Information and Communications Technology

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized International Development Association IDA at WORK Information and Communications Technology Connecting people and markets September 2009 SUSTAINABLE DEVELOPMENT NETWORK

2 Contents Connecting People and Markets 2 Expanding Affordable Phone Access in Nicaragua 13 Better Communication Services for a Better Future in Afghanistan 14 Sri Lanka Project: Taking the Benefits of ICT to Every Village, Citizen, and Business 16 Mobile Phones Create Opportunities for Villagers in Bangladesh 18 d IDA at WORK: Information and Communications Technology

3 Information and Communications Technology IDA at WORK International Development Association Connecting people and markets Information and communication technologies (ICT) are powerful enablers of development. They can play a critical role in accelerating efforts to address key challenges facing developing countries and offer unprecedented opportunities for people in underserved areas and markets to access knowledge and services. The International Development Association (IDA) provides lending and technical assistance to increase access to widespread, affordable ICT services. This includes helping governments formulate sector policies and regulations that promote competition, and advancing the use of ICT for the delivery of public services. IDA also works with the International Finance Corporation (IFC) on private sector investments, particularly to broaden connectivity at affordable prices, develop local IT skills and industry, and promote grassroots entrepreneurship and innovation. The stories in this booklet show the direct positive impact of ICT on poverty reduction. IDA can, and must, continue to play a strong role through its continued support to ICT as a platform and enabler for stimulating growth across all sectors, creating new opportunities and employment, and improving governance and the efficiency of business and social services. The World Bank and the IFC remain committed to working with governments, the private sector, civil society and development agencies to help IDA countries seize the opportunities offered by ICT, and become formidable competitors in the global economy. Mohsen A. Khalil Director Global Information and Communication Technologies IFC/The World Bank IDA at WORK: Information and Communications Technology 1

4 IDA at WORK Connecting People and Markets The Information and Communications Technology (ICT) sector has undergone a revolution over the last decade in all developing countries. Around $30 billion was committed to investments in telecommunications networks in IDA countries between 1997 and 2007 and 53 percent of the population now live within reach of wireless networks. By 2007 there were over 250 million telephone subscribers (fixed and mobile) in IDA countries, and a further 318 million in countries borrowing from both IDA and the International Bank for Reconstruction and Development. This number has since continued to grow rapidly as prices fall and networks expand. This growth in access to information and communications technology in IDA countries is boosting economic productivity, raising incomes of families and small businesses, and providing an important source of government revenue. The adoption of information and communications technology has also been broad-based, with mobile phones reaching many low-income families and those living in rural areas. The performance of the sector has been driven by market liberalization, which has in turn stimulated private sector investment and competition. Almost US$1 billion of IDA funds were committed between 1997 and 2009 to support ICT sector reform, regulatory capacity building, and infrastructure investment, in addition to a significant amount of advisory services. The focus of IDA in the sector has now broadened, going beyond voice connectivity to developing broadband and promoting the use of information and communications applications to deliver public services. IDA s portfolio of technical assistance and investment projects in the latter areas continues to grow. IDA also works in partnership with the International Finance Corporation, the World Bank s private sector arm, in the telecommunications sector, allowing it to support both public and private investments. IDA has had some notable successes, including a project in Afghanistan where IDA-supported sector reform increased the number of telephone subscriptions from 57,000 to almost 10 million between 2002 and At a glance Almost US$1 billion of IDA funds was committed for activities related to information and communications technology between 1997 and IDA countries that have implemented significant ICT sector reforms generated around US$30 billion in investment between 1997 and The annual revenue generated by the telecommunications sector in these countries is equivalent to around 4 percent of GDP. The number of telecom subscribers in IDA countries has risen from around 1 percent to over 25 percent of the population, or more than 250 million subscribers, within less than a decade. This number continues to increase. 2 IDA at WORK: Information and Communications Technology

