Sogavare says “debt trap” rhetoric will not deter Solomon Islands

Prime Minister Manasseh Sogavare this week has declared that no amount of misinformation and scare-mongering such as the “debt-trap” rhetoric will deter his pursuit to advance the Government’s development agenda for the future of the country.

Sogavare made the statement at a groundbreaking ceremony on Wednesday to mark the beginning of construction of 161 towers under the Solomon Islands National Broadband Infrastructure Project (SINBIP) aimed at improving and modernizing telecommunication and internet services in the country.

The SINBIP is fully funded with a concessional loan of approximately US$65 million from the Exim Bank of China at one percent interest rate.

An independent financial review of the SINBIP by a New Zealand expert showed relatively strong financial evaluation indicators to comprehensively evaluate the economic benefits of the Project.

The review highlighted that the Financial Net Present Value of approximately US$65 million is required for the project with an Internal Rate of Return of 8.86% for an Investment Recovery Period of 11.4 years with an Investment Profit ration of 11.23%

This indicates that the Project has good direct economic benefits. The static investment recovery period is 10.97 years, and the dynamic investment recovery period is 11.40 years – indicating that the Project has the ability to recover its full investments.

In terms of Debt Paying Ability, the independent analysis showed very favorable Interest Coverage Ratio (ICR) Debt Service Coverage ratios (DSCR).  These indicates strong ability to repay both principal and interest from year five. This is a critical foundation for the investment – that revenue generated can cover all debt obligations

Sogavare said the government will do whatever it can to secure the future of the country and people by continuing to engage with whoever is willing to engage with us to further our development aspirations.

“We will not be deterred by misinformation such as debt traps. No amount of fear mongering will distract us from our march towards a better and brighter future for our people,” he said.

“We are friends to all and enemies to none. As such, I invite all our development partners to intensify our engagement, collaboration and cooperation so that Solomon Islands can achieve its 2030 Agenda,” he added.

The first three pilot mobile towers will be constructed soon after this week’s ground breaking ceremony to be followed by the rollover of mobile tower construction in other parts of Guadalcanal, Central Islands and Isabel Provinces. The Government hopes to complete the first 25-30 mobile towers before the Pacific Games in November 2023.

The Prime Minister is adamant that the project is of great significance to Solomon Islands’ economic and social development, highlighting, that governments must look to invest in their national broadband networks.

“With increased efficiency stimulating greater innovation, high-speed broadband has been proven to drive not just consumer satisfaction but national GDP,” Sogavare said.

The Prime Minister further highlighted that from national development experience, ICT has become the foundation of national economic development by creating considerable income, and promoting enterprises, especially small and medium enterprises to improve innovation ability by integrating ICT with economic and social development and bringing new impetus to long-term development and through spillover effects to benefit the entire population.

Sogavare said the telecom industry as the foundation of the national economic development, can promote the development of other industries, especially those related to people’s livelihood by connecting communities in remote islands and rural areas with high-speed Internet.

“This investment can provide telemedicine, distance education, health, public services and community welfare, and drives the development of surrounding industries such as transportation, commerce, logistics and finance. ICT infrastructure can also contribute to national civilization, providing urban and rural residents with re-education and learning opportunities, and promoting the development of Solomon Islands’ society and civilization,” he said.

By comparison, Solomon Islands current telecommunication network is expensive and backward and has a low population coverage. Most regions are still covered by the 2G network, and the mobile broadband coverage is less than 25%.

According to Sogavare, the high-speed broadband Internet brought by the international submarine cable cannot be extended to government agencies, enterprises and public institutions, or thousands of households all over the islands that cannot generate huge benefits to improving the national economy and people’s lives.

ENDS//

-GCU Press