PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5780 Project Name
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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5780 Project Name Caribbean Advanced Regional Communications Infrastructure Program Region LATIN AMERICA AND CARIBBEAN Sector General information and communications sector (100%) Project ID P Borrower(s) GOVERNMENTS OF CARIBBEAN NATIONS Implementing Agency N/A Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 1, 2010 Estimated Date of January 20, 2011 Appraisal Authorization Estimated Date of Board May 27, 2011 Approval 1. Key development issues and rationale for Bank involvement 1. The Latin America and the Caribbean (LAC) region has seen important improvements to its ICT infrastructure over the past 10 years. Through telecommunications sector liberalization and private participation, important investments have been promoted, most notably in the deployment of mobile telephony networks and the installation of numerous international submarine fiber optic cables that serve the region. 2. Within LAC, the Caribbean region has also benefited from these trends, but to a lesser extent, with major gaps in access to ICT infrastructure still prevalent. At the international level, most countries in the region are currently served by only one alternative international cable, and some countries such as Haiti 1 and Guyana 2 were only recently connected to a cable. At the national level, major infrastructure gaps also exist, with very little investment in broadband networks venturing beyond the main urban centers, especially in the form of fiber backbone networks, which have very limited extension, in the few countries that have one. 3. There are a number of new submarine cables that have been proposed over the past few years 3, which may fill part of this gap, and incumbent operators are slowly planning to expand their fiber backbones. However, given the current still fragile recovery of the global 1 Haiti submarine cable linking it to Bahamas had recently become operational, but was damaged during the January 12, 2010 earthquake and needs to be repaired. 2 Guyana recently inaugurated a submarine cable as a joint venture with Suriname, connecting both countries to Trinidad and Tobago, where they have access to onward connectivity through a number of other cables. 3 Among others: 1) the Southern Caribbean Fiber to link Trinidad and Tobago to Guyana, Suriname and French Guyana; 2) the Northern Caribbean Fiber to link the Dominican Republic, Haiti and Jamaica to international cables in St. Croix; 3) the Colombia-Florida Subsea Fiber to link Colombia to Southern Florida with a landing station in Jamaica; 4) Telefónica s Emergia cable which could land in the Dominican Republic; 5) Columbus Networks possible extension to Haiti.
2 economy, it appears that most of these projects may have been put on hold, and even if some do go ahead their long term economic viability may be questionable. 4. In addition, the existing infrastructure is very vulnerable to natural disasters, as was demonstrated in the aftermath of the recent Haiti earthquake and in previous years hurricane seasons. The lack of redundancy in the ICT infrastructure, both at the international and the national levels, and the inexistence of emergency communications networks, leaves the countries very exposed to major disruptions in communications services, which proves to be a serious problem particularly in the face of emergencies At the global level, there is growing recognition that investing heavily in ICT, particularly broadband infrastructure, can play a crucial role in promoting economic growth, competitiveness and social inclusion of any economy. In fact, recent research published under the IC4D09 flagship World Bank report 5 shows that a 10% increase in broadband penetration can have an impact of close to 1.4% in increased annual GDP growth in developing countries. 6 There is also evidence that higher rates of ICT penetration are associated with greater levels of exports. 7 This recognition, coupled with the slowdown in private sector investments as a result of the global economic crisis 8, has prompted most OECD economies to declare access to broadband communications a public good, even a human right, and programs to address these market failures have been put in place. 9 For instance, most OECD countries have launched over the past 18 months aggressive countercyclical anti-crisis stimulus packages, which in most cases have included major public broadband investments, structured as public-private partnerships (PPP) with substantial public funding. 10 Many developing countries are following suit, with Brazil, Mexico, and several others in LAC, planning similar programs for the deployment of nationwide broadband backbones. 6. Furthermore, once the underlying ICT infrastructure is in place, intensive usage of ICT in the public and private sectors, as well as society in general, is associated with higher levels of government transparency, a more innovative and investment-friendly private sector, and an overall more resilient and competitive economy, and a more integrated society. For example, cheaper and better access to broadband can increase the region s ability to compete and generate youth employment in the fast-growing global ICT market of Business Process Outsourcing (BPO) and e-commerce. In fact, it has been shown that the global addressable 4 The Haiti earthquake provides a vivid example of this concern: shortly after the quake, all communications networks went down, with minor exceptions, just at the time when the service was needed most for coordination of search and rescue operations. Service was only minimally restored after two days and has to date not yet fully recovered its pre-quake capacity. 