5 SECTORAL CONTEXT IDA countries have witnessed a revolution in the ICT sector. Over the last 10 years, the ICT sector in IDA countries has undergone a revolution. Around US$30 billion was invested into telecommunications businesses between 1997 and 2007, primarily by the private-sector. The proportion of the population living within range of wireless telephone networks increased dramatically from close to zero at the end of the 1990s to 53 percent by By the end of 2007 there were 250 million telephone subscribers in IDA countries, around 90 percent of whom were mobile subscribers. IDA countries continue to see sustained growth in the sector. On average, there were around 20 million new telecommunications subscribers every year between 1996 and 2007 and the number of subscribers continues to increase. The average annual increase in telecommunications penetration for the first half of this period was less than 1 percentage point compared with nearly 3 percentage points in the second half of the period. This growth has been surprisingly broad-based. Network investment was initially focused on cities and towns but is rapidly extending into rural areas. In Sub-Saharan Africa, for example, more than 40 percent of the rural population is now living within range of the mobile networks. This figure is increasing every year. The success of the mobile market is beginning to be replicated in other segments of the information and communications technology industry. For example, rates of internet access in IDA countries have begun to rise, though from a very low base. The total number of internet users in IDA countries has risen from less than 0.1 percent of the population to more than 4 percent in the last decade. As networks have expanded and competition has intensified, prices have dropped dramatically. The average price of mobile calls in a group of IDA countries 1 fell by 15 percent per year over the period , but in some IDA countries mobile call tariffs have fallen by much more. In Bangladesh, for example, mobile tariffs have dropped by nearly 90 percent since Average mobile call prices there now lie between 1 and 2 cents (US) per minute, bringing pre-paid telephone services within financial reach of the majority of the population. A similar effect is being seen with the internet - average prices for 20 hours per month of service in IDA countries fell by 37 percent over the same period. The ICT industry in many IDA countries has become a major source of innovation, particularly when it comes to providing services to low income users at affordable prices while offering sustainable business opportunities. Examples include persecond billing and recharge cards denominated in small units. Operators in East Africa (who are IFC clients) recently pioneered free roaming across their networks, allowing users to move within the region and pay the same call charges that they pay in their home market. The same operators have also more recently been leading the development of mobile phone-based banking services. Access to information and communications technology increases economic growth. The information and communications technology sector s contribution to economic growth is widely recognized. It is estimated that a 10 percent increase in teledensity 2 contributes to 0.6 percent of GDP growth and the consulting group McKinsey has estimated that the economic impact of wireless in China has amounted to US$108 billion, or five 1 Sao Tomé and Principe, Ghana, Congo Rep., Kenya, Bangladesh, Sri Lanka, Nepal, Timor-Leste, Vietnam and Tajikistan. Source: Wireless Intelligence, The number of telephone subscribers per 100 population. IDA at WORK: Information and Communications Technology 3

6 IDA at WORK: Information and Communications Technology THE IMPACT OF ICT ON SMALL-SCALE FISHING ENTERPRISES IN KERALA, INDIA More than 70 percent of adults in the Indian state of Kerala eat fish at least once a day, and more than 1 million people work in the fishing industry. Fishing is done primarily by small enterprises, working near home markets and traditionally selling their catches to a specific market. This causes large geographical disparities in market prices, according to local conditions of supply and demand. These disparities were so great that it was not uncommon for fish in some markets to be discarded because they could not be sold while there was an active trade going on in neighboring towns. Mobile phone services were introduced in Kerala in 1997 and expanded progressively along the coast and outwards from the major urban areas. Network coverage also extends kilometers out to sea, allowing fishermen to find out the prices in different markets along the coast, decide where to land their catches, and agree on prices before landing their fish, effectively conducting auctions by phone. The effects have been dramatic. After mobile phones were introduced, 30 percent 40 percent of fishermen began selling fish outside their home markets compared with almost none beforehand. Within a few weeks this significantly reduced the dispersion in fish prices between markets. Prices on any given day now rarely differ by more than a few rupees per kilogram, compared with up to 10 rupees before. Moreover, there are almost no cases of wastage. Mobile phones have resulted in an increase in fishermen s incomes. On average, daily revenues have risen by 205 rupees, while costs (including the cost of buying the phones) have increased by 72 rupees. Thus the profits of fishermen have jumped by 133 rupees a day a nine percent increase. The introduction of mobile phones has also had a modest benefit for customers, with the average price of sardines falling by 0.39 rupees per kilogram, or just under four percent.. Source: Jensen, Robert The Digital Provide: Information (Technology), Market Performance and Welfare in the South Indian Fisheries Sector. The Quarterly Journal of Economics; Vol. CXXII August 2007, Issue 3. percent of GDP. More recent evidence indicates that the positive impact of ICT extends to new technologies such as internet, including broadband and may, indeed, exceed the impact of traditional voice-based communications. It is estimated that every ten percentage points increase in broadband penetration results in 1.38 percentage points additional GDP growth in developing countries 3. One of the key ways in which this sector impacts the economy is through investment. Between 1997 and 2006, around 10 percent of total net foreign direct investment inflows in IDA countries went into the telecoms sector and the share of ICT in infrastructure private investment has increased, rising from 54 percent between 1993 and 1999 to 66 percent between 2000 and The direct positive effect of information and communications technology on poverty reduction can be seen through its impact on small and medium-sized businesses. 3 See Christine Zhen-Wei Qiang and Carlo M. Rossotto with Kaoru Kimura, Economic Impact of Broadband In Information and Communication for Development, World Bank. 4 IDA at WORK: Information and Communications Technology

