%e" p;d 4 w.

ffiW,r,W
^#tu'i,6
P L IAM ENT o
I

F kp NYrr I

LI tsR ARY
B LEO
Office of the Auditor'General No:.

* ? J I,IAR ZUII t

RLA \

t.

Performance Audit
Report of the Auditor'
General

lmplementation of National
Optic Fibre Backbone
lnfrastructure Project
(NOFBI)

a J,
9'

nistry of lnformation Communication and Technology

Secember 2A14

ll
a

ir'i L " ' !

I am pleased to publish and publicize this audit reporl that examines the implementation
of the National Optic Fiber
Baclibone lnfrastructure Prolect (NI)FBl) by the lVinistry of lnformation Communication and Technology,
Ii/y Office
carried out the audit under the mandate conferred to me by the Public Audit Act, 2003. Section 2g(1)
of the Act
mandates me to assess the economy, efficiency and effectiveness with which the Government, a
state corporation or
local atrthority uses its resources.

Performance audits together with financial and continuous audits form the three-pillar audit assurance
framework that
I have established to give focus tc, the varied and wide scope of audit work done by my Office. The framework
provides high-level of assurance to stakeholders that public resources are not
only disbursed, recorded and
accounted for in the correct manner, but also that their use results in beneficial change in the
lives of Kenyans. The
main goal of our performance audits is to promote effective use of public resources and
delivery to Kenyans of public
services of outstanding quality.

I have submitted the original copy of the report to the Speaker of the National Assembly to table parliament
in in
accordance with Afiicle 229(7) of the Constitution. ln addition, I have remitted copies of the report
to the Cabinet
Secretary for lnformation Communication and Technology, the Principal Secretary at the National
Treasury, and to
the Director-General, Communication Authority of Kenya.

dffe"r
EOWARD R.O. OUKO, CBS

AUDITOR€ENERAL

December 2014
 ilts|r

AFROSA.I.- Africa l)rganizatiorr o1 tl^e ,!;unren-e l utlit lnstitu.ions

A(3 Auditor-General
B(:)S Bandwr,ltlr and Clou,i sen,rces
BPO Busirress Process Outsou i ::ng
CCK Commun:cation Comrnisr:ion c f l(ent/a
E" E- is a Ertropean cigital r.ransrrission format
EASSy Easterrr lfrica Subnrarine, :lable Svs-ert
GDC Government )ata Cenl'-'
GCCN Governrnent Comnon {lore I'ietrvork
GoK Governn'rent cf KenYa
ICT lnformation and Cimmu ric;a:i:n -echnology
ICTA ICT Authority
INTOSAI lnternatirnal Organizat cn o= :he Sr.tpreme Audil lnslituticns
*r:rr Siuprenie,Audit lns:ituiions
lSSAls lnternaticnal Standard
IP lnternet Protccol
KENAO Kenya National Audit Clfice
KENHA Kenya National H ghwaYs Al:horitY
KURA Kenya L;rban Roads A,ulhoritv
LION Lower lnrlian Ccean Netuork s$marire cable
MDG [Iillenn ir.r m DeveloPment Gc'als
tvtolc Minislry of lnformation and 'lommunication
MOT Minisl.ry of TransPort
NOFBI Nationai Optic Fibre E :cktrc,ne lnf-astructure
OAG Office of the Auditor General
OFC Optical Fibre Cable
POP's Points of Presence
SEACOM African Cable SYstems
STM.1 Synchronous Transfer Mod lle
TEAMS The East African Marire Cable Sy'stems
TKL TELKOM KenYa
VPN Virtual Private Netwot*
CCITT Consultative Cornmittee for lnternational Telephony and Telegraphy
ITU-T I nternational Te lecomm u
nications U n ion, Telecoms Stanc ardization
VFIVI Value for MoneY
WD]VI Wavelength Division llultiplex ng

Page i
OAG_K
a

. -..' i . f i . ' 'tl.

Bandv:idth '
The highest frequency that can be transmitted by an analog system and is commonly used to
represent highest f''equency and information-carrying capacity of a medium.

