Internet services to South Africa townships
Environmental and Social Review Summary
This Environmental and Social Review Summary (ESRS) is prepared by MIGA staff and disclosed prior to the date on which MIGA’s Board of Directors considers the proposed issuance of a Contract of Guarantee. Its purpose is to enhance the transparency of MIGA’s activities. This document should not be construed as presuming the outcome of the decision by MIGA’s Board of Directors. Board dates are estimates only.
Any documentation that is attached to this ESRS has been prepared by the project sponsor, and authorization has been given for public release. MIGA has reviewed the attached documentation as provided by the applicant and considers it of adequate quality to be released to the public but does not endorse the content.
MIGA is seeking to proceed with underwriting a guarantee to Meridiam and/or any of its group holding companies, subsidiaries, or affiliates (“Meridiam” or “Guarantee Holder”(GH)) covering up to €27 million of its equity/shareholder loan investments in Ilitha Telecommunications (Pty) Ltd (“Ilitha”) of the Republic of South Africa, for a period of up to 10 years. This ESRS describes Ilitha Environmental and Social (E&S) management practices and assesses the impacts of the project.
The project involves the provision of internet services to consumers in townships and other underserved communities in South Africa. Founded in November 2018, Ilitha is a small vertically integrated fiber network operator and internet service provider which provides services in underserved townships, peri-urban and rural regions in South Africa. As of end of 2024, Ilitha had passed c. 7,500 homes (connected c. 3,200 homes) in Eastern Cape province, and it plans to expand its network further in Kwa-Zulu Natal, Eastern Cape provinces and beyond, to over 150,000 low-to-middle income households by end of 2026, with the support of the investment from Meridiam. As Meridiam will subscribe to controlling shares through capital raise in Ilitha, the scope of the E&S review is all its activities, current and planned. Internet connections by Ilitha are made through the installation of wooden poles (8-10 m high) in private backyards, and the laying of aerial fiber optic cables between the poles and the houses.
The Project is categorized as Category B according to MIGA’s Policy on Environmental and Social Sustainability (2013). The Project will have limited, site-specific adverse E&S risks, and/or impacts that can be readily addressed through mitigation measures and management plans.
Due to the small size of Ilitha, one of the key E&S risk will be related to its capacity to scale up its operations and systems to manage the planned increase in number of connections, and to subsequently apply MIGA’s E&S requirements. Other key E&S risks associated to the project construction include (i) occupational health and safety and management of labor and working conditions; (ii) community health and safety; (iii) overall environmental monitoring; (iv) installation of poles on private properties, including residential areas. During operation, impacts will be minimal and associated to punctual intervention of pole/line maintenance. E&S impacts will be managed through the implementation of specific Environmental and Social Management Plans (ESMPs). The installations will occur in urban settings and, in cases of private property, with voluntary consent of owner(s) and no resettlement impacts. No associated facilities will be built for this project. Contextual risks are considered low in association to this operation. The gender-based violence (GBV) risk rating for the Project is substantial due to the proximity of workers crews with the communities during installation.
While all Performance Standards (PSs) are applicable to this investment, based on our current information, the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:
- PS1: Assessment and Management of Environmental and Social Risks and Impacts
- PS2: Labor and Working Conditions
- PS3: Resource Efficiency and Pollution Prevention
- PS4: Community Health, Safety and Security
PS5 does not apply to the Project since, in areas where poles will be installed in private properties, this will be done on a voluntary basis and will not result in physical or economical displacement. The Project will be built in fully developed urban areas, therefore PS6 will not be triggered. No Indigenous Peoples communities as defined in PS7 were identified in the Project affected areas of influence and therefore PS7 is not triggered. No sites of cultural/historical value were identified during the review process; therefore, PS8 does not apply.