5 See 6 See to access these and many other relevant publications and studies. 7 Telecommunications Infrastructure and Economic Development: A Simultaneous Approach; Lars-Hendrick Röller & Leonard Waverman, American Economic Review, Broadband networks involve a long lead time between outlays and yields and private investors tend to seek investments with shorter payback periods. 9 Several European governments have declared broadband a legal human right. See for instance Finland: 10 Broadband Infrastructure Investment in Stimulus Packages: Relevance for Developing Countries; Christine Zhen- Wei Qiang
3 market for IT and IT-enabled services (ITES) is estimated at US$ 475 billion of which only about 15% has been realized, and every job created is projected to yield about four additional jobs in ancillary services. If the Caribbean were to capture only a fraction of this addressable market, its socioeconomic impact would be tremendous. A robust local ICT industry would help generate more economic output, attract foreign investment, energize local exports, create more employment for the local populations, and overall the region would see a boost to its economic integration and diversification efforts. 7. In line with the above trends, to maximize the development impact of the regional ICT infrastructure and to harmonize ICT policies and programs within the Caribbean region, governments of CARICOM 11 member states plus the Dominican Republic (collectively known as CARIFORUM countries) have established a CARIFORUM Regional ICT Steering Committee 12. This Regional ICT Steering Committee has developed a holistic Regional ICT Strategy, which is expected to be approved at a Ministerial Conference to be scheduled by July The Regional ICT Strategy, seen as a key pillar of the CARICOM Single Market and Economy (CMSE), would harmonize efforts at the regional level towards fast-tracking the formation of the CARICOM Information Society by Alongside the strategy, a Draft ICT Action Plan has been developed by the Regional ICT Steering Committee, centered on five priority areas, including capacity building, access and connectivity, legal and regulatory framework, ICT applications and ICT industry monitoring and promotion. Implementation of this comprehensive strategy would allow the countries of the Caribbean to accelerate the deployment of this critical regional infrastructure, and would maximize its development impact, leveraging its potential in terms of opportunities for trade and competitiveness, economic diversification and social development, government efficiency and transparency, as well as overall regional integration. 8. In support of the implementation of the CARIFORUM Regional ICT strategy, the World Bank is designing a Caribbean Regional Communications Infrastructure Program (CARCIP), envisaged as a holistic umbrella ICT-enabled development framework, strongly anchored in CARICOM s regional ICT agenda. Through a regionally harmonized programmatic design, CARCIP is capable of providing maximum flexibility to the region, allowing countries to join the program individually, on a need and readiness basis, and start with a core set of activities tailored to their particular needs, expanding the scope in subsequent years, as implementation progresses. It is also designed to be complementary to work already being done at the national and regional level, both through regional organizations and with donor-funded programs. In particular, it is meant to complement existing initiatives led by CARICOM, CKLN 13, CTU 14, CANTO 15, CARICAD 16, ITU 17, CTO 18, among others, as well as initiatives funded by the IADB, the CDB, the EU, CIDA, the OAS, as well as other World Bank and the infodev program, among others. None of these donors are presently active in 11 CARICOM Caribbean Community 12 See 13 CKLN - Caribbean Knowledge and Learning Network 14 CTU - Caribbean Telecommunications Union 15 CANTO - Caribbean Association of National Telecommunication Organisations 16 CARICAD - Caribbean Centre for Development Administration 17 ITU - International Telecommunication Union 18 CTO - Commonwealth Telecommunications Organisation
4 the whole region with a broad ICT-specific program. However, a number of them are funding programs in some countries that include ICT aspects, such as the EU in the area of entrepreneurship, CIDA and CDB in the area of public sector modernization, the OAS in civil registries, and the IADB in selected aspects of e-government. 9. The World Bank is well placed to support this effort, as it has extensive experience in similar regional programs globally, including the East Africa Regional Communications Infrastructure Program, the Central African Backbone, the Pacific Islands Connectivity Program, among others. The World Bank is also very active in the ICT sector in the Caribbean, through a number of highly complementary programs, both at the regional or subregional level (CKLN, OECS EGRIP 19, OECS TICT 20 and CIDA s SEMCAR, to name a few), as well as multiple projects at the national level. 