Project Isizwe - the free WiFi initiative that aims to deploy WiFi across SA - has received a cash boost to accelerate rollout in Tshwane.
The project, a non-profit organisation founded by Alan Knott-Craig Jnr, already has live deployments across the City of Tshwane, the Western Cape and in Limpopo's Thulamela and Mutale municipalities. It also provided free WiFi in Stellenbosch between 2013 and this year.
Isizwe has now received an undisclosed amount of funding from Mergence Investment Managers to accelerate rollout across Tshwane, says Kasief Isaacs, portfolio manager for infrastructure investments at Mergence.
About two months ago, Project Isizwe's pilot project for the City of Tshwane - the first metropolitan municipality in SA to provide free WiFi - breached the half-million mark, with the NPO announcing it had tallied 504 300 unique users, with average sessions per user amounting to 26.7. The Tshwane pilot went live in November 2013.
In a statement, Isizwe and Mergence note the funding could "set the pattern for social impact bonds in South Africa". The companies explain this would take the form of private sector guaranteeing delivery of service, the public sector guaranteeing payment, and commercial funding being accessed upfront from the financial markets.
Social impact bonds are a form of innovative funding that gives service providers, including non-profit organisations, access to upfront resources to tackle social problems by tapping private funding to cover the upfront costs of social programmes approved by government institutions.
The Project Isizwe business model revolves around obtaining government funding for the installation of free public WiFi zones in low-income communities. The high cost of bandwidth is reduced using local service providers and partnerships with companies such as Neotel.
Isizwe works with the owners and managers of fibre networks to provide access to low income communities and geographically diverse areas which are viewed as uneconomical by many for-profit providers and telecommunications companies.
Societal impact
Isaacs explains Mergence seeks to provide capital to businesses that are aligned with its international clients' investment objectives. The investment will allow Isizwe to accelerate WiFi provision by funding the interim outlay of capital necessary to speed up deployment. The city will continue to fund the project as each milestone is reached. "The funding significantly reduces the risk for the municipality, enabling a demonstrable shift towards an outcomes-based procurement model," says Isaacs.
Isizwe COO Zahir Khan adds: "Some municipalities have been burnt through non-delivery and misallocated spending. Through the private sector - or non-profits such as ourselves - a combination of service delivery guarantees and upfront funding from the commercial sector can ensure payment by government only upon successful outcomes."
Khan notes the investment "represents a key building block for Project Isizwe. Over the longer term we could develop a funding and deployment model, in the form of a social impact bond, for similar WiFi projects in other municipalities across South Africa and potentially into the wider African market."
Last month, Khan noted the project team was "actively engaged" in discussions around enabling free WiFi services in a number of other areas in SA. Although unable to give specifics, he said it was in talks with municipalities "and other parties" in Limpopo, the Free State, Eastern Cape and KwaZulu-Natal, aiming to connect 5% of SA's population in the next five years.
The first phase of the Tshwane Municipality free WiFi project launched in November 2013 with five sites and a capacity of 25 000 users spread across five locations in Soshanguve, Mamelodi and Atteridgeville. Phase two with a further 213 sites was launched in mid-2014, while phase three, currently under way, will take the total number of sites to over 600, connecting more than 700 000 users.
Tshwane executive mayor Kgosientso Ramokgopa, in his state of the capital address on 14 May, said the intention was to provide every citizen of Tshwane - potentially two million people - with free WiFi within walking distance by the end of 2016.
Isaacs explains: "Mergence Investment Managers seeks to invest in projects that will make a social impact as well as provide a competitive return for our institutional clients." The social impact of expanding broadband by 10% grows the economy per capita 1.28%, employment by 0.28% and facilitates the growth of small and medium enterprises, he adds.
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