Broadband - High-capacity transmission technique using a wide range of frequencies, which enables a
large number of messages to be communicated simultaneously and commonly refers to lnternet
access via
a variety of high-speed networks, including cable, DSL, Wi-Fi, WilVAX, 3G, 4G and satellite.

Business process outsourcing (BPO) - a subset of outsourcing that involves the contracting of the
operations and responsibilities of specific business functions (or processes) to a third-party service
provider. BPO that is contracted outside a company's country is called offshore
outsourcing. BpO that is
contracted to a company's neighboring (or nearby) country is called near shore outsourcing.

Goncessional loan'These are loans that are extended on terms substantially more generous than
market
loans. The concessionality is achieved either through interest rates below those available
on the market or
by grace periods, or a combination of these. Concessional loans typically have long grace periods.

Core '
The central part of an optical fiber that provides the transmission region for an optical
signal. The
core is manufactured of an optically pure glass of a high refractive index surrounded by a lower
refractive
index cladding.

Dark Fiber ' Typically, optical fibers that are unused within an installed cable assembly or
operational
network scheme. For lease fibers to support another operator for their network
capability.
Digital subscriber line (DSL) ' a family of technologies that provide internet access
by transmitting digital
data using a localtelephone network. DSL service is delivered simultaneously
with wired telephone service
on the same telephone line.

Dongle - is a small USB device that ailows you to access the internet

EtherneULAN - consist of either one or more network terminals (NTs)

tied together with a centrally located
network switch over either twisted pair, wired cable or optical networking
over a pair of multimode optical
fibers.

E1 '
A link that operates over two separate sets of wires, usually unshielded
twisted pair (balanced cable)
or using coaxial (unbalanced cable). A nominal 3 volt peak signal is
encoded with pulses using a method
avoiding long periods without polarity changes. The line data
rate is 2,04g Mbius (full duplex, i.e.
2.048 tr,lbiUs downstream and 2.049 tt/tbiUs upstream).

Fibre optic Cable 'A cable provides organization and separation

for one or more wires or optical fibers.
Depending upon the installation, common commercial cable's
outer jacket consists of either a UV+esistant
or low-smoke, zero-halogen polymer.

Fiber Optic Link ' A basic fiber optic link consists of a transmitter, fiber optic cable
assembly and a
receiver/detector

OAG-K
Page ii
 I

tsp (lnte.net Ssclice provioer]r , A compra,rir I r:rrglr,tza:ion, usualrt asr;or;iated witl^ eiiher t

lelecomnrunicatior or cable TV provrCer, whicn prr:ii:es irt:tret access anc pn',t:sical conrectons to lhtl
general public and industrY.

L.it Fiber. opti:at fiber rvrth active equipment rn:oth erds'.e, connecting a l.ransmitter and receive-

tcrgetler,

. The devices betweer

Network oefinition of an interconnected sysi=ir ol r;ablin3 and comrnu:ic.ations
data servers. c:enters, storage and users.
point of
Node . l-he ccrmmon definition is er terminal or te'mirr:is, of wlrich, are conneoted to a netwcrk or a
demarcation
from either
Optical Fiber. An optical transmission mediurr developed n the late 197'0s nranufactured
purpose of transnitting digfial light
r:ptically pure glass or plastic prefornrs, in long lengtr spans for the sole
pulses.

receive signals from Earth and :o

Satellite - is a self-contarned communications systeri witn ttre ability to
retransmit those signals back with the use of a trans:,ond€r-an
irtegrated recei'rer and transmitter of radio

signals.
temporarily (testing), semi-
Splicing - A noethod of mounting two optical fiber end faces together, either
permanently (mechanical splicing) or permanently (lusion splicing)'

STM.1 . Synchronous Transfer h/odule level 1, a ficre optic transmtssion Standard equivalent to
155.52Mb/s.
optical fiber for either a splice,
Termination . The common term used for the preparatirr of the end of an
conrector installation or the installa'tion into an elecrc-optical &vice

The Ministry - MinistrV of lnformation, Communicatbn and Technology'

wavelength Division Multiplexing WDm) - The rnultiplexing (and de-multiplexing) of different

windows, for the purDose of carrying
wavelengths (channels) within a specific wavelength or wavelength
many different signals over a single optical fiber'

Page iii
OAG-- K
t

TABLE OF CONTENTS

LIST OF ABBREVIATIONS

LIST OF DEFII{ITIOI{S
il

EXECUTIVE SUMIilARY vlil

Concluf ions
):il 1

Recompendations ............
xilt
t < .-. . /

Background of the National Optic Fiber Backbone lnfrastructure project......... ................... 1

Objegtive of the Audit..

