Benin: MIGA Backs New Mobile Phone Network

Benin: MIGA Backs New Mobile Phone Network

December 3, 2001—Very few citizens of Benin have access to a telephone. At less than 1 percent, the country's teledensity is among the lowest in the world, impacting economic growth and affecting Benin's citizens at the most basic level. A new mobile telephone network called Benin Cell, supported by MIGA, is about to change that.

The project, the agency's first in Benin, involves the installation, operation, management, and maintenance of a network based on the GSM standard (Global System for Mobile Communications). The project will also install an international gateway for remote areas and international connectivity.

The coverage was issued in the first quarter of fiscal 2002, providing protection to Investcom Global Ltd. for its initial investment and future earnings in the new venture, as well as a revolving loan. MIGA is also covering a loan guaranty by Investcom Holding SA of Luxembourg. The guarantees cover the risks of transfer restriction, expropriation, and war and civil disturbance. MIGA's exposure is $8.06 million.

Until early last year, Benin had just 49,000 fixed and mobile lines to serve a population of about 6 million. To address the problem, the government formulated a new telecom regulatory framework and recently opened the sector for licensing. Benin Cell was awarded a 10-year renewable operating license and began operations last year, mainly covering southern Benin, including Porto Novo and Cotonou. The project has so far reached 12,000 customers and plans to service a total of 20,000 by year-end. The goal is to bring this up to 100,000 customers in 10 years.

In addition to increasing the number of lines per person, the availability of a reliable service with better connections, voice quality, and clarity should facilitate and increase the efficiency of local businesses. As the country's third mobile telephone operator, Benin Cell is also expected to have a positive effect on pricing and quality through increased competition.

Some $6.5 million in tax revenues should be generated in the first five years, in addition to $500,000 a year in licensing and other fees. More than 50 people will be employed and receive extensive training in telecommunications, marketing, and sales. Local businesses are expected to benefit as well through the procurement of goods and services in the project area.