 per cent).

Others are Wananchi Telecom Ltd (5 per cent), Jamii Telecom (3.75 per cent),Access Kenya (1.25 per cent) and Flashcom (1.25 per cent).

"To date agreements for the cable ownership operation have been negotiated and agreed between the different players," said the Treasury Permant Secretary, Joseph Kinyua.

He said the Privatisation Committee and the Attorney General’s office have also approved the agreements.

Kinyua said information and communication technology (ICT) consumers can expect quality connections and lower costs for data and calls.

"This should stimulate the demand for communication services and the value addition industry such as the Business Processing Outsourcing sector, web-based services among others," he said.

Kinyua also confirmed that Kenya was negotiating with the International Monetary Fund (IMF) for emergency funding of between $100-$300million, to ease pressure on its foreign exchange reserves.