3

Methods Used To Gather Audit Evidence.................. ................ 4

Legal Frameworl for the NOFBI project ............... 5

Roles and Responsibitities of key players in the NOFBI project.........

5

Objec{ives of the NOFBI projeci

5

The NOFBI Project lmplementation process...

6

NOFBI Stakeholders

Budget and funding of the NOFBT project aclivities

8

lnadequate aocess tro ICT services through the NOFBI project ......................11

OAG_K
Page iv
 l

..,tt J

...........,.......,.25
lneffecttve monitoring and intpier"nerl3ll6rr pf the NOFBI p'or€cf "
Appendix 1: NOFBT Phase 1 Contractors and their Romes i1TE. Relirn (',ilestern Region 1i42 Km)...' ..""""""""""' "32

1i1ZKm) .........'-.""' '33

Appendix 2 : NOFBT phase 1 Contractor and their Rou:es l'luAwEl CONTRACT (Central Region
I'
(North Eastern R,egion 1284KM).'....""re
Appendix 3:NOFB phase 1 Contractors andtheirRou:es SAGEM CONTRACT

Appendix 4: NOFBI phase 1 Contractors and their Routes SAGEM COiITPJCT

(Coast Region 677KM)..""""''""""""35

1 . There was still inadequate access to ICT services in ltenya tl" rough the NOFBI Project, """"""""'37

2. NOFBI servrces were unreliable...., """""" ""37

1. NOFBI services were not utilizecl to the full capacity providec '"""""'' "37

Page v
OAG-K
l

ll

LIST OF FIGURES

Figure 2: Penetration trend ana|ysis..........,.... ....10

Figure Access of NOFBI in Kenya........... .11

1l Figure : NOFBI fault resolution trends .14

)

Figure NOFBI availability trends in201312014 fiscal year 15

i

Figure Graphic representation of faults. 16

Figure Graphical representation of NOFBI dark fiber 21

l'1
il Figu 9: Kenya's international bandwidth utilization....
t(_l
l.
22

10: NOFBI revenue trends from January 2010 to October 2012

24

LIST OF TABLES

Table 1: Supplier Contract, lmplementation Schedule and Related Costs

...9
Table 2: Fault resolution times..........
.14
Table 3: SLA and contracts signed
,18
Table 4: GDP Per Capita
19
Table 5: Dark fiber charges and revenue for June 2014 ......
25
Table 6: Lit fiber charges and revenue for June 2014.............
25

i
t

OAG-K
Page vi

i
 a

1"

i
I

Page v i
OAG-K
 EXECIJTIVE SUMMARY

1 By 2007 over 80% of Kenya's population had no access to basic telecommunication services, due
to the rural urban network coverage imbalances as well as the high costs of the services that were
unaffordable to most Kenyans. The Government's opinion was that an optic fiber cable was the
best economical solution to achieve the required national bandwidth to expedite the deployment
and develc,pment of rural telecommunication services in Kenya. The National Optic Fiber
Backbone lrfrastructure (NOFBI) project was then proposed to establish a national public broad
band network with access points in every county in order to attract and stimulate private sector
participatiori in the provision of rural telecommunications services.

2 The NOFBI project is implemented by the ttllinistry of lnformation Communications and Technology
(l\tlolCT) who has the mandate of general oversight of the communications sector in Kenya .The
operations of the NOFBI prolect were entirely financed by the National Government with additional
funding from two concessional toans from china totaling us$ 10g.5 million; us$ 37 million in 2O0T
for phase l, and US$ 72.5 million in October 2012 for phase ll. NOFBI phase I was implemented
between 2007 and 2009. Phase I involved the establishment of a national telecommunication back
bone network using fiber optics cable traversing 5000 Kms within road reserves along major
roads/highways in Central, Western, Coast and Northern Eastern regions of Kenya. At the end
of
the audit, NOFBI phase ll was still ongoing. Phase ll entailed adding 2100 km fiber to further
improve the backbone's coverage, reliability, provide wider bandwidth and expand
e-Government.

