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Viewing cable 07ACCRA2162, GHANA'S ICT DEVELOPMENT: IS THE GLASS HALF FULL?

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Reference ID Created Released Classification Origin
07ACCRA2162 2007-10-11 08:34 2011-08-26 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Accra
VZCZCXRO6523
RR RUEHMA RUEHPA
DE RUEHAR #2162/01 2840834
ZNR UUUUU ZZH
R 110834Z OCT 07
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 5497
RUEHZK/ECOWAS COLLECTIVE
UNCLAS SECTION 01 OF 04 ACCRA 002162 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
FOR AF/W BANKS, EEB/CIP: Saeed and Blakeman 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EAID GH
SUBJECT: GHANA'S ICT DEVELOPMENT: IS THE GLASS HALF FULL? 
 
REF: ACCRA 1725 
 
1. (SBU) SUMMARY:  This is the first of two cables on the 
Information Communications Technology (ICT) sector in Ghana.  It 
covers policy and services.  Septel will address privatization of 
the two national carriers.  Ghana's ICT sector has considerable 
promise.  Telephone penetration rates have risen, costs have come 
down, and availability of advanced ICT services is expanding. 
Nevertheless, Ghana is far from realizing its potential in the 
sector.  Even more impressive progress has been hamstrung by bungled 
privatization, regulatory gaps, and questionable business practices 
by state-owned Ghana Telecom (GT), as well as general business 
climate challenges.  According to the World Bank's PPI Database 
which tracks private participation in infrastructure, sixty percent 
of total investment in the sector since 1992 has failed.  However, 
Ghana may soon overcome some significant hurdles.  Long-stalled 
privatization plans for GT and WESTEL may finally be realized in 
2007 (see septel).  Government investments in ICT, such as the 
national switch and fiber optic network, are moving forward and 
could have significant positive spillover effects for the private 
sector.  End Summary. 
 
---------- 
BACKGROUND 
---------- 
 
2. (U) Ghana deregulated its telecommunications sector in 1994, with 
support from the World Bank.  The deregulation was   aimed at 
increasing teledensity and rural and urban public access, expanding 
mobile service coverage and privatizing telecommunication 
businesses.  The National Communications Authority (NCA) was created 
in 1996 to provide independent oversight and regulation but had 
little or no real independence or impact until 2003.  A Board of 
Directors was not even constituted until December 2000. 
 
---------------- 
POLICY FRAMEWORK 
---------------- 
 
3. (U) The GoG has two policies in place: the 2005 National 
Communications Policy: www.ict.gov.gh/Telecom%20policy/ 
Ghana%20Telecom%20Policy%20Final.pdf), and the 
2003 ICT for Accelerated Development (ITC4AD) Policy 
(www.ict.gov.gh/pdf/Ghana%20ICT4AD%20Policy.p df).  The former aims 
to integrate Ghana with new information technology by enhancing 
infrastructure and promoting a more economic and entrepreneurial 
telecommunications industry.  The latter is a more detailed 
framework for promoting socio-economic development through an 
integrated ICT-led approach.  Four ICT bills have been prepared to 
be reviewed and approved by Cabinet before submission to Parliament. 
 They include: the New Telecom Bill, to provide regulations 
regarding electronic communication and broadcasting; the National 
Communications Authority Amendment Bill; the Electronic Transaction 
Bill, to regulate electronic communications and transactions; and 
the National Information Technology Agency, to act as a certifying 
agency and monitor the implementation of national information 
communication technology policy.  Per the Chief Director at the 
Ministry of Communications, Cabinet has recommended that the four 
bills be consolidated into one. 
 
-------- 
SERVICES 
-------- 
 
4. (U) ICT sector contributions to Ghana's GDP rose from 1.8 percent 
in 2000 to 6 percent in 2005.  In 2006 Ghana was noted for the 
fastest teledensity growth rate in Africa.  While fixed line 
services did not increase dramatically in 2006, mobile service 
subscribers more than tripled in the same time period. 
 