In addition to the World Bank Group General Environmental, Health, and Safety (WBG EHS) and the Telecommunication EHS Guideline, the following guidance will apply:
- Good Practice Handbook: Use of Security Forces: Assessing and Managing Risks and Impacts (2017)
- Good Practice Note: Managing Contractors’ E&S Performance (2017)
The following documents were reviewed by MIGA:
- ERM Environmental and Social Due Diligence (2024);
- Ilitha Stakeholder Engagement Plan;
- Ilitha Community Environmental, Health and Safety Management Plan;
- Ilitha Consent to Construction documents;
- Ilitha Environmental Compliance and Monitoring; and
- Ilitha and ERM replies to MIGA E&S Questionnaire.
In addition to reviewing the above documents, MIGA carried out multiple meetings with the Project and consulting firm key E&S staff and management.
MIGA’s due diligence review considered the E&S management process and documentation for the Project and identified gaps (if any) between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable time period, are summarized in the paragraphs that follow and in the Environmental and Social Action Plan (ESAP) attached to this ESRS. Through the implementation of these measures, the Project is expected to be designed and operated in accordance with the PSs.
Key E&S issues associated with the Project are summarized in the paragraphs that follow.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
Ilitha is a small company that is planning to scale up its operations with the equity injection from Meridiam. As described above, the operations have limited footprint and impacts in both construction and operation phases. Ilitha has limited Environmental and Social Management System (ESMS), Policies, operational level Management Plans (ESMPs) and procedures in place to assess and mitigate E&S risks and impacts. This is due to the start-up nature of the business. Hence, to plan and prepare for the scale up, Ilitha has mandated an international E&S consulting firm to help them develop an overarching operational project ESMS, ESMPs, Policies and Procedures in line with MIGA’s Performance Standards. These are expected to be completed by mid-2025. Ilitha will develop the ESMS, ESMPs, Policies, and Procedures to align with MIGA’s requirements (ESAP Item). More details on the components required to fulfill this ESAP Item are provided in the following paragraphs.
Ilitha has developed a preliminary Environmental Policy that sets out the company’s commitment to use environmental and social best practices. Additionally, the company has developed internal Human Resources Policies including: (1) Gender Equity Policy, (2) Child Labor Policy, (3) Privacy Policy, (4) HIV / AIDS Policy, (5) POPI Policy and (6) Retrenchment Policy. The current policies generally align with MIGA’s requirements, however, due to the unsigned nature of the policies, it is unclear whether they have been endorsed by senior leadership. Ilitha is currently working to strengthen the Policies and add specific ones related to Health and Safety; Security; Social Investment; Procurement Policy; Anticorruption and Bribery. Ilitha will develop all identified policies and procedures (ESAP Item)
Ilitha has not developed mechanisms to assess E&S risks and impacts in the Company’s Area of Influence in accordance with PS1. However, the Company has developed an overarching ESMP that outlines incident investigations and reporting, subcontractor management, emergency preparedness, hazard identification and risk assessment and waste management. In general, Ilitha’s ESMPs should outline measures and actions to mitigate and improve performance in relation to identified health, safety, and environmental risks and impacts throughout the construction and operational phases in accordance with MIGA’s requirements. Ilitha will review and update all ESMPs, drafting all missing ones as, for example, the Emergency Preparedness and Response Plan (ESAP Item).
Ilitha’s activities do not require an environmental impact assessment by local regulation and do not trigger any environmental authorizations in terms of South African law.
Although Ilitha does not have a formal Stakeholder Engagement Plan (SEP) or associated mechanisms in place, the Company conducts stakeholder engagement meetings with communities in each ward prior to commencement of construction activities. Daily toolbox talks are held to discuss activities from the previous day as well as discussion of relevant health and safety topics, to keep health and safety knowledge up to date. Furthermore, each time the construction staff mobilize to a new site/area informal hazard identification and mini-risk assessments are conducted prior to construction. Ilitha will update the SEP and associated processes to align them with MIGA’s requirements (ESAP Item).
