Validation Workshop
Session 4.2: Presentation of the Toolkit
Monday 14 March 2011
Windhoek, Namibia
Leona Mentz
ITU Expert
1
Introduction
 SADC nearing 50% mobile voice penetration
rates
BUT
 Most rural & high cost areas remain under
served, Internet and broadband not addressed
significantly
“How to” - Guide
 The Toolkit discusses:





Understanding & Setting up Universal Service Funds
Alternative Funding for Projects
Programme and Project Design
Monitoring & Evaluation
Regional Harmonization
2
Understanding USAFs
 Why set up a Fund?
 only one of a number of methods of financing
 depends on the project and the country context
 depends on the definition of universal service & access
 Important to implement SADC Ministerial
Decisions, and critical to ensure ongoing
relevance
 Understanding and Analysis of Market is required
 What should be achieved (definitions)?
 Where and who are eligible (services, convergence)?
 Important considerations from an
implementation perspective:
 What programmes and projects are to be pursued?
 How is the money disbursed?
3
Understanding USAFs
Successful Funds embrace the following key
principles:
•OBA
•Good Governance
•Alignment with Regulatory &
Policy framework
•Technology neutral
•Market orientation,
sustainability &
entrepreneurship
•Decentralized bottom up
planning & project definition
•Innovation & localization of
projects & processes
•Total Cost of Ownership
approach
4
Setting up a USAF
 Best established in a liberalized market:






Clear institutional framework for the Fund
Clear, pro-competitive licensing regime
Fair interconnection regime
A framework for infrastructure sharing and facility leasing;
Effective and efficient spectrum management regime; and
Harmonization with regional and global approaches and
standards
US/UA Guidelines and other CRASA
Guidelines deal with this extensively
5
Fund Management
The Ministry
A division of the regulator
A separate agency
An independent third party
Fund Must have (at a minimum):