7 Table 1: Recent license-awards and privatization proceeds in selected IDA countries Country Afghanistan Bangladesh Bhutan Nepal Sri Lanka Kenya Mali Rwanda Ghana License award revenues 4 licenses auctioned, US$125 million Three broadband wireless licenses issued, US$90 million 2nd mobile license auctioned, US$17 million 2nd mobile license auctioned for US$ 25 million Four 3G licenses and the fifth mobile license, US$24 million Privatization of Kenya Telecom, US$390 million Privatization of incumbent operator, 275 million Privatization of RwandaTel, US$100 million Privatization of Ghana Telecom, US$900 million The ICT sector is a major generator of revenues for governments of IDA countries. The ICT sector is a major generator of revenues for the government through taxes, sector levies and, in some cases, revenue-sharing arrangements. On average, the revenue generated by the ICT sector is equivalent to about four percent of GDP and a significant proportion of this is passed on to the government through sales tax, sector levies, and corporate taxes. A recent World Bank study of the mobile industry in Bangladesh showed that between over US$300 million in government revenues was generated during 2005 alone; in Afghanistan, the telecommunications sector now contributes an estimated US$75 million in taxes annually. The tax revenue generated by the ICT sector represents a significant proportion of total government revenues, particularly in countries with a small formal sector and limited tax-base. The process of market reform itself also generates significant government revenues. Private investors transferred approximately US$7.1 billion to governments of IDA countries through privatizations and license awards between 1997 and Table 1 provides some examples. ICT is increasingly being used as a platform for service delivery The widespread availability of telecommunications networks provides a platform over which both the public and private sector can deliver important services. Companies in IDA countries have pioneered the use of mobile phones for transferring money, making payments, and for the delivery of other financial services to the previously unbanked. The public sector is also using information and communications networks to deliver services. In Ghana, the government has used ICT to improve the efficiency with which the customs clearance process is managed. Clearance times for cargo at Tema port have come down from 2-3 weeks to 1-2 days. IDA at WORK: Information and Communications Technology 5

8 IDA at WORK: Information and Communications Technology IDA CONTRIBUTIONS IDA is in a strong position to provide technical and financial support to countries wishing to reform their ICT sector ICT sector reform has been the main driver of performance in the telecommunications sector, in addition to technological advancement. There has been a global shift of policy in the telecommunications sector from development through state-owned enterprises to market liberalization and privatization of state-owned enterprises. By 2009, over 90 percent of IDA countries had introduced competition into their internet and mobile markets, and more than 80 percent had established a separate regulatory authority for the sector. Sector performance further improves as the reforms deepen. In a recent World Bank study of 24 African countries 22 of them IDA countries it was found that the mobile penetration rates increased by less than one percentage point per year when there were only two mobile operators in the market but by more than three percentage points per year when there were four or more operators competing. Increased competition has also been associated with drops in the price of mobile services and international calls. The nature of IDA assistance has evolved with the evolution of government policy towards the information and communications technology sector. In the past, IDA projects typically focused on investment activities that aimed to increase access to ICT services, primarily through state-owned fixed-line operators. But from the middle of the 1990s, IDA support evolved to place greater emphasis on supporting the liberalization and privatization process, especially in the mobile market, with growing attention to sound regulation and promoting access in rural areas. Since 1997, IDA has funded investment projects, technical assistance and analytical work in 47 IDA countries. Results on the ground. IDA support to governments has resulted in significant improvements in sector performance. Sector Reform IDA supported the reform of the telecommunications sector in Afghanistan through a comprehensive package of capacity building, support for drafting of legislation and licenses, rehabilitation of the government s network, and improved postal service. From a single operator in 2002 with a barely functioning network, a competitive telecommunications market has developed with four licensed private mobile operators, a combined fixed and mobile operator, and seven private internet service providers. The sector has attracted nearly US$500 million in private investments, accounting for 60 percent of all foreign direct investment in Afghanistan. As a result, the number of telephones in Afghanistan increased from 57,000 in 2002 to almost 10 million by Moreover, falling prices have made services more affordable. In 2002, it cost about US$400 to own a mobile phone and US$2 for every minute of talk time. Today, an Afghan can own a mobile phone for less than US$50 and spend less than 10 cents per minute for talk time. IDA has had similar success in Samoa, a Pacific island state with a population of around 200,000. By the end of the 1990s there was widespread dissatisfaction with the services being offered by Telecom New Zealand under a joint venture with the government. IDA provided a technical assistance loan of US$4.5 million which supported the government s liberalization of the sector and renegotiations with Telecom New Zealand. A new Telecommunications 6 IDA at WORK: Information and Communications Technology

