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

China Eximbank provides $25.9 million concessional loan for Gambia National Broadband Network (GNBN) Project 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.

It is secured by (i.e. collateralized against) by project (broadband) revenues deposited 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).

Gamtel was expected to use the loan proceeds to finance a $25 million commercial contract that it signed with Huawei Technologies Co., Ltd. on June 27, 2017.

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 Co., Ltd. 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.

The are multiple indications that the China Eximbank loan for the GNBN Project underperformed vis-a-vis the original 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 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.' Then, in 2024, a government audit revealed that 'GAMTEL lacks the necessary infrastructure to keep up with the increasing demand, resulting in a significant portion of the population being underserved.' It concluded that '[t]his deficiency was attributed to the inadequate implementation of the National Broadband Network (NBN) project, wherein fibre access terminals (FATs) were installed in locations distant from residential areas, severely restricting accessibility.

Additionally, it was observed that in certain areas, customers faced difficulties in obtaining internet connectivity due to the exhaustion of ADSL cards, consequently impeding supply efforts.'