FIXED-LINE 
---------- 
 
5. (U) In 2003, over half of fixed telephone lines were in the Accra 
region, yet only about 10 percent of Ghanaians live in Accra and 
56.2 percent of Ghanaians live in rural areas.  The current number 
of telephone lines found in the northern part of the country is 
fewer than 5% (the Northern, Upper East, and Upper West Regions 
account for 18% of Ghana's population) and users throughout Ghana 
are generally willing to pay more for mobile connectivity because 
the fixed-network presents so many limitations.  The NCA advertised 
for and selected ten new fixed-line service providers to provide 
regional access and improve fixed and wireless operator 
interconnectivity.  Despite the importance of this project it is on 
hold because it will influence GT and WESTEL values during 
privatization.  Nevertheless, investors may discount the price they 
offer knowing this will take place. 
 
6. (U) Alcatel Shanghai Bell, a Chinese telecom technology vendor, 
 
ACCRA 00002162  002 OF 004 
 
 
has been selling equipment and services for rural telecommunications 
infrastructure development.  In 2003, Alcatel signed an $80 million 
contract with GT as part of a three year upgrade and expansion 
program of both fixed-line and mobile networks.  In 2006, another 
three year contract was signed as phase II.  Note: China is a 
significant supplier of equipment for telecommunications development 
and plans to invest a total of $3 billion in the sector.  End note. 
 
 
MOBILE 
------ 
 
7. (U) Mobile services were introduced in Ghana in 1991.  The number 
of subscribers rose 12% from the first to second quarter of 2007 -- 
from 5.6 million to 6.3 million.  Ghana has four active mobile 
operators.,  All have begun to offer mobile internet service.  Since 
2006, all mobile operators in Ghana have the capacity to provide 
fixed telephony services and since 2005, all have unlimited gateway 
licenses and offer broadband services.  The NCA has made 
interconnection a requirement.  In 2006, WESTEL was granted a 
license to become the fifth mobile operator in Ghana, but is not 
providing service. 
 
8. (U) The largest mobile provider in Ghana is Mobile 
Telecommunications Network (MTN) Group Limited of S.A.  It recently 
bought Investment LLC (owners of Scancom Ghana/Areeba operators), 
which controlled over 50% of the mobile market.  MTN has the 
resources and capacity to significantly increase investment and 
services in Ghana. Currently it is undergoing a $150 million 
technical upgrade, aimed at increasing the quality of service -- and 
as a precursor to eventual 3G service offerings.  The World Bank 
reports that Scancom's capital expenditures at the end of September 
2006 were $233 million.  The other active providers are Tigo, 
OneTouch (owned by GT), and Kasapa. 
 
INTERNET 
-------- 
 
9. (U) Ghana was one of the first countries in Africa to become 
connected to the Internet.  According to the United Nation's 
International Telecommunication Union, as of September 2007, 
approximately 2.8 percent of Ghana's population (more than half a 
million people) was using the internet, up from 0.2 percent in 2000 
and 1.8 percent in 2006.  For those wishing to connect at the 
growing number of Internet cafes, the estimated cost of 40 pesewa to 
1.5 Ghana cedis (GH) (approximately 45 cents to $1.60) per hour is 
often prohibitive.  For those connecting privately, infrastructure 
and subscription costs remain high and service quality is relatively 
poor.  GT offers dial-up access which is billed as a phone charge; 
GT now also offers broadband services starting from about $43 per 
month (up to $282 for premium business services) with a $95 
installation charge.  Most GoG offices and nearly half of private 
businesses do not provide Internet services and e-mail has yet to 
become an integral part of doing business. The expansion of internet 
services is hampered by high cost of bandwidth from SAT3 and 
satellite sources.  Cost per month for half circuit 2Mbps (E1) 
bandwidth from GT's SAT3 is currently $5,000, reduced through 
negotiations by the ISPs from $12,000. 
 
10. (U) Accra boasts more than 100 access centers with high 
occupancy rates; fewer options for connectivity are available in 
rural areas.  Cafes have begun to offer additional services for ICT 
businesses.  BusyInternet, established in 2001 and now the largest 
privately owned and operated ICT centre in Africa, launched 
BusyIncubater in 2005 with the support of the World Bank to nurture 
young companies by providing space, shared services, and, often, 
advice and financial assistance.  Five Ghanaian businesses have 
taken advantage of these services and six companies are currently 
located at BusyInternet while growing their capacity. 
 