9 Act was passed in 2005 that provided the framework for competition and established an independent regulator. In 2006, the government awarded new cell phone network licenses, generating competition. The results were felt immediately: the number of mobile subscribers increased by 170 percent and the price of a call to the US fell by 55 percent within only one year. Nigeria Universal Access Program as part of Privatization Support Project Nigeria continues to reap the benefits of a decade of aggressive sector reforms that have created an open regulatory framework and very competitive telecommunications markets. Figures released by the Nigeria Communication Commission in March 2009 indicate an outstanding growth trend. The current total number of subscribers (132.7 million) is a 50 percent increase over the previous year. Most of the growth is attributed to growth in the mobile sector, accounting for more than 95 percent of the Nigerian market. The development in the sector has concentrated in key cities and urban centers where only about 30 percent of Nigerians live, leaving rural areas relatively underserved. The 2003 Communications Act included a provision by the Government to bridge this divide by establishing a Universal Service Provision Fund and expanding networks to underserved communities. IDA has also supported the government s efforts to expand ICT services into rural areas through providing subsidies on a competitive basis. The combined impact of the 25 percent subsidy, and use of CDMA technology is allowing the Universal Access operator to offer very competitive prices. The price of a call to another customer of the same network is N4 per minute compared to average of N18. The price of a call to other networks is N15/minute, which is about 50 percent lower than competitors. The UA Provider, GICELL is reported in local papers to have invested an additional US$50 million of private funds in rural telephony and expecting to increase to US$700 million between IDA at WORK: Information and Communications Technology 7

10 IDA at WORK: Information and Communications Technology Rural access Promoting competition among private operators has been highly effective in delivering telecommunications services to rural areas. The previouslymentioned World Bank study of 24 African countries showed that mobile networks had quickly expanded to cover more than 50 percent of the population, including more than 40 percent of those living in rural areas. The same study showed that if effective competition was established, networks would continue to expand, reaching areas with more than 90 percent of the countries population. Some form of financial incentive would be required for mobile operators to cover the remaining parts of the population at current price levels, but the universal service subsidy is much lower than had been expected, and certainly much lower than would have been required for extending fixed-line access THE EVOLVING AGENDA. As basic telecommunications services become more widely available in IDA countries, policymakers are turning their attention to new services. The nature of IDA support is also changing accordingly to three areas of focus: broadband, the wider adoption of ICT in public services, and the development of the IT and IT-enabled services industry. Broadband. Access to the internet is rapidly growing in developed countries and broadband is becoming increasingly important in business and personal lives. However, despite some recent improvements, access to the internet in IDA countries remains very limited and prices are prohibitively high (Figure 1). Figure 1: Internet Access in IDA Countries Compared with Higher-Income Countries Internet users (per 100 population) Fixed broadband tariff (US$ per month) IDA only IDA blend Lower middle-income Upper middle-income High income Source: International Telecommunication Union. 8 IDA at WORK: Information and Communications Technology

11 e-government in Rwanda The government of Rwanda has been a leader in Africa of the use of ICT in the delivery of public services. IDA has been supporting the government through the erwanda project, funded by a US$10 million grant. The objectives of the project are to increase the efficiency and effectiveness of some of the government s internal functions and to use technology to help the government deliver services and information. The project has installed networks in government ministries and in district offices around the country and provided the training for staff to use them. It has supported the development of a government portal, which will link all government information and websites. Government ministries have also developed websites, both for their internal purposes as well as for information dissemination to the citizens. The project has also provided ICT services to parts of the population that currently do not have access. It has supported telecenters in rural areas and an ICT bus (or mobile telecenter) that will be traveling throughout the country. Finally, the project is also developing ICT applications for providing public services to the public. For example, esoko (launched in June 2009) provides agricultural market price information and telemedicine equipment is being installed in two hospitals to link them to the King Faisal Hospital in Kigali. The increasing coverage and capacity of ICT networks is opening up new opportunities for economic growth and development in IDA countries. IDA at WORK: Information and Communications Technology 9

