DBSA spends R1.2bn

By Siyabonga Africa, ITWeb junior journalist

Johannesburg, 23 Mar 2009

The Development Bank of Southern Africa (DBSA) has invested more than R1.2 billion in ICT projects in the year so far. The bank is adamant it will continue to look for growth prospects in the technology sectors of southern Africa.

The DBSA says it has invested in and provided loans for initiatives including undersea cables, such as the East Africa Cable System (Eassy) cable. The bank will finance a part of the $235 million (R2.27 billion) price tag. The DBSA also previously financed iBurst's nationwide broadband network worth more than R50 million.

“Other investments we have made in the ICT arena include telecommunications infrastructure and rolling out of new mobile networks,” says DBSA spokesman Jacky Mashapu. “These investments are seen as strategic in the sense that they facilitate greater accessibility and ultimately reduce the costs of doing business in Africa.”

Africa's ICT potential

Mashapu says there are a number of reasons why the bank is investing in the African ICT sector. Firstly, the strong commercial growth prospects and the profitability track record of the sector fit with the bank's international divisions strategy of focusing on commercially sustainable socio-economic projects.

“The ICT sector has also been proven to be a major driver of innovation, economic and social activity within Africa, with a high degree of development impact,” says Mashapu.

And, finally, the bank believes there is a large untapped telephony market in Africa, which will present huge opportunity for cheap, affordable communication technologies to the under-served population.

“We believe ICT capital expansion directly contributes to Africa's economic development in providing national access to telecommunications services. The roll-out of capital expansion projects will further increase its geographical footprint, bringing telecommunication services to rural, semi-urban and urban areas, which were previously un-served,” adds Mashapu.

Getting priorities straight

Analysts believe the bank should focus on developing the national backbone of southern African countries. Africa Analysis analyst Dobek Pater says the DBSA should look at supporting projects that seek to provide comprehensive backbone to rural areas.

“Cities in countries such as Angola and Malawi are developing broadband networks, yet they end in the city and do not extend to rural areas.”

Frost & Sullivan telecoms analyst Lindsay McDonald concurs with Pater, and says the bank should prioritise rural communications development above that of urban areas. Mashapu says cellular telephony is the best chance of bringing connectivity to the economically disadvantaged and isolated communities.

Satellites should also feature in the DBSA's future investment portfolio, McDonald adds. The technology can be used to extend bandwidth from the incoming undersea cables, such as Eassy and Seacom, to landlocked countries in southern Africa.

“Satellites will be important for the next 10 years and they will help bridge the connectivity gap for impoverished areas.”