------------ 
COMING SOON 
------------ 
 
The following represent a sampling of new services and initiatives 
underway in Ghana. 
 
11. (SBU) Fiber Optic Backbone Network: In 2006, a new company 
called the National Backbone Company Ltd (NBCL), owned by the GoG, 
was established to put in place a national fiber optic backbone. 
The NBCL took over the assets of Voltacom, owned by the GoG's power 
company, Volta River Authority (VRA).  With concessional financing 
from China, Ghana is extending an existing 600km fiber optic cable 
ring connecting Accra, Tema, Kumasi, and Takoradi.  Under the $30 
million first phase of the project, the Chinese firm, Huawei 
Technologies Company is installing fiber from Kumasi to Tamale and a 
small portion of cable required to complete the 600km ring. 
President Kufuor commissioned phase one of the national network 
construction in August and work is expected to be finished by the 
 
ACCRA 00002162  003 OF 004 
 
 
close of 2007.  Phase II, costing an additional $40 million, will 
extend the network into the far north of Ghana and will include an 
e-government/last-mile element to link all district Assemblies to 
the network.  Some believe the network will not be financially 
viable throughout the country. NCA's Forson told EconOff the network 
should have been private sector-led from the start.  However, the 
Chief Director at the Ministry of Communications emphasized that the 
GoG sees this backbone as a public good, crucial for broader 
development.  He said affordable access to services will be a key 
consideration in its operation.  Over the long-term, the Chief 
Director said the vision is to float the company on the Stock 
Exchange.  The GoG plans to acquire bandwidth (two STM-1) from GT's 
SAT3 which will be linked to the NBCL fiber optic backbone. 
 
12. (U) National Switch: All banks in Ghana have been asked to link 
their ATMs and Point of Sale devices to the new National Switch, 
E-ZWICH, by March 31, 2008.  By July 1, 2008 all banks with existing 
switches are to be compatible with E-ZWICH to ensure Ghana has a 
common payment platform and biometric Smartcard.  If this moves 
forward as planned, it should help bring the unbanked into the banks 
and expand financial services. 
 
13. (U) Broadband over power-line (BPL): In early July AllTerra 
Gridline Communications Ghana Limited in partnership with the Volta 
River Authority launched a test of BPL technology.  The idea is to 
transmit data using the existing electricity grid, potentially at 
higher speed and lower cost than by other means. 
 
14. (U) E-Ghana: The World Bank approved a 10 yer $40 million 
E-Ghana project on August 1, 2006 to help generate growth and 
employment by leveraging ICT and public-private partnerships.  The 
projects will strengthen the IT industry and the efficiency and 
transparency of government functions.  Among the elements of the 
project are e-government applications and the establishment of a 
high-speed government-wide communications network and shared portal 
infrastructure. 
 
15. (U) Trade by Mobile Phone:  The regional Market Information 
Systems and Traders' Organization project (MISTOWA) received $11 
million from USAID/West Africa over three years to increase 
agricultural trade and food security by developing an intra-regional 
system for providing market information via Internet and mobile 
phone use.  Tradenet.biz is a web platform and software provider 
created for use by producers (farmers) of and traders in 
agricultural commodities.  They can now receive and transmit market 
information on prices, volumes of goods, and other specifications to 
reach new suppliers and new customers.  Thus, regional trade is 
increasing as business is conducted via text messaging, and users 
are charged only the cost of regular mobile services. 
 
16. (U) Enabling Mobile Banking: Ghana will be a beneficiary of a 
USAID/West Africa project to support M-banking, an 18 month, $1 
million project regional project. Under the project, Ghana will 
introduce M-banking and developed a private network for channeling 
national, intraregional, and international payments and remittance 
flows.  The project is based on a USAID-funded study from March 2006 
that estimated the value of informal cross border trade at $2 
billion in remittances and $8 billion in informal trade settlements 
flowing annually through Ghana, Mali, Nigeria, and Senegal. 
Currently, only five percent of West Africa's population has a bank 
account.  [Note: ECOBANK debit transfer services are available by 
mobile phone but the program is not yet robust and only transfers 
between accounts, not from points of sale.  ECOBANK and other banks 
are eager to expand its mobile banking capacity.  End Note] 
 
