by Piet Coetzer


South Africa to become gateway in world economy

South Africa to become gateway in world economy

While there were many  who were skeptical about South Africa becoming a full member of the BRICS group of nations (Brazil, Russia, India, China and South Africa) in 2010, one of the flagship projects of BRICS is set to drive the country “to take on a strategic role as a gateway in the world economy”. 

This is the assessment in a recent KPMG report with the title The Infrastructure 100: World Cities Edition. The report by the international consulting firm’s Global Infrastructure Practice sets out to “showcase 100 urban infrastructure projects that embody the spirit of innovation and stand as an inspiration to infrastructure participants and city leaders around the world.”

On the communications network front, the planned undersea optic cable that will link the five BRICS nations to the rest of the world was chosen as the “featured project” by an independent international panel of experts.

The report states that although still in the early planning and feasibility stage, the BRICS cable is one of the largest and most ambitious endeavours included in the Infrastructure 100. The BRICS submarine cable is a 34 000 km, 12.8 terabits capacity fibre optic cable system that will link cities in the BRICS with the United States.

The BRICS countries are currently home to 40% of the world’s population and 25% of global GDP. With urbanisation rapidly increasing, access to a fast and secure global communications network is essential to the growth and prosperity of the BRICS states. “The impact of this project cannot be understated,” the report says.

Resoundingly positive

The concept for a worldwide cable first surfaced after South Africa was admitted to the BRICS economic bloc in 2010. Suggestions followed at the March 2011 BRICS summit in China that South Africa,the smallest of the economies in the group, was punching above its weight, and questions were asked about what additional value the country could bring to the table.

With this in mind, the idea for the cable was put forward as a way of reducing reliance on links across Europe and the North Atlantic. Currently, the BRICS countries are connected to each other via telecoms hubs in Europe and the United States, resulting in high costs and the risk of possible interception of critical financial and security information by non-member states.

A new system would provide a shorter, cheaper and, potentially, more secure route for traffic flowing between the BRICS nations – along with enhanced internet connectivity to boost economic activity.

In terms of routing, the cable will extend south from Vladivostok on Russia’s Pacific coast through Shantou in China to Singapore. A spur will be built to Chennai in India as the main cable extends further south through Mauritius, on to Cape Town, across the South Atlantic to Fortaleza in Brazil and then north to Jacksonville in the US state of Florida.

Extensions to other countries, en route such as Indonesia, will  also be possible. The cable will not be a system that is self-contained. It will interconnect with several other cables, including the soon-to-be-operational West African Cable System (WACS) and SEACOM on the East African coast.

The plan is to achieve speeds of 12.8 terabits per second, making it 1 000 times faster than the Telkom SAT-1 cable, which for 20 years was the primary connection between South Africa and Europe along the west coast of Africa, and two and a half times faster than the brand new WACS cable.

Currently the estimated completion date for the whole development is the second half of 2014 with an estimated budget of US$1.4 billion. While this amount may seem large, proponents say it is miniscule compared to the eventual benefits and impact on GDP growth.

“Andrew Mthembu, chairman of technology group i3 Africa and one of the drivers of the project, is also responsible for the WACS cable. Mthembu has stated in the press that he hopes to take many of the lessons from WACS and apply these to the BRICS system.

“According to Mthembu, the necessary information is now in place to take the next step of seeking investors for the project. Traffic and feasibility studies have been carried out and the respective governments – along with telecommunications operators in these economies – have been canvassed to gauge their support. The result has been resoundingly positive, it is reported. 

Supporters suggest that the appropriate investment structure for the project would be a consortium. In this way, the operators in each country would come together by way of a construction and management agreement, making contributions to the overall cost commensurate with the capacity received from the system.

In association with Imphandze Subtel Services, i3 Africa is already in possession of the requisite telecommunications licences in South Africa to land, operate and maintain the cable. It is now in the process of formally inviting telecommunications operators and other potential investors in the BRICS countries and the United States to participate in the project.

Strategic role

“The next, crucial part is the setting up of agreements with operators and other governments, which could take a number of months to finalise. Mthembu has said the main lesson of the WACS cable was that getting the permits from 12 participating countries, each with their own regimes and laws, was the hardest part.

“When completed, the BRICS cable will be the third-longest in the world. It is likely to prove a strong step in increasing BRICS trade and driving South Africa to take on a strategic role as a gateway in the world economy,” the KPMG report states.

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