The World Bank Group is the largest multi-lateral financier and provider of policy advice in the field of ICT in developing countries. Over the past five years, the World Bank Group has provided more than US$3 billion of funding in over 80 countries through its three financing arms; the International Bank for Reconstruction and Development (IBRD or World Bank), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA):

• World Bank has supported reforms in over 80 client governments and provided approximately US$750 million in loans for ICT related projects. This support is in addition to lending projects in other sectors—such as health, education, trade, and finance— which have ICT components. It is estimated that US$1 billion to 1.5 billion in lending is provided to these projects annually. Trust funds administered by the IBRD have contributed an additional US$50 million to the ICT sector in the past five years.
• IFC, the private sector arm of the World Bank Group provided approximately US$1.5 billion in financing to ICT companies in developing countries. Additionally, through its syndicated loan program, the IFC offers commercial banks and other financial institutions the chance to lend to IFC-financed projects that they might not otherwise consider. These loans have contributed another US$1 billion toward the sector.
• MIGA, as an agency that provides political risk insurance to foreign investments in developing countries, has supplied an additional US$700 million to the ICT sector through private investment guarantees.

According to a review of activities in this sector by the Operations Evaluation departments of the World Bank and IFC, it is one of the best performing sectors in the World Bank Group’s portfolio, both in terms of returns and development impact.

Policy

The scope of World Bank activity in supporting telecommunications sector reform has been. As of 2005, over 120 countries have at least some competition in the digital mobile sector and more than 88 countries have privatized the incumbent operator - two measures of reform progress. Furthermore, over 100 countries have relied on World Bank support (grants, lending or technical assistance) for part of a sector reform program.

A recent review of Latin American experience indicates the impact that sector reform can have in rolling out access. The review found that countries that privatized saw telephone penetration grow 40 percent faster than otherwise, while full liberalization increased this differential to 160 percent.

Peru, for example, has seen impressive results due to a World Bank-backed reform program. In 1993, the Peruvian government embarked on a major reform of its telecommunications sector, supported by World Bank lending of approximately US$50 million. Between 1993 and 2001, the number of fixed telephone lines in the country approximately tripled, the number of mobile subscribers expanded more than forty-fold, and the number of public telephones increased by a factor of eleven.

Nor have these results been confined to Latin America. Some of the poorest African countries have witnessed an explosion in telephone penetration following the licensing of mobile operators. In Uganda, for example, the licensing of a second national operator in 1998 led to the installation of 120,000 new mobile lines over a two year period, subsequently increasing to over 320,000 by 2001.

More recently, the World Bank has seen considerable success in its support of a broader ICT reform and rollout agenda. This has included: i) efforts to back access programs in Africa, Asia and Latin America that have extended the reach of telecommunications networks to poor people and rural areas; ii) support for ICT policy reform that has allowed the expansion of e-commerce and e-government in our client countries; and iii) support for postal sector modernization that has increased the efficiency, reliability and reach of postal operators in a number of economies.

Finally, a number of trust funds have provided an average of US$1.7 million per year to finance World Bank Group ICT project preparation, as well as a range of Technical Assistance and Economic Sector Work activities.

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Telecom, Media and Technology Investments

On the IFC side, average annual investment approvals in the Telecom Media and Technology sector grew from US$263 million in the period FY1993-95 to US$450 million in the years thereafter (FY1996-05).

These investments in the sector can be considered a success on a number of grounds. IFC funding for the sector has a very high mobilization rate - attracting on average about US$9 of outside private financing for each dollar of IFC funding. Equity returns in the sector are double the IFC average and 85 percent of IFC investments in the sector received a “satisfactory or better” rating by an independent evaluations unit in relation to their contribution to economic growth.

A sample of seven IFC cellular investments across countries from Bangladesh to Venezuela illustrates the significant impact cellular investments can have on improving access to telecommunications. An analysis of IFC projects three years after investment shows that each US$1,000 invested by IFC created an average of 14 lines. The countries in which IFC operates created within a period of 3 years more cellular subscribers than the total number of fixed line subscribers prior to IFC’s investment.

Using Celtel as an example; IFC has invested a total of US$30 million in the common equity capital of the holding Company in 1999 and early 2000. IFC’s investment has helped Celtel to roll out, modernize and expand, through its operating subsidiaries, the mobile telecommunications networks in Uganda, Zambia, Chad, the Republic of Congo, Gabon, Malawi and Sierra Leone. At the time of appraisal, telephone penetration in these countries was extremely low (in most cases below 1%) and the quality of service was extremely poor; Celtel at the end of 1999 was a start up telecommunications company with a total of 37,000 proportional subscribers. Today, proportional subscribers of Celtel number almost 2 million. The most notable growth in telecom penetration was achieved in the Republic of Congo (from 0.14% in 1999 to 9.4% in June 2004) and in Gabon (from 1.23% in 1999 to 22.4% in June 2004). The Company has continued to grow, and now has majority stakes in mobile operations that are located in 12 different sub-Saharan countries. Celtel also holds minority stakes and management control in 3 other African operators. The Company, now one of the leading mobile operators in Africa, was recently acquired by MTC of Kuwait at a valuation of US$3.3 billion.

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infoDev

infoDev is a multi-donor grant program supporting innovative projects and knowledge on development opportunities offered by ICT. Since 1995, infoDev has funded over 200 projects providing on average US$9.8 million each year in grants. infoDev now focuses on initiatives of strategic importance for developing countries such as the Incubator Initiative, the Dialogue on the regulation of the Networked Economy and the African Connection. infoDev funds have been particularly effective in:

• developing small-scale models for testing ICT-based innovative approaches to address development issues;
• supporting policy-related projects that foster a proper regulatory environment for the expansion of information infrastructures;
• supporting capacity building projects to develop necessary human resources; and
• supporting projects that emphasize networks and communities of interest to improve communication within sectors, e.g. to support virtual communities with the help of web sites, databases or other information-sharing systems.

Since its creation, infoDev has generated and collected a significant amount of information on the use of ICT for development. Its efforts to share this knowledge, as well as to enhance access to and use of it, are pursued through different channels such as the infoDev website, printed and electronic publications, special studies such as the Telecommunications Regulatory Handbook, the e-government toolkit, the Global Information Technology Report 2002 and 2003, and the organization of large international events such as the Global Forum on Business Incubation. back to top

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