Ilitha currently has an informal grievance management practice in place. Communities are informed about their rights to raise issues, concerns, or complaints directly to Ilitha staff working in the local area. Ilitha also appoints a local community liaison officer (CLO) for each project who has the primary responsibility of capturing community grievances and reporting these to the social facilitator. Interviews with Ilitha representatives suggests that reliance is placed on the fact that general laborers and CLOs are known to communities, and so this should encourage open and transparent communication of grievances. Ilitha currently does not have a grievance register in place. Ilitha also shares their contact details on physical infrastructure such as poles, and Wi-Fi routers should communities need to contact them. Currently, no system exists for raising anonymous grievances. As per the SEP, Ilitha will develop a grievance mechanism in line with MIGA’s requirements, disseminating contacts details and mechanism in areas accessible to public (ESAP Item).
Ilitha has hired a Health and Safety, Social, and Environment (HSSE) Manager to increase its capacity and staffing to properly manage project specific E&S risks and impacts. The HSSE Manager will be supported by CLOs hired at each ward within 30 days prior starting construction.
Regarding pole installation, no land acquisition is necessary, and activities will not result in physical or economical displacement. The poles will be installed in private residential premises, usually at one corner in the backyard with a pole serving four to six households. Site availability and exact pole location are discussed with the property owner(s) before installation. This is a voluntary process, and the owner can refuse the positioning of the pole in their backyard. Once the owner agrees on having a pole on his property, it signs the Landowner’s/Occupiers Consent To Construction Of Telecommunication Equipment form. If an owner were to refuse to have a pole installed in their yard, the pole could be deployed somewhere else due to the density of the township. There is no restriction of usage of the backyard for the owner. The owner could also decide to have the pole removed or shifted after it being installed and already in use. No right of way is required for the fiber optic cable. For poles that need to be installed on public property, Ilitha will apply for wayleaves from the respective municipality. Besides having the Consent Form and the owners’ registry, the overall process is not formally documented within Ilitha’s procedures. Ilitha will document the process and develop a Pole Installation Management Plan (ESAP Item)
PS2: Labor and Working Conditions
Ilitha currently employes 35 staff, 11 of which are women, with all of them coming from the local communities in which Ilitha operates. Ilitha has limited Human Resources Policies and currently does not have collective bargaining agreements, or worker grievance mechanism. Ilitha will develop all these policies, plans and mechanisms, including those addressing risks related to sexual harassment and sexual exploitation and abuse across all areas of its operations (ESAP Item).
None of the current workers in Ilitha are part of a labor organization and the workers are free to join such associations. Ilitha is currently small enough for employees to directly voice out any concerns they have. Ilitha has employment contracts for their employees that stipulate the employment terms in line with South African law.
The Company does not have a formal Contractor Management Plan outlining how contractor E&S performance is managed or whether contractors are expected to apply and subscribe to the company E&S standards. Contractors are required to comply with South African EHS legislation and standards. Ilitha will develop the Contractor Management Plan (ESAP Item).
Ilitha has a limited OHS plan. To align with MIGA’s requirements, it will develop an operational health and safety plan to address operational OHS risks, specifically risks encountered by field staff such as heat fatigue, working at heights, work in wet weather conditions and the right to refuse dangerous/unsafe work. OHS requirements will be applicable to contractors too and enforced through contract conditions and obligations (ESAP Item).
At present, sales employees receive an online induction, which is focused mainly on introducing Ilitha as a company and describing its service offering. In-person training and on-the-job training is provided to support employees in defining their sales-related responsibilities. This training however does not address topics of health and safety or procedures for handling high-risk scenarios, including risks related to sexual harassment and sexual exploitation and abuse. Construction employees, mostly subcontracted under the supervision of Ilitha receive daily toolbox talks with Ilitha’s safety officer, access to PPE, and regular training on how to perform their responsibilities. The training involves observation and replication of activities including excavation, pole planting, and hauling of fiber lines. Some works performed on site require specific certifications, such as working at heights, and employees or contractors have access to obtaining such certifications. It is the responsibility of each construction team supervisor to ensure that only certified workers perform tasks such as working at heights.
