Parliament to approve Chinese K16.5 bn loan to improve internet

Minister of Finance, Economic Planning and Development Goodall Gondwe has said China will provide Malawi with 160 million yuan [about K16.5 billion or a $23 million] to improve  Internet connectivity .

 Malawi Finance Minister Goodall Gondwe and Chinese Ambassador Shi-ting Wanga signs a framework agreement on the provision of Concessional loan by China to Malawi National Fiber backbone-pic by Lisa Vintulla

Malawi Finance Minister Goodall Gondwe and Chinese Ambassador Shi-ting Wanga signs a framework agreement on the provision of Concessional loan by China to Malawi National Fiber backbone-pic by Lisa Vintulla

Gondwe said this after the signing of framework agreement on the provision of a concessional loan with China for the Malawi National Fibre Backbone Project.

The government of Malawi does not have centralized control over the international gateway, which the International Telecommunication Union (ITU) characterizes as competitive.14

Malawi has a total of six fiber gateways to the SEACOM and EASSy cable landings, three each through MTL and the Electricity Supply Corporation of Malawi Limited (ESCOM).

The state-owned Malawi Sustainable Development Network Programme (SDNP), a licensed ISP, oversees the local traffic hub that connects the country’s internet service providers (ISPs.)

Gondwe said with the Chinese loan concenssion Malawians will benefit from the project because most rural areas will now have Internet through the Malawi National Fibre backbone.

He said the issue will be taken to Parliament and once approved, government will go ahead to get the money from China.

According to Gondwe, under  the framework agreement, it  will be concessional at 21 percent interest and have a five-year grace period. It has 15 years repayment period.

The connectivity, whose lines will be carried using Escom electricity transmission poles, will have drop points at Capital Hill in Lilongwe, Government Office Complex in Blantyre and government offices in Zomba.

Chinese Ambassador Shi-Ting Wang said with the building of the Malawi National Fibre Backbone, Malawians will have “ timely benefits of this information era in the near future.”

Currently, onnection speeds for Malawian users are frustratingly slow, decreasing to an average of 1.7 Mbps from 1.9 Mbps a year prior, compared to a global average of 6.3 Mbps, according to Akamai’s “State of the Internet” report.6

The Freddom House index report for 2016 has also noted that slowing speeds have coincided with rising costs, likely due to poor infrastructure management and lack of investment.

Malawi’s flagging economy in the past year has reinforced its status as a least developed country, with soaring inflation having a negative impact on the ICT sector.

Low rates of internet and mobile phone access in Malawi are largely a result of the high cost of service for consumers, including 17.5 percent value-added tax (VAT) on mobile phones and services, and 16.5 percent VAT on internet services.

In May 2015, the Malawian parliament implemented an additional 10 percent excise duty on mobile phone text messages and internet data transfers.

Consequently, access to the internet is extremely expensive for average Malawians.

A low literacy rate of 64 percent also hinders access to ICTs, and there is a significant digital divide along gender lines.

Unreliable electricity and the high cost of generator power strain ICT use. Less than 10 percent of the country has access to electricity, giving Malawi one of the lowest electrification rates in the world, according to the World Bank.

The electricity grid is concentrated in urban centers, but only 25 percent of urban households have access, compared to a mere 1 percent of rural households.

Half of Malawi’s private sector enterprises rely on backup generators.

The high cost of infrastructure development in rural areas makes companies unwilling to invest in the country’s remote regions.

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5 years ago

I just do not get it. No Electricity but we spend money to get internet !!!!!!!! WTF !!!!!!!!! I really struggle to understand out countries logic we will spend money on just about everything that is not important. Hotels, Sports Stadium, Parliament, Presidential Villas, Presidential Cars, Internet, etc. etc. etc. but we will NOT spend money to make sure this nation has water and power !!!!! The last time the DPP ran the country we had the same issues. No power, no fuel. Yes we have no power and we will have no fuel as soon as the tobacco auctions… Read more »

Janiffer Kaphulira Nyoni
Janiffer Kaphulira Nyoni
5 years ago

Malawi is a pathetic nation indeed. Only a banana rebublic can borrow money for internet conectivity when it can’t feed its own people. Put this money and borrow more for irrigation. once we have enough food, then we can borrow for laxiouries like internet. otherwise this business of begging for food year in year out is embarrasing, shameful, demeaning, dehumanising, etc and should be put to an immediate stop if people are to respect us.

5 years ago

What’s concessional about 21% interest?

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