10. CAS, CPS and RPS links. The current Dominican Republic CPS, Haiti CAS, Jamaica CPS, Guyana CAS, and the RPS for the OECS, all have identified CARCIP as one of the areas for regional investment. While the countries that would benefit from the project vary in size and needs, the project is well suited to support a number of common strategic themes identified in the various strategies, which will clearly benefit from improved communications infrastructure and cheaper access to ICT: broaden to address fiscal and debt sustainability issues, the growth agenda (Jamaica CPS) by consolidating government networks and promoting private sector growth through targeted investments; promoting growth and local development (Haiti CAS) by increasing connectivity throughout the country and improving private sector investment and incentives; the need to work in areas where the Bank s support could significantly leverage additional financing to contribute to the Government s overarching PRSP focus of accelerating and sustaining growth (Guyana CAS) by improving private sector investment and incentives and leveraging other donors (e.g. Norwegian TF); (ii) promote competitiveness in a sustainable and resilient economic environment, (iii) enhance quality of public expenditures and institutional development (Dominican Republic CPS) through targeted private sector investments in country-wide connectivity, high degree of government interconnectedness and growth of the local ICT industry; (i) enhancing competitiveness and stimulating sustainable growth in the medium term employ a sub-regional/multi-country approach to both lending and non-lending activities that produce significant cross-border benefits in areas where consistency of policies and actions add credibility, economies of scale or potential competition (OECS RPS) through enhancing regional connectivity between the islands, strategizing and enhancing investment with the private sector, cooperative approach to development of the regional ICT industry, and exploiting economies of scale in deploying services for citizens and businesses. 2. Proposed objective(s) 11. The primary development objective of the proposed program is to increase the availability, demand and development impact of the regional ICT infrastructure, services, and firms, as a pillar of regional integration and creation of a modern information society. 19 OECS E-Government for Regional Integration Program; Bank Approval May, OECS Telecommunications and ICT Development Project; Bank Approval May, 2005
5 12. This would be achieved through a targeted set of strategic interventions harmonized at the regional level but tailored to the needs of the individual countries, including support for the development of the regional ICT infrastructure, promotion of ICT-led innovation as well as ICT-enabled public and private sector transformation. 13. As a result of the program, it is expected that the whole Caribbean population would benefit, by having access to new communications services, sources of information and knowledge, enhanced and diversified employment opportunities, improved delivery of public and private sector services, increased productivity and transparency of government, and more rapid and coordinated response to emergencies. Overall, the region would see a boost to its competitiveness, social inclusion, economic diversification and regional integration efforts. 3. Preliminary description Lending Instrument 14. The proposed lending instrument is a Regional horizontal Adaptable Program Loan (APL). In this context, it is proposed that during the first phase within any given country the program will focus on a selectively constrained number of components and activities. Additional components and activities may be added in the future through additional financing or new projects. It is expected that the first phase will focus substantially on the connectivity component while allowing for selective inclusion of enabling environment elements of the other two components (see program components below). 15. The proposed APL structure will allow countries substantial flexibility to join the program on a needs and readiness basis, and to select the elements of the program that fit their immediate needs within an overall harmonized regional framework, while allowing for incremental incorporation of additional elements in the future. Triggers for countries joining the program after the first phase will be clearly specified in the program document and will include among others a confirmation of commitment and readiness to participate in the program. 16. Eligible countries for the proposed operation includes all the members of the World Bank within the Caribbean region, including, among others, Belize, Jamaica, Haiti, Dominican Republic, the countries of the Organisation of Eastern Caribbean States (Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines), Barbados Trinidad and Tobago, and Guyana. Program components 17. The proposed program will have different elements depending on the priority areas for each of the participating countries, and will be tailored to each country s needs. However, the interventions for each of the participating countries will be structured along the same set of strategic priorities and will be closely coordinated and jointly implemented to the extent possible, to ensure the regional spillover effects are maximized.