The project will be built by small crews of 4-6 workers contracted locally under the supervision of Ilitha’s staff. Each crew will be able to install 100 poles per week, with up to four crews working simultaneously in each township. No workers accommodation will be necessary.
PS3: Resource Efficiency and Pollution Prevention
During construction, the impacts will be minimal and localized to the premises of the selected households. The main activities will be associated with pole planting and the hauling of fiber optic cable lines between poles. The poles are between 8 to 10 m high, with a diameter of 20 cm, requiring a small 30 cm wide – 50 cm deep hole that is then filled with small amounts of concrete once the pole is planted. Excavation is usually done manually or with a back-hopper. The minimal impacts might be associated with noise, dust, soil management during the digging process, and minimal non-hazardous waste. During operation no impacts are expected unless minimal maintenance to the line is required. Ilitha will develop a formal ESMP for the management of E&S impacts during construction that will be included in the ESMS described in PS1 (ESAP Item).
The Company generates small quantities of non-hazardous internal fiber waste and duct off-cuts which are disposed of in waste skips and collected by the municipality on a weekly basis during curbside waste collection. Ilitha is not engaging in waste segregation for the purpose of recycling and appropriate waste management. Ilitha’s EHS makes provision for waste management however, the plan does not sufficiently detail strategies to effectively handle and dispose of waste materials. The Waste Management Plan will be reviewed and updated by Ilitha and included in the ESMP part of the ESMS (ESAP Item).
Ilitha will also develop a Resource Efficiency Management Plan for tracking and monitoring water use, waste production, energy consumption, GHG emission, as these features might increase with Ilitha’s plans for scaling up its operations (ESAP Item).
PS4: Community Health, Safety and Security
The nature of Ilitha’s operations is relatively low risk in terms of community health and safety. Risks exist in relation to physical infrastructure, including poles or fiber optic lines which may become damaged or collapse. During construction, community health and safety risks are moderate, with particular risk around excavation for pole planting. Ilitha explains to households any potential health and safety risks related to pole planting and fiber hauling prior to commencing construction. In addition, where potential damage to community property takes place, Ilitha covers the cost of replacing any damaged property. Ilitha will develop an Emergency Preparedness and Response plan in line with MIGA’s requirements (ESAP Item).
Ilitha does not employ any private security services to secure their infrastructure. To avoid theft of fiber optic cables, Ilitha engages in community awareness campaigns highlighting that fiber optic lines do not contain copper, and so far, no theft has occurred. In addition, Ilitha does not have ESMPs addressing security within the community or its infrastructure or company vehicles. Ilitha’s operating model during construction phase involves the entry of construction teams into private properties, to plant poles and haul fiber through backyards. There is no indication that Ilitha conducts any form of background check or vetting of workers prior to appointment. Households in which poles are planted sign consent forms prior to construction commencing. It is unclear if any form of identification of Ilitha’s workers and contractors is provided to the households to prevent the risk of unauthorized access into private property and posing a subsequent personal security risk to households. Once Ilitha increase its operations and footprint, communities may be exposed to additional health and safety risks prompted by the presence of additional contractor workforce, including risks related to sexual harassment and sexual exploitation and abuse. Ilitha will develop a Security and Community Health and Safety Management Plan to effectively manage these risks to the community (ESAP Item)
The documentation listed below is available electronically as PDF attachments to this ESRS at www.miga.org.
Broad Community Support is not applicable for this Project.
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MIGA supports its clients (as defined in MIGA Policy on Environmental and Social Sustainability) in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.
In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for MIGA. The CAO is mandated to address complaints from people affected by MIGA-guaranteed business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of MIGA.
Independent of MIGA management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of MIGA’s environmental and social performance through its compliance arm.
Complaints may relate to any aspect of MIGA-guaranteed business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of a MIGA-guaranteed business activity. Complaints can be submitted to the CAO in writing to the address below:
Compliance Advisor/Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Room F11K-232
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
E-mail: cao-compliance@ifc.org