why the successful implementation of the NOFBI project is important

3. The Auditor-General authorized the audit of the NOFBI prolect after having considered
that
successful implementation of the NOFBI prolect has the potential to increase the
Kenya,s GDp by
up to 10%. Other benefits of national broadband include increased worker productivity, job
creation, efficiencies in the distribution of goods, services and information,
and reduction in the
challenges of low population density and physical remoteness from cities.
ln addition, by 2014, the
Government had allocated the tvlolcT over US$ 135 million for the NoFBI project
yet expected
benefits had not trickled down to Kenyans. Cost of internet in Kenya
was still high, only a few
Kenyans could afford access to good quality broadband network
and most Kenyans still lacked
access to basic telecommunication services,

OAG-K
Page viii
t+ The purpose o{ the audit was to estak:ish .rr,'herllter :he I{OFBI proiect lrarl provided broadbanC
particular, the
ctnnec:i,/ity so;as to enhanc,e provrsion cl cirrr,nun cation services in the corrntry. ln
audit ained to establish wlrether the inrpi,:nentarion of the NOFEI p"oject by the lt/ollT had;
improved universal access to informalion, :iorl'ln'unication and teleccrrnmuntcation services
n

Kenya lcwered internet lharges, made ICT sen,i(,es nrore reliable been fully utitized to the
full

capacity provided and has treen econonticalf inrprien'erled'

rn Kisuml,
5 The audit focused on the irnplementatiorr o- the NfFBI prolect s'ght counties namely;
Busia, :ldcret, Embu, ttlalindi, Mombasa, trlachaKos ard Kajiado by the tvlolCT, between
20Jl '-o
phase I had been
2014. Tlre counties sanrpled were where Jre irnplementation of tire NOFBI
completed and phase ll surueying had starteg. l/lost of internet data avarlable are national
thus in
pro.lect alone
some insrance we were rrot able to assign causes cirectly attributable to the NoFBI

Audit F rndings

6. rlonnection ofmajor towns firough the NOFBI prolect was among the l/inistry's ITra or
achievement. By 200g, the Mrnistry had laid 44'lSKnrs of NOFBI covering
mailr towns within
Eastern Region
selected regions (1342 Kms in tre Western Region, 1961Kms in Coast and North
that the Ministry
and 112Kms in Central Region). This was over 88% cf the 5000Kms of NOFBI
penetration level also rose
had set out to achieve in their strategic plan by 2c'12. lienya's internet
penetration le'rel by 2013 was
from about 10% in 200g to over 470/oby 2..013. ln addition, internet
already in line with the united Nation's Brcadband cornmission advocacy target
of 40 people for
100 targeted. Thetargethad been achieved thro.rgh the NOFBI
projectand otherbackbone
every
infrastnrctures in the country. However in stite of the said successes tre audit
revealed that:

a) There was still inadequate access to ICT services ir Kenya through the NOFBI project;

b) NOFBI services were unreliable;

c) The cost of internet senvices was still hi3h;
d) NQFBI services were not utilized to the full capacitv provided; and
proiected costs
e) The NOFBI project was not effectively morritorec nor implemented within
resulting to variations and delays in executing NOFSI
phase ll.

NOFBI project
There was inadequate access to ICT services through the
to all regrons in Kenya
7. The Government's desire was to imprcve u,niversal access to ICT services
through the I\OFBI prolecl. Preliminary acti vities of te
NOFBI project which included route surueys
from Telkom Kenya Ltd. However, as
were undertaken bY the ti/inistry in liaison with 1e':h''rica staff
acknowledged bY the Communications AuthrlritY of Kenya,
despile the grc'wth in the total
Page ix
OAG-K
 broadband subscriptions per person, the penetration was still low compared to the average African
penetration rate of 7 4%. By 2014,\he presence and availability of the NOFBI project had not yet
covered a large partof Kenya especially in the rural areas:

a) The auCit found that the NOFBI had inadequate coverage within the four (Central, Western,
Coast and Northern Eastern) contract regions where NOFBI phase I had been constructed,

b) There were numerous cuts on the network making some links extremely disjointed and
unusabte leading to lack of connectivity and accessibility;

c) NOFBI phase I project was not designed to enhance access in all regions as infrastructure was
purely a backbone link with no last mile connectivity to end users; and

d) The NCFBI infrastructure was found not to have any protection circuit to leverage on incase
of
disruption of services in the main circuit so as to ensure uninterrupted access.