Reporting Procedures.
Full time Fund Administrator
Separate Board of Trustees
Own Bank Account
6
Fund Management
 Accountability:
 Transparency & Trust
 Efficiency
Toolkit provides some recommendations
(with accompanying examples)
•
•
•
•
Separate accounting
Operating procedures
Governance framework
Annual report & auditing
7
USAF Funding
 Variety of sources:
 Government general budget,
 Levy imposed on industry, as a percentage of annual
revenue
 Regulatory sources such as the proceeds of license
competitions, frequency spectrum auctions and fees.
 Once-only contributions from government
 Consumers
 Level of funding:
Policy
Driven
Range from 0.02% to 6%
Market
Driven
8
USAF Funding
SADC mostly
Levies on
operators
could be
coupled with
Seed
funding
from
Donors
Gov’t
Funding
Regulator
Surpluses
•Approach has been primarily
market driven
•Best Approach to determine level
of contribution:
Consultative process
Put maximum/range in
legislation not actual %
Review levies periodically
9
Financing of Projects: Utilization
of Funds (Challenges)
 1998-2006, only 26 percent of USAF funds
collected globally had been redistributed to the
ICT sector for use on universal access projects
Slow Funding:
• Fund is located with the regulator (not prioritised)
• Speed of the political process, governments fail to pass enabling
legislation, or hold back approvals for funds to be spent
• Significant time needed to design, evaluate and assess and
implement projects
• Projects often considered ‘public investments’ & subject to lengthy
approval processes
• Disbursements may be subject to additional constraints from third
party organizations such as donors
10
Financing of Projects: Utilization
of Funds (Opportunities)
Best practice:
 Legal framework encourage efficiency & transparency &
enable speedy Fund disbursement
 Fund should be given sufficient autonomy to disburse
funds
 A clear Delegation of Authority Framework should exist
across the organization
 Fund should have clear continuous and ex post reporting
requirements
 Funds should have a maximum amount that can be rolled
over from one year to another without eliciting a review of
the USAF contributions
 Only collect money when structure in place to disburse
11
Designing Programmes &
Developing Projects
Understand the Status Quo:
• Current policy and regulatory tools to meet defined
targets and objectives;
• Short and medium term policy changes impact the
ICT environment
• Current infrastructure and infrastructure requirements
to meet the defined targets;
• Infrastructure roadmap of operators using all types of
infrastructure and technologies;
• Market dynamics and demand analysis
• Impact of non-ICT factors such as electricity, roads
and access
12
Designing Projects
 Well Designed projects :
 Targeted
 Measurable
 Sustainable
Successful Projects:
 Commercially successful (i.e. successful from
a market perspective) and
 Successful from a developmental perspective.
Focus on demand and needs as well as on
supply and socio-economic impact.
13
Types of Projects
 Infrastructure Projects:
 the network should be open and
provide universal coverage in the
area concerned.
 the amount of the compensation
for rolling out the network cannot
go beyond what is necessary to
cover the additional costs to deploy
the network in non-profitable
areas.
Funder
(Private,
public,
PPP etc.)
Funding
(Subsidies
grants,
loans etc.)
 Last Mile Access:
 Infrastructure sharing
14
Types of Projects:
School & Library Connectivity Projects
Connecting
Communities
Connecting
Schools
Funding Schools DIRECTLY
Funding Schools INDIRECTLY
-Well measured
-Focused on areas
-Focused on communities
-E-rate
-Infrastructure Sharing
-License obligation
15
Types of Projects:
Community Access Projects
 Cyber cafes, telecentres & information
access points
Funder
(Private,
public,
PPP etc.)
Sustainable Project is Demand Driven
Funding
(Subsidies
grants,
loans etc.)
16
Types of Projects
Content and Applications Projects
ICT sector strategies focus more on
broadband uptake
Funder
(Private,
public,
PPP etc.)
Becomes critical to focus on
culturally and linguistically sensitive
information
Funding
(Subsidies
grants,
loans etc.)
17
Type of Projects:
Pilot Projects
 Objectives Document for a pilot project
 Objectives – what is the thesis being
tested
 Project Team – who from the Fund and its
partners is involved in the pilot? What are
the roles and responsibilities?
 Sample and Sample size – what is the
location/population/technology/etc being
tested and why?
 Timeframe – provide a start and end date
 Budget – what is the budget? Who is
paying for what portions (if a partnership)
 Monitoring and Evaluation
 Overlapping Projects
Funder
(Private,
USF, Other
etc.)
Funding
(Subsidies
grants,
loans etc.)
18
Calculating Cost of Universal Service
and Access
Cost analysis will require:
 Market data which is below national level
 ICT access levels – which is more micro that national
penetration levels
 Geographical information on the project area
 Population centre’s and population
Two of the more user friendly cost models:
• World Bank’s ICT voice Model
•Public Access Broadband Model
19
Calculating Costs: Recent Modeling
Trends
Most common approaches to arrive at cost:
 Use of cost information to approximate the
maximum subsidy and
 Use of benchmarks derived from available local,
regional and international information
20
Process Issues: Eligibility for Funding
Eligible Bidders
Cannot distort the market
Eligible Areas
competitive market interest
21
Process Issues: Eligibility for Funding
 State owned entities:
No fundamental problem with government
owned companies being awarded projects if
the process followed has been transparent and
fair
 New Entrants & Small Players:
May be inadvertently excluded due to lack of
experience i.e. requirement for 5 years
experience in bid…
 Non-licenced Companies:
Open to debate….
22
Process Issues: Awarding Subsidies
Smart
Subsidies
• Once off/encourage cost savings/optimal
results/good governance
Reverse
Auctions
• incentivized to bid a cost that is as close
to the actual cost of service provision
Fixed
Subsidies
• award the funds to the operator that
provides the most comprehensive service
for that subsidy
23
Process Issues: Bidding
Documents
Pre-bidding
Documents
In Process
Documents
Post Process
Documents
24
Monitoring & Evaluation
Monitoring & Evaluation defined
Benefits of Monitoring & Evaluation
Link between Monitoring and Project Design
Examples such as World Bank 10 step Monitoring &
Evaluation process
 Design Mistakes established through M & E




25
Regional Harmonization
Role of CRASA:
 promoting the harmonization of universal service
 provide capacity building on Fund management
 compile annual statistics and indicators to assist
the 14 members to measure the success or
otherwise of the Funds
26
Conclusion
 Intended to be a practical guide
 Highlight important areas to consider
from Fund establishment to Fund
disbursement
 Provide case studies and examples as a
reference
27
Thank You!
Leona Mentz
Director: Policy and Regulation
Pygma Consulting
[email protected]
Tel: +2711 783 1210
www.pygmaconsulting.com
28