12 IDA at WORK: Information and Communications Technology IDA s technical assistance and investment lending is increasingly targeting the broadband market. A good example of this is IDA s support for the Eastern African Submarine Fiber-Optic Cable, a submarine communications cable running along the East coast of Africa. IDA was closely involved in the initial stages of development including the feasibility studies, the financial structure and the policy framework. Financing for the project was subsequently provided by the International Finance Corporation and other development finance institutions, also showcasing the partnership between IDA and the International Finance Corporation in the sector. IDA s portfolio of broadband activities has increased rapidly over the past two years. A key component of this has been the Regional Communications Infrastructure Program in Eastern and Southern Africa. This program will extend the geographic reach of broadband networks and contribute to lower prices for international capacity, while contributing to improved government efficiency and transparency through selected e-government applications. The Board of the World Bank approved an overall funding envelope of US$424 million for the Regional Communications Infrastructure Program in Burundi, Kenya and Madagascar participated in the first phase, obtaining US$164.5 million. This was followed in 2008 by Rwanda (US$24 million) and, in phase three, by Malawi, Mozambique, and Tanzania, (US$151 million). The project in each country is tailored to suit its specific needs. In Burundi, for example, the project is supporting the development of the broadband communications infrastructure in a partnership between the government and the private sector operators. This will connect all of the districts of the country and be run on an open-access basis. In Rwanda and Malawi, the project will finance the purchase of broadband services, thereby stimulating the development of the international fiber-optic links. IDA s program of support for broadband infrastructure continues to expand. A project to develop a fiber along long-distance electricity transmission lines in Democratic Republic of Congo was approved by the Board of the World Bank in Similar projects are under development in Central Africa to connect Cameroon, Chad and the Central African Republic while in West Africa, IDA is supporting greater connectivity among countries by utilizing the regional electricity transmission infrastructure. 10 IDA at WORK: Information and Communications Technology

13 Broadening the use of ICT. As ICT services become more widely available, governments are looking to expand their use in the delivery of public services. IDA is increasing its support to governments this area, providing US$18 million to support e-government services in Ethiopia, US$39 million for a project in Ghana, and US$93 million for similar activities in Vietnam, for example. The review (see box) of the e-rwanda project provides a more detailed picture of how IDA is supporting governments in the use of ICT in the delivery of public services. IT/ITES services The increasing coverage and capacity of ICT networks is opening up new opportunities for economic growth and development in IDA countries. IDA is supporting governments to develop their IT and IT-enabled business sectors, following the lead of countries like India and the Philippines. The e-ghana project, for example, is helping the government to generate growth and employment through public-private partnerships to develop the technologically enabled services industry. Ghana Project leveraging Public/Private Partnerships to develop the IT/IT Enabled Services sector Ghana s information and communications technologies sector has registered one of the most significant growth rates in Africa. The government s proactive policy and regulatory interventions, combined with support from the World Bank Group and other development partners, has resulted in a competitive and vibrant industry, with teledensity of close to 50 percent and more than US$150 million of private investment in the sector since The US$40 million World Bank-funded eghana project is building on these successes, and providing additional support for further harnessing Ghana s competitiveness in the IT-enabled services industry. According to McKinsey & Co. the global market for IT Enabled Services is about US$475 billion of which only 15 percent has been realized so far, with India being the most dominant player. eghana s primary objective is to generate growth and employment and support the government s efforts to capture a portion of this lucrative industry through the use of publicprivate partnerships and the opportunities offered by information and communications technologies. In partnership with the government and the private sector, project funds have contributed to the creation of a government-managed ITES Secretariat and a Private Industry Association the Ghana Association of Software and IT Companies (GASSCOM). These organizations are collaborating very effectively to improve Ghana s competitiveness in the ITES sector and their efforts to increase visibility, improve skills sets and standards, and investment promotion are beginning to pay off. The 2009 AT Kearney Global Services Location Index has ranked Ghana #15 out of 50 countries, globally, in terms of location, attractiveness, and #1 in terms of financial attractiveness. Close to 20 ITES companies are currently registered with GASSCOM, and over 1,000 jobs have been created during the last two years. The additional partnership between the public and private sector to train some 50 training institutions and 6,000 business process outsourcing agents in the second half of 2009 is expected to further strengthen Ghana s position as one of the most attractive locations for ITES business in Africa. IDA at WORK: Information and Communications Technology 11

14 IDA at WORK: Information And Communications Technology LOOKING AHEAD We have high expectations of ICT and its transformative effects in all areas of the economy and society, said Rwanda s president Paul Kegame in Communications technology has fundamentally changed the way people live, work, and interact socially, and we in Rwanda have no intention of being left behind or standing still as the rest of the globe moves forward at an ever increasing pace. The reform of the telecommunications sector in IDA countries has been a success, driving economic growth, creating opportunities and providing a platform for growth across the economy. Policy reform and the improvement of public sector governance have triggered large amounts of private investment, greatly improved service delivery, brought more jobs, and sustainably increased government revenues. IDA has supported the majority of countries implementing such reforms. Building on this success, the ICT agenda in IDA countries is evolving. The key priorities will be catching up with the rest of the world in terms of broadband connectivity and broadening the use of ICT across government, including health, education and rural development. Both of these areas present major challenges at the policy and the financing levels. IDA s support can play a key role in ensuring that they are both successful. Broadband is currently very expensive in IDA countries and only available to small sections of the population. The falling price of personal computers, improvements in international communications infrastructure and innovation in broadband wireless standards mean that many of the obstacles facing widespread broadband roll-out are being overcome. However, key bottlenecks remain. Government policy and regulatory frameworks continue to constrain investment in the sector. Reliance upon traditional radio-spectrum management techniques is limiting market entry and innovation while the lack of high-capacity domestic backbone networks is raising the costs for companies entering the market. IDA s technical expertise in these areas and the availability of financial resources to support targeted public intervention to overcome the infrastructure bottlenecks will be a major area of activity for IDA in the future. Moreover, as widespread and low-cost connectivity is already becoming a reality in most IDA countries, it provides an extraordinary opportunity for the public sector to improve its service delivery. This is already happening in some countries, but other countries and more applications will follow. This will require significant technical expertise and financial support, both of which IDA is in a position to provide. 12 IDA at WORK: Information and Communications Technology