6 18. The program is structured along three main components, as described below. A fourth crosscutting institutional development and capacity building component will lend support to the regional institutional framework to implement and monitor the program: 1) Regional connectivity infrastructure, aimed at increasing access and affordability of broadband communications networks in the region and within countries; 2) ICT-led innovation, aimed at leveraging the regional broadband infrastructure to contribute to the development of the regional and national IT/IT-enabled services (ITES) industry; and 3) e-transformation, aimed at contributing to improved government and private sector efficiency and transparency by leveraging the regional broadband infrastructure towards the delivery of e-services, mobile applications and content, including e- government, e-commerce and e-society applications. 19. Component 1: Regional Connectivity Infrastructure. This component will be aimed at bridging the remaining gaps in the regional broadband communications infrastructure. This may include a combination of the following: (i) promoting public-private partnerships in the deployment of submarine cable infrastructure, including landing stations, roll-out of terrestrial broadband backbone fiber networks and cross-border links (e.g. between Haiti and the Dominican Republic, and possibly others where applicable), national and regional Internet Exchange Points (IXPs) and repair of public infrastructure destroyed as a result of natural disasters; (ii) support to the deployment of last mile broadband connections outside of main urban areas and high speed government virtual private networks, including connectivity support for government offices, health centers, schools, colleges and universities (leveraging CKLN), as well as national and regional emergency communications networks; and (iii) telecoms regulatory harmonization and institutional capacity building, including TA for PPP transaction support. 20. Component 2: ICT-led innovation. This component will be aimed at creating the enabling environment that will leverage the regional broadband infrastructure to foster employment and growth of an innovative regional IT and ITES industry. This may include a combination of support for: (i) strategies, policies, regulatory and incentive structures to support a multilingual regional IT and ITES industry capable of meeting local demands oriented to the export of services; (ii) leveraging and expanding existing regional network of IT and technology incubators, IT parks and technology centers, and investment promotion centers; (iii) targeted skills development and certification programs, including support for universityindustry collaboration on R&D and global linkages; (iv) creation of special financing vehicles, such as regional or national Venture Capital Funds, for regional IT/ITES industry, and mobilizing the Caribbean diaspora in North America, Europe and elsewhere for knowledge, connections and investment. 21. Component 3: Regional E-Transformation. This component will be aimed at improving government and private sector efficiency and transparency by leveraging the regional broadband infrastructure towards the delivery of a wide variety of e-services. This may include a combination of support for: (i) harmonized regional enabling environment for e- services and mobile applications, including strategies, policy, legal and regulatory
7 frameworks, e-government standards, interoperability frameworks, and enterprise architectures, as required; (ii) deployment of regional e-government and m-government shared services and infrastructure, including data centers and cloud computing infrastructure; (iii) deployment of regional e-security infrastructure, including identification platforms, digital signatures certification authorities, and computer emergency response teams; (iv) sharing and transfer of knowledge, best practices and technical solutions for e- services and m-services within the region, including e-services and mobile applications on the basis of PPPs, high impact e-society and mobile applications (education, health and rural development), high impact e-commerce and mobile applications (banking, tourism, retail); and (v) PC for all programs aimed at increasing computer penetration and digital literacy in the region, by lowering the cost of access to credit for vendors and consumers. 22. Component 4: Regional Institutional Development and E-Leadership. This component will be cross-cutting and aimed at supporting institutional development and capacity building activities, to enhance the effectiveness of the regional institutional framework charged with implementing and monitoring the program, and will support the creation of a network of ICT leaders in the region. It is expected that an existing regional institution will have overall program oversight and will implement the program by leveraging and enhancing institutional capacity at the national level. This component will need to be present throughout all phases of the program. Implementation arrangements 23. The implementation arrangements will need to be fully worked out as project preparation progresses. It is proposed to link the program at the CARICOM/CARIFORUM level within an existing regional specialized agency. This regional agency will play the role of overall program coordinator, as well as project implementation entity for selected aspects of the project, such as where implementation capacity at the national level is weak, or where splitting among national level implementation agencies may prove impractical. This regional implementing entity will be supported by other specialized regional agencies and national implementing agencies as required. A decision has not yet been made on the appropriate regional anchor for the program. 4. Safeguard policies that might apply 24. Because of the need to avoid adverse impacts to coral reefs that are found along the coastlines of most of the potential participating countries and to other sensitive coastal ecosystems, the project is assigned to environmental category B under OP 4.01 Land acquisition for terrestrial facilities, if required, would trigger OP 4.12 Involuntary Resettlement, but may not be triggered if the facilities follow existing rights of way, especially roads. A determination will be made during project preparation. 25. An Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF), if applicable, will be conducted for the CARCIP program prior to Project appraisal. The ESMF and RPF will be reviewed by the World Bank and publicly disclosed in all countries participating in CARCIP Phase 1. Specific Environmental Management Plans
8 and Resettlement Action Plans will be prepared as necessary for submarine and terrestrial facilities during project implementation, in line with the ESMF and RPF, once the locations of those facilities have been identified. 5. Tentative financing for Phase 1 Source: ($m.) BORROWER/RECIPIENT 0 International Bank for Reconstruction and Development 6 International Development Association (IDA) 16 Total Contact point Contact: Juan Navas-Sabater Title: Lead ICT Policy Specialist Tel: (202) Fax: (202) Jnavassabater@worldbank.org
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