17. (U) Last Mile Initiative (LMI):  LMI is a USAID Global 
Initiative designed to expand the access of the rural poor to 
telecommunications.  Ghana will receive $200,000 in assistance, 
implemented through the Trade and Investment Program for a 
Competitive Export Economy (TIPCEE) which seeks to increase private 
sector competitiveness of Ghana's exports in world markets.  LMI 
activities in Ghana will include: 1) the addition of electronic data 
exchange capacity via bar code to enable logistics management for 
pineapple smallholder farmers and exporters; 2) development of a 
packhouse-to-field telecommunications application linked to the GoG 
universal access fund; and 3) building of capacity related to the 
GoG telecommunications policy and regulatory environment. 
 
-------------ICT EDUCATION 
------------- 
 
18. (U) Through a number of education initiatives, Ghana is trying 
to increase the quality and quantity of Ghanaians with ICT skills 
needed to support sector development.  Among the initiatives are: 
 
--Ghana Telecom University College (GTUC) aims to increase job 
availability and income in Ghana through the use of new 
technologies.  It offers certificate and degree programs in Computer 
Informatics and Computer Science, Information Technology, 
 
ACCRA 00002162  004 OF 004 
 
 
Telecommunications Engineering, and Telecommunication Management. 
In October 2007 it will begin offering a Master in ICT (MICT) 
program in conjunction with the Technical University of Denmark, the 
first of its kind in Ghana. 
 
--In February 2007 the Kwame Nkrumah University of Science and 
Technology (KNUST) inaugurated broadband wireless Internet and a 
a 
voice telephony facility on campus.  The KNUST E-Campus Network is 
expected to be the hub of ICT networks throughout Ghana's 
educational system. 
 
--The Kofi Annan Centre for Information and Communication Technology 
Centre of Excellence began as a joint project between the 
governments of Ghana and India in December 2003.  It is Ghana's 
first Advanced Information Technology Institute (AITI) and aims to 
stimulate growth in and build human capacity for ICT.  The Centre 
can host nearly 1,000 teaching, learning, and research professionals 
at one time.  It provides an incubator for private companies that 
will later set up in the Free-zone, and houses West Africa's first 
supercomputer. 
 
--Oracle Corporation offers a Workforce Development Program in Ghana 
jointly run by Oracle University and Intercom Programming and 
Manufacturing Company (IPMC) to provide low cost and accessible IT 
skills training.   Students and community members can access full 
and part-time programs through participating educational 
institutions toward certification.  Hewlett-Packard and Cisco 
provide similar free or low-cost software and hardware for IT 
certification programs. 
 
--The first National Institute of Information Technology (NIIT) 
center was launched in Ghana in May 2000 and quickly became the 
country's largest IT training school.  There are now five centers 
training 7,500 students each year.  Its education programs train 
individuals in software development and internet related 
applications for corporate clients, including banks. 
 
-- The World Bank is providing a $4.2 million credit facility for 
Ghana to establish a Technology Park at the Tema Free Zone that will 
provide necessary space and infrastructure for ICT businesses. 
 
-- Ghana is participating in the NEPAD e-schools project. 
 
19. (SBU) Comment:  Ghana is eager to be a regional leader in the 
ICT sector, as evidenced by comprehensive planning efforts, 
government-backed education initiatives, task forces and frequent 
references to the importance of ICT in speeches of government 
officials.  Despite impressive progress in areas such as mobile 
services, the sector continues to be plagued by regulatory gaps 
(e.g., on VOIP) and business practices of GT that bully potential 
investors and manipulate access.  More generally, ICT depends on 
high quality, reliable power supply.  Ghana's energy crisis has 
eased somewhat with a strong rainy season and start-up of emergency 
power sources but the quality of power is equally important. 
Frequent surges and variations in the current wreak havoc on 
electrical equipment and increase the cost of doing business.  In a 
recent survey of Ghanaian businesses across all sector, 43% 
indicated that quality of power supply was a significant problem. 
End Comment. 
 
BROWN