15 Expanding Affordable Phone Access in Nicaragua IDA at WORK: Information and Communications Technology Challenge Before 2000, Nicaragua s telecom sector was state-dominated and inefficient. It consisted of a fixed-line monopoly (ENITEL) and one mobile operator (BellSouth), whose license limited its services to the Pacific region the wealthiest area in the country. Two previous attempts to privatize the company failed because of the lack of financial and technical information. Approach The Nicaragua-Telecommunications Sector Reform Project aimed to strengthen the policy and regulatory environment in the telecommunications sector and improve rural access to services by encouraging private investment in those areas. Results A newly liberalized telecom market yielded a seven-fold increase in fixed and mobile phones from 194,000 in 1999 to more than 1.3 million in Highlights: In 2000, it was common to wait three years or more to get a new line installed by year-end 2005 that wait is about 15 minutes. ENITEL was privatized in September 2001; an aggressive tariff rebalancing program was implemented in 1999 before privatization to eliminate cross-subsidies between local and international services and also to increase the value of the company. Privatization proceeds for the government have been estimated at US$153 million. Two new cellular operators were granted national licenses to compete with the incumbent, Bell South of Nicaragua S.A. and the three mobile operators installed nationwide networks, covering all departmental capitals, and actively competed for market share. A new regulatory entity (TELCOR) was set up, and several competition laws were passed boosting private investment, increasing service quality, and aligning costs and prices. TELCOR also put in place regulations to open fixed-line telephone services to further competition after ENITEL s exclusivity period expired in April As a result, calls to the USA that used to cost $1 per minute cost 15 cents by year-end The new Telecommunications Investment Fund (FITEL) installed public telephone service in rural areas where private operators are not active and expanded rural mobile coverage. This resulted in an increase in the number of communities with public telephone service from 171 to 536 (310 percent increase). In addition, 30 communities benefited from mobile coverage. In addition, around half a million rural inhabitants in areas not covered by private telephone providers benefited from newly installed public phone lines. IDA Contribution Total project cost was US$18 million, of which IDA contributed US$15.9 million and the Government of Nicaragua US$2.1 million. ENITEL privatization was attempted twice before with donor support, and both times it failed. IDA was able to assist the Government in successfully privatizing ENITEL and liberalizing the telecom industry because it could draw on the World Bank s global experience in this area. Next Steps Despite these achievements, Nicaragua continues to have one of the lowest teledensity and ICT levels in Latin America. IDA s follow-up project supports greater expansion of rural broadband networks where service is relatively poor, and further enhancements to the competitive landscape of the industry. IDA at WORK: Information and Communications Technology 13

16 IDA at WORK: Information And Communications Technology Better Communication Services for a Better Future in Afghanistan Challenge In 2002, following three decades of violent conflict, Afghanistan had a barely functioning and very limited communications network. The challenge was to extend service to the majority of the Afghan population that had no access to communications services such as telephones or the Internet. The Ministry of Communications operated telephone services only in five major cities, and over 60 percent of the 57,000 functioning lines were in Kabul. The country also had no access to the Internet. The poor state of communications infrastructure hindered the Government s ability to coordinate its own operations, requiring the physical transfer of information or meetings. Approach The International Development Agency (IDA) Telecommunications Project and the Afghanistan Reconstruction Trust Fund (ARTF) financed the construction of a digital transmission network. A Memorandum of Understanding between Afghan Telecom and the Pakistan Telecommunications Company Limited enabled national and international telecommunications, lowered costs for Afghans, and increased traffic. An Earth Satellite Station at Mahtab-Qala on the outskirts of Kabul was installed and commissioned, and was converted into the primary international telecommunications gateway for Afghanistan. Results The number of telephones in Afghanistan has increased from 57,000 in 2002 to 10 million in 2009 and costs have fallen from $2/minute to $0.10/minute. Highlights: From a single operator in 2002, Afghanistan s competitive telecommunications market now has four licensed private mobile operators, a unified service provider, and seven operational private internet service providers. The sector has attracted over US$ 1 billion in private investments. Today 33 percent of Afghans have access to telephone services, compared to less than one out of 100 in Mobile prices have dropped considerably, making services more affordable for more Afghans. In 2002, it cost about US$400 to purchase a mobile phone and US$2 for every minute of talk time. Today, an Afghan can purchase a mobile phone for less than US$50 and spends less than 10 cents per minute of talk time. All provinces are now connected on the Government Communications Network (GCN), enabling voice and data transfer, and video conferences between Kabul and the provincial capitals. Afghan Telecom has been corporatized and a separate regulatory agency established. In 2008, the telecommunications sector contributed over 10 percent of the Government of Afghanistan s domestic revenues. The telecommunications sector directly or indirectly employs over 60,000 people. IDA Contribution The total project cost was financed by a US$22 million IDA credit. An additional US$ 6.13 million came from the ARTF, and the Public Private Infrastructure Advisory Facility (PPIAF) provided a grant of US$ 480, IDA at WORK: Information and Communications Technology

17 IDA support has been catalytic in establishing the policy and regulatory framework for a sector that is largely private sector driven. IDA also supported the establishment of an independent regulatory agency and the corporatization of the Government s telecommunications operator. IDA support and policy dialogue focused on creating the policy, legal and regulatory institutions to foster privately led wireless roll out, drawing from experience in other post conflict environments, where wireless communications are the primary telecommunications infrastructure and where competitive private wireless operators can rapidly provide services under the correct regulatory and policy conditions. The sector has also leveraged resources from USAID to establish a district communications network. Next Steps Despite developments in the sector, gaps remain. A 2005 survey suggested that 60 percent of businesses still rated the quality and extent of telecommunications as a serious problem ranking it behind access to land, water and electricity. Of 34 districts, 10 have less than half of their populated places covered by telephone services, and access still needs to be improved in rural areas. There is also a need to improve the quality and range of services and to reduce prices. The Bank is providing technical assistance to the regulator to strengthen regulatory capacity, designing its rural telecommunications development program, and is supporting the ministry in leveraging the use of information and communication technologies for development and governance The number of telephones in Afghanistan has increased from 57,000 in 2002 to 10 million in 2009 and costs have fallen from $2/minute to $0.10/minute. IDA at WORK: Information and Communications Technology 15

18 IDA at WORK: Information And Communications Technology Sri Lanka Project: Taking the Benefits of ICT to Every Village, Citizen, and Business Challenge In 2002 the Sri Lankan government and Tamil Tiger rebels signed a ceasefire after 19 years of civil war. Information and Communication Technology (ICT) was seen as a means of supporting peace, equity and economic growth through technological and institutional transformation of key sectors in the economy. Sri Lanka s ICT aspirations were first received with some skepticism given the market and institutional environment for ICT in the country. The telecommunications infrastructure was limited and what existed was concentrated in urban areas, leaving rural areas lacking even access to basic ICT services. There was a lack of ICT awareness and literacy in the population as a whole and limited use of ICT within government and the private sector. Approach The Government of Sri Lanka approached IDA to finance a visionary e-development strategy intended to address the many gaps in Sri Lanka s ICT environment. This request resulted in IDA funding the e-sri Lanka Project which consisted of six programs: Re-engineering Government using ICT Supporting E-Society ICT Investment and Private Sector Development ICT Human Capacity Building Information Infrastructure ICT Policy, Leadership, and Institutional Development Results Today e-sri Lanka project is in its 5th year of implementation. It has become a catalyst for transformation and innovation, powerfully contributing toward achieving the vision defined at the project launch of taking ICT to every village, to every citizen, every business, and transforming the way government thinks and works. Highlights: The Government Information Center (GIC) is now providing information on 99% of government services, 12 hours per day, 365 days per year with 2500 calls answered daily. This year GIC received the World Summit Award for government service. IDA funded 164 innovative ICT community and NGO driven projects resulting in cutting edge rural ICT innovation that received the World Summit, Stockholm Challenge, Manthan, e-india, and GKP Awards. IDA Contribution IDA financed US$53 million for the project and an additional $15 million provided by Korean Exim Bank and US$1 million through a JSDF grant. 16 IDA at WORK: Information and Communications Technology

19 Next Steps The end of the war has meant that areas in the North and East of the country have become more accessible for development projects. Once again ICT is viewed as a mechanism to address the significant development challenges in the area. There is a need to extend telecommunications infrastructure to these areas, establish public access points and mobilize communities to develop ICT-based solutions to development challenges. The Government network will also have to be extended to connect 75 divisional secretariats in the North and East of the country to enable the provision of government services. The Government Information Center (GIC) is now providing information on 99% of government services, 12 hours per day, 365 days per year with 2500 calls answered daily. This year GIC received the World Summit Award for government service. IDA at WORK: Information and Communications Technology 17

20 IDA at WORK: Information and Communications Technology Mobile Phones Create Opportunities for Villagers in Bangladesh Challenge In 2000, Bangladesh had one of the lowest teledensity rates in the world: 0.26 telephones per 100 inhabitants. The challenge was to increase access to telecommunications services, improve the quality of service being offered, and increase connectivity to rural areas promoting economic development. The fixed line incumbent, the Bangladesh Telephone and Telegraph Board (BTTB) had only 350,000 lines in service for a population of 125 million. The waiting list for a fixed line totaled 200,000 subscribers with a waiting time of over 10 years. Approach Recognizing the essential role of private sector participation in improving basic infrastructure that would support broader economic development objectives, the project supported the expansion of GrameenPhone Limited s network capacity and population coverage. Instead of focusing on a high-end, niche market, GrameenPhone s strategy was to position itself as the second national operator by pursuing a low tariff strategy designed to compete directly with BTTB. Contiguous investments have assisted in the expansion of GrameenPhone s digital cellular network since 2000, allowing the company to assume a leadership position in the cellular market. Results GrameenPhone has become the largest cellular operator in Bangladesh, with a network covering over 98 percent of the population and 20 million subscribers as of June Simultaneously, its successful Village Phone Program has had a significant impact on the rural population. Highlights: GrameenPhone currently has 10,000 base stations in 5,700 locations, covering approximately 98 percent of the total population and 80 percent of the country. (Coverage=access to the network signal.) The entire network is EDGE/GPRS enabled, allowing access to high speed internet and data services from anywhere within the coverage area. GrameenPhone s Village Phone Program now has more than 225,000 phones in operation, and serves 50 million people in more than 55,000 villages, extending coverage into rural and poorer areas. The Program has had a tremendous social and economic impact on the operators mostly rural, poor women for whom income-generating opportunities are rare. The operators take microloans from GrameenBank to buy cell phones and provide mobile pay phone service in their shops, the local market, and elsewhere. The operators earn by charging a markup agreed on with GrameenPhone. GrameenPhone has also established 500 Community Information Centers (CIC), in nearly 450 upazilas (the lowest level of administrative government), where citizens in rural areas have access to the Internet and information services. Prices have also fallen considerably. A prepaid minute of call from a mobile phone cost 5 Taka in 2004 (Exchange rate: US$1 = approximately 70 Taka). The rates have now fallen to Taka 0.70 per minute due to increased competition and improved interconnection between operators. 18 IDA at WORK: Information and Communications Technology

21 The TeleCommons Development Group ( TDG ) of Canada found that a single phone call to Dhaka replaces a physical trip to the city and saves between 2.64 percent to 9.8 percent of the mean monthly household income. A 2006 Ovum study found that almost a quarter of a million Bangladeshi depend on the mobile industry, directly and indirectly, and that mobile services revenues are more than US$ 1.6 billion annually. IDA Contribution IDA drew on its experience in other countries to support a policy dialogue focused on establishing a regulatory framework that enables the growth of competitive private wireless operators. Through the Telecommunications Technical Assistance Project, IDA supported the restructuring and corporatization of state-owned BTTB, the strengthening of the policy function of the ministry, and the strengthening the regulatory capacity of the regulatory commission, including its spectrum management function. The work of the World Bank reduced the regulatory risk faced by GrameenPhone and gave all parties far greater confidence in investing in Bangladesh. GrameenPhone has become the largest cellular operator in Bangladesh, with a network covering over 98 percent of the population and 20 million subscribers as of June IDA at WORK: Information and Communications Technology 19

22 IDA at WORK: Information and Communications Technology Bangladesh Partners In 2000, the International Finance Corporation, part of the World Bank Group, provided a loan of US$16.7 million and made an equity investment of US$1.57 million in exchange for 3 percent of the company s shares (GrameenPhone I). This investment funded the initial installation and operation of the company s GSM 900 network. In December 2003, IFC sold its equity stake to the shareholders for TK466 million (US$8 million). In 2004, IFC provided the company with a second loan (GrameenPhone II) of US$30 million, the proceeds of which were partly applied to repay IFC s first loan. Next Steps GrameenPhone I and II were successful and IFC has found that the model is replicable in other countries, and has most recently assisted in developing a similar program in Uganda. The Bank also continues to assist in telecommunications sector reform. 20 IDA at WORK: Information and Communications Technology

23 IDA at WORK: Information and Communications Printed Technology on recycled 21 paper

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