China Eximbank provides $25.9 million concessional loan for Gambia National Broadband Network (GNBN) Project (Linked to Project ID#56893)

On December 22, 2017, China Eximbank and the Government of the Gambia signed a $25,900,473 loan agreement for the Gambia National Broadband Network (GNBN) Project. The loan carries the following borrowing terms: a 2% interest rate, a 7 year grace period, and a 20 year maturity. It is apparently secured by (i.e. collateralized against) a minimum cash balance in an escrow account that is accessible to the lender. Gambia Telecommunications Company (Gamtel) — a state-owned telecommunications company — is responsible for repaying the loan (through an on-lending arrangement with the Government of the Gambia). However, there are indications that it has underperformed vis-a-vis the expectations of the lender. In June 2018, the IMF noted that the Government of the Gambia had breached its target on contracting new non-concessional external debt due to the $25 million China Eximbank loan for the Gambia National Broadband Network (GNBN) Project. Then, in 2019, a World Bank-IMF Debt Sustainability Analysis (DSA) revealed that the Gambia was in debt distress. Approximately two years later, according to a January 2021 IMF report, Gamtel 'did not make sufficient provisions for servicing the loans contracted from the Islamic Development Bank (IsDB) for the construction of The Gambian portion of the ECOWAS Wide Area Network (ECOWAN) and from [China Eximbank] for the construction of the Gambian National Broadband Network (GNBN). [...] [T]he arrears [to China Eximbank] were incurred on the interest payment falling due on March 21, 2020 (i.e., within the period leading to the approval of G20 DSSI, giving rise to an expectation that the initiative would cover it under the clause referring to the outstanding arrears). In the end, the [Gambian] authorities cleared these arrears (US$0.25 million) on June 19, 2020. Going forward, GAMTEL is expected to maintain and replenish a dedicated escrow account to ensure timely servicing of its debt obligations.' The main objectives of the GNBN Project were to bring faster fiber access direct to subscribers while making per-MB internet access cheaper. It involved the installation of at least 420 km of fibre-optic cable, augmenting 947 km of fiber optic cable already deployed through the West Africa Regional Communication Infrastructure Programme (WARCIP). It also involved the installation of a data center. The implementation of the GNBN Project was originally expected to increase the Gamtel's annual income by as much as $13 million. Huawei Technologies and Gamtel were responsible for project implementation. On April 22, 2019, Ambassador Ma Jianchun inspected the Gambia National Broadband Network Project and conducted a special survey on China-Gambia and China-Africa cooperation in the field of information and communication. Luo Wenjun, Economic and Commercial Counselor of the Embassy, and Zhao Quan, head of Huawei's Gambia office, accompanied him. Ambassador Ma inspected the Gambia National Broadband Network Project related facilities such as data centers, optical fiber access points, and optical fiber distribution points. He also listened to reports on the development of Gambia’s business and implementation of the Gambia National Broadband Network Project. On June 26, 2019, the GNBN Project was officially completed and put into operation. The commencement ceremony was presided over by Gambia’s Vice President Dr. Isatou Touray, and attended by the Chinese Ambassador to the Gambia and the West African regional director of Huawei. The Deputy Speaker of the National Assembly Momodo Sane and Cabinet Ministers of the Government of The Gambia were also in attendance. During the ceremony, the Chinese Ambassador to the Gambia, Ma Jianchun, gave a speech. He emphasized the important progress for information and communication technology, one of the eight priority areas of the ‘Gambia National Development Plan (2018-2021),’ that this project allowed. The Gambia National Broadband Network is the first large-scale information and communication technology cooperation project between the two countries, and it is also the only Gambia infrastructure project financed by concessional loans from China to date.

Additional details

1. The Chinese project title is 冈比亚国家宽带网项目. 2. In 2018 and 2019, an effort was underway to transfer of backbone fiber assets from Gamtel and the Ministry of Finance to a special purpose vehicle (SPV) called Broadband Fiber Co. SPV, Limited Liability Corporation. These assets include 817 km of ECOWAN fiber, 130 km of Gamtel legacy fiber (incorporated into ECOWAN) and the 420 km of fiber being established through the GNBN. 3. The face value of the loan is drawn from the World Bank's Debtor Reporting System (DRS). See https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0. 4. In June 2018, the IMF estimated that the the grant element of the China Eximbank loan is 26%. This value is different than the grant element that AidData has estimated (using the OECD's methodology).

Number of official sources

17

Number of total sources

22