\0FBt se-vice-q il?tg ;rrg,i1ftg

8. As stated in the lVinistry's strategic plans and NOFBI prolect documents, NOFBI was expected to
bring reliable power of high speed, high bandwidth connectivity to Kenya. However, the audit
found that the activities and operations of the NOFBI made the services unreliable:

a) Telkom Kenya Ltd. took long to restore destroyed NOFBI links sites. According to interviews
conducted with NoFBI clients, at time NOFBI links outages last up to 24 hour;

b) The NOFBI links experienced frequent down times due to sabotage, normal faults,
damage by
road contractors, force majeure and theft of NoFBI cables making it unreliable. The NoFBI
links often has an average downtime of approximafly 1.45 hours per day;

c) NOFBI phase I design was linear instead of ring making the links lack redundancy.
ln addition,
the main and protection are on the same cable so that when there is a cut, piotection
both and
main are down. Further as shared by NOFBI Operations and Maintenance
teams, NOFBI had
poor quality termination; and

d) NOFBI did not have guaranteed continuous quality of services since its
links were damaged
due to frequent soil erosions and floods that left the NOFBI cables
exposed and unavailable,
vandalism, damage by road contractors, NOFBI equipment malfunction due to high
temperatures and damage to optic cables from burrowing animals (rodents),
The unreliability
has forced some ISP's that use the NOFBI to invest heavily on back
up links due to the
sensitivity of services and type of clients they provide connectivity.
The backs up costs are
eventually pushed back to the end users.

OAG-K
Page x

il
 +-'-r( (F,., i-( v\-( .

q Ore of trte expected benefits of a NOFE} \r,ar; tl ltv,rer cost of cornmurticatiorr t'tat can attrat:t
o'tl".e
investment part;cularly in rural a.eas The a.rctit r:.,wer,'er fo.nd that despite tlre implementation
couniries.
NOFBI projeoi, Kenyans were strll paying mcre lol intertel than the LN target for developinE
Also, thougc rrlOFEil charge is
,vere heervrl r sLtt,s Cizec, internet ctlsts lo enc users stili very
1:rrir:es
costly ard Gcvernnrent Distric;t Treasury Off :ers a tlre tountl.s were still usir'g nrode'ns.

tr. Fi.wi}-c-,'i6i i*. Ip" 'S' |-"."',

fully utilized tc' the
10 -he Governrent's intention irorn the onsel: vrras trat ttre NOFBI project was to be
availabre capacity. The Gor,,errrme^t was fu use tlre TJOFBI within its offices ard lease ou: any
this the ar-dit':,und trat tl'e utilization level ori NCFBI links was lcw
rernainingl rlapacity Contrarl,to
-herc rad also been a lovr effotl to
ranging fror 096 to 5g% acrcss diffe-ent regions 'uhere it tra'rersed.
com,nerciaiize the NOFBI infras;truclure. Licens;ej lS]s rncreased to 169 n 2013 uc f'om 52 in 20C9'
NoFBI direclly
of these, cverlhe four years running from 200irt: 2i01:l' only five ISP's leverage on the
ISP's. As a rcsult tt'e project continues
as of June 2014, representin,q a meie 3% o{ the lctal n lmber of
:o place a heavy financialburden to (enyans sirr;e it is not self-sustaining:

givirg an annualfigure
a) NCFB,'s monlrly operation and maintenarice fee'ryas t'.shs.20,261,96600
of Kshs.252,7T1,496.OCt(inclusive of 9,6,2'7328.0t) collocation charges for January to February
2010) fortheperiodMarch20l0toFebrua.r201'andKshs.2a3,143,568.00fortneperiodlr/larch
2011 to 2g February 2012, giving a total of Kshs.495,915,064.00. Hovuever,
durirg these periocl,
NOFBI generated only Kshs'143,787,337.00, and

revenue to maintain its

b) ln arjci:ion, despite the fact that NOFBI prcjecl is nc,t generating sufficient
own operating costs, taxpayers are also being subiected to repaving the
concessional loans
110 millicn (US$37 rn for
receiveC from China to finance the NOFBI proiect totaling over US$
fees). By
phase I and US$72.5m for phase ll plus additior,al loan management and cornmitment
towards the NOFBI
August 2014, the government had dready paid only Kshs.1 ,264.3 million
phase ll loan.

