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 .

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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