Cameroon to Find US$ 55 Million —Global Voice Group Shows How This Can Be Achieved

Cape Town, December 11, 2015 (Newswire.com) - ​In October 2015, the protocol relating to the construction of an undersea fibre optic telecommunications cable between Cameroon and Brazil and the extension of Camtel’s[1] telecommunications infrastructure was signed between China and Cameroon. The ambitious two-year project aims to build a modern telecommunication network passing through 30 Cameroonian towns and is intended to improve the capacity and national coverage of the existing telecoms operators and assist Cameroon’s third telecoms operator, Viettel, to benefit from fibre optic connectivity. 

Eximbank China will cover 85% of the financing for this US$ 366 776 016 project, but Cameroun must find 15% of this or US$ 55 million. This is a heavy number for any developing country.

Business, government and household Internet usage is currently constrained in Cameroon by very high costs (US$ 300 per month for Camtel’s ADSL 256/128 service) for relatively low speeds.  The optic fibre cabling will bring several advantages:

• fibre optic transmission is faster​
• fibre optic transmission results in less attenuation (signal loss)​
• fibre optic cables are impervious to electromagnetic interference (EMI), which wreaks havoc on a network​
• fibre optic cables are not a fire hazard as there is no electric current travelling through the core​
• fibre optic cables do not break easily, so do not need to be replaced as frequently as other wires.

All forms of commerce will benefit from fibre optic connectivity, as it will lower the cost of communication, which is a vital part of any business.  At the moment, only large companies like banks can afford the cost of corporate Internet, but for start-ups and SMEs (small and medium-sized enterprises), the costs are crippling.

New opportunities for the growth of the data market will emerge as cheaper bandwidth should translate to more users. The expansion of broadband infrastructure will facilitate access to high-speed data communications services by all.

Nic Rudnick, chief executive of Liquid Telecom[2], is convinced that fibre roll-out is a business necessity: “I firmly believe that the small businesses of Africa need access to affordable broadband to grow.  Fibre is the key to the future economic prosperity of Africa.”

How can Cameroon, a developing country, raise the US$ 55 million—its 15% share of the project finance?  Global Voice Group (GVG), the world leader in telecommunications governance technologies, has made it its mission to help African countries harness the financial potential of a crucial sector of their economy: telecommunications.  The leveraging of international incoming calls as an innovative funding mechanism has become an important part of the economies of many African countries. According to McKinsey & Company, “innovative” refers to finance mechanisms that might mobilise, govern or distribute funds beyond traditional donor-country official development assistance (ODA)[3]. 

GVG’s revenue assurance programme and its integrated anti-fraud component aim to protect the revenues of the telecoms operators while ensuring sustainable conditions for the optimal enforcement of the pricing or tax policies of African States. Cameroon, too, could benefit from this expertise.

To make this funding mechanism effective, however, international incoming traffic must be accurately measured and a revenue-assurance solution put in place to prevent the fraudulent diversion of the telecoms traffic.  GVG provides telecommunications regulators with anti-fraud technologies that have the capacity to identify grey routes and detect fraudulent lines in less than an hour, enabling legal operators to disconnect them promptly.

The Cameroonian government already suffers significant revenue losses in the telecommunications sector through the notorious SIMbox fraud[4]. Besides the loss of this revenue, there is a widening security threat posed by the radical Islamist militia Boko Haram (BH) based in Nigeria, as the threat is stifling cross-border trade[5], hurting livelihoods, causing price increases and raising fear among civilians.

GVG’s cutting-edge telecommunications governance solutions have assisted countries like Ghana, Guinea-Conakry, the Central African Republic, Tanzania, Rwanda, Liberia, Togo and Congo-Brazzaville to optimise the revenue generated by international incoming telephone traffic, so as to ensure that both the local operators and the government collect their fair share of the revenue. GVG can assist Cameroon to raise the necessary US$ 55 million in less than two years, through a US$ 0.05 micro-surcharge on incoming international telecoms traffic, as the calculation below illustrates.

Telecoms: International Traffic inbound​

Type of transactions: Voice minutes​

Annual volume: 650 million​ (2015 estimate)​

Micro-surcharge (US$): 0.05​

Total annual (US$): US$ 32,500,000​

Total over 2 years: US$65,000,000[6]

Innovative financing for development could eventually help the Cameroonian government to raise the revenue to address other development needs of the population, such as poverty, education, road infrastructure etc.

The benefits that will accrue to the Cameroonian government through fibre optic cabling make it an investment in the country’s future economic development. The US$ 55 million which GVG can assist Cameroon to raise for the fibre optic cabling project within the short timeframe of less than two years will pay dividends over the long term.

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[1] Camtel is Cameroon's national telecommunications provider, providing a wide range of telephony services to its consumer and business customers, including national and international telephony, Internet services, leased lines, satellite communications, and wireless CDMA.

[2]  Liquid Telecom operates the largest terrestrial fibre network in Africa, with close to 20 000 kilometres of fibre networks.

[3] McKinsey & Company, 2013

[4] According to a recent study carried out by the US-based Communications Fraud Control Association (CFCA), “bypass” is a global telecoms phenomenon that affects all international operators, by causing them to experience financial losses of close to US$ 3 billion each year for local Cameroonian telecoms operators, and more than 4 billion CFA francs (approximately US$6.6 million) in State revenues.

[5] Cross-border trade sustains the local economy in the far north region which sells onions, rice, maize, livestock and other agricultural goods to Nigeria and imports sugar, cement, textiles, electronics and the inferior quality petrol locally known as “zua-zua” which is smuggled in from Nigeria and on which the region is dependent.

[6] Note: Cameroon only needs to raise US$ 55 million for its 15% share of the fibre optic cabling project.