Low commercialization of the NOFBI

that NoFBI has
11 overtrme tre NOFBI project was expected tc be self-reliart. However the audit found
ln althe reg'rcns visited, the zudit
nolbeen commercialized as intended thus reducing prolecl revenue.
low. The low awareness was because the Mtnstrv
found trat the level of NoFBI awareness was still
and benefits of the NoFBI prolect' This
had not carnpaigned or created awareness atrcut the existence
generate the much needed revenue'
led to the infrastructure's extra capacity not being ieased out to
Th.rs taxpayers continued to being subjected to heavy financial
burlen'

Page xi
OAG_K
 >' t,
rFYr;

12. The audit founc that the NOFBI project was not managed as effectively as expected since:

a) The NOFBI phase I network in some regions had not been commissioned five years later. phase I

of the NOFBI was completed by 20'10. However by 2014, the audit found thai the Athi - River to
Namanga NOFBI link in the Central and North Eastern Regions, had many cable cuts which had
not been repaired since 2007 which led to lack of internet connectivity and access in Kajiado
County. This site was done by IV/S Huawei but was never accepted by Telkom Kenya Ltd during
handover oi the prolect for management.

b) NOFBI Phase I was not designed properly. The installation of NOFBI cables in some regions was
not to the correct depth and was frequently destroyed by soil erosions and floods that left
the
cables OXpcrsed and unavailable, vandalism, damage by road contractors, high temperatures
and
burrowing animals (rodents). ln addition the backbone infrastructure design was linear instead of
ring which had the following effects:

' The linear network did not have redundancy and had no alternative route in case of damages.
The main and protection are on the same cable so that when there is a cut, both protection
and
main are down; and

' As such the Government has to incur more taxpayers funds in phase ll to close the loops in
phase l's infrastructure and integrate equipment to allow the backbone
be extended to all the
47 county headquarters in Kenya.

c) Phase ll of the NOFBI Prolect was not implemented as planned. Contract for the implementation
of
NOFBI phase ll was awarded to tt//S Huawei on TJuly 2010. The contract had
since had two
amendments, the first one on 17 October 2011, and a second one on 23\{iay
2014. ln March
2013, Huawei, the contractor, was paid advance payments of US$ '14.5 ttrlillion (2OYo
ofthe contract
sum of US$ 72.5 Million) to start preparing for phase ll prolect delivery.
However project works
were again suspended for over two years, as the Ministry requested
for project changes, in
compliance with new requirements due to reorganization and restructuring
of the Government
following Kenya's 2010 Constitution. By October 2014,the tt/inistry
was still in the initial plans of
implementation NOFBI phase ll and had not yet put in place
a dedicated office to provide
supervisory services and ensure effective implementation of the NOFBI pro1ect.

d) The NoFBI Cable was experiencing numerous cuts, which were

cosly to repair. The cuts were
due to vandalism, damage during road constructions, rodents and floods.
For instance, the 164Km
NoFBI link between Athi River and Namanga which was seriously
damaged during road
construction, needed to be redone at the cost of a new installation
estimated to coit taxpayers over
us$ 419,962 92.

OAG_K
Page xii
 e) he lilO;31 prolect had not lreer implentern'Le:l r,ritl. n prc jected costs. Ilajor alterations of
,
plrase I

lnclucieci renoval of somer items e.g. Dig tal H:'spiia s;oluiion which weis lo crlst tiSS 4,115,426 0(,
Telepresence solution wl'r,ch vr'as to cosl tJS'$ 6107,961C0 and othe- acc:sscries allhougl" tl^e
tota, cos: of project has rotr:han