[afrinic-discuss] An EASSy debt for Africa

[Eric Osiakwan]

An EASSy debt for Africa
By
Eric M.K Osiakwan
Visiting Fellow and Scholar, DV Program, Stanford University

On the 29th of August 2006, seven (7) Southern and Eastern African countries signed the 
Inter-Governmental Protocol of the Inter-Government Authority (IGA) of the East and 
Southern African Submarine System (EASSy) which is the governmental framework through 
the New Partnership for Africa’s Development (NEPAD) within which the cable is going to be 
owned, built and operated. 

The protocol, which is the outcome of an African led consultative process, mandates that the 
EASSy cable has an African majority ownership. The current proposal for the cable is a 
combination of debt and equity financing of 70% against 30% for the total cost of three 
hundred million dollars ($300,000,000). The question must be asked why do we want to 
saddle Africa with another debt if the business proposition of the cable is viable?

The NEPAD E-Africa Commission, which is facilitating this process with the government’s 
mandate to have an African majority ownership of the cable based on an Open Access 
structure, must consider my proposal not to accrue debt for this project because much of the 
money can be raised through equity and stocks on the continent. 

The EASSy Special Purpose Vehicle (SPV) must be owned in a public private partnership with 
the participation of governments, private sector, educational institutions, network operators, 
civil society and the consumer. 

The EASSy SPV should be listed on the various country stock exchanges so that it works 
within the stock exchange discipline, which allows it stocks to be traded without burdening 
the company to make huge profits to pay it shareholders. This approach meets the current 
“regulated return on investment” clause in the protocol in that the company would not be 
bent on paying it’s investors huge profits so would price capacity at cost however the 
investors can trade their stocks in the company on the stock exchanges to make profit based 
on the performance of the company.

Governments and public institutions must be able to invest public funds, pension funds etc 
into the EASSy SPV. The stock market would serve as a platform to trade these shares later or 
an exist strategy to recoup the investment.  

For the “indigenous” private enterprises the proposal is to lower the financial uptake for 
equity from the current one ($1,000,000) to two ($2,000,000) million dollars to between 
hundreds of thousand of dollars and one million dollars ($1000,000). This must include not 
only Eastern and Southern Africa private enterprise.
Educational institutions who consume a lot bandwidth must also be allowed to invest like the 
UbuntuNet Alliance which has about three million dollars ($3,000,000) for the purposes of 
participation in the EASSy SPV. 

Civil Society and Consumers must be allow to purchase shares or bonds of the EASSy cable 
on the stock market – hence my proposal is for the various governments to guarantee the 
Initial Public Offering (IPO) of the EASSy SPV in the various country stock exchanges.

The trading of stocks of the EASSy SPV on the exchanges would seek to rapidly expand the 
participation of the African people and create the African ownership, which is the flagship of 
NEPAD. 

The process would also generate long-term activities on the exchanges and create a trading 
post for a critical regional infrastructure company, which would ensure effective and efficient 
management of the enterprise. 

This would also have an impact on the stock markets in that trading of an “unusual” entity 
would create innovation, ensure that our financial sector is able to re-engineer to scale with 
development interest and ensure that private interest is at par with development goals to 
create a win-win situation. 

The stock market serves as the platform for trading the stocks of the EASSy SPV so that 
should the company be doing well then the investors can make money by trading their 
shares; otherwise the stock market is a good exit strategy for those who want to dispose off 
their shares if the company does do well in their opinion.

Why should we saddle Africa with an EASSy debt when the viability of the project can 
guarantee raising equity for it implementation ensuring that an African led process, is African 
financed? 


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Eric M.K Osiakwan
Executive Secretary
AfrISPA (www.afrispa.org)
Tel: + 233.21.258800
Fax: + 233.21.258811
Cell: + 233.244.386792
Handle: eosiakwan
Snail Mail: Pmb 208, Accra-North
Office: BusyInternet - 42 Ring Road Central, Accra-North 
Blog: http://afrispa.skybuilders.com/users/Eric/blog.html
Slang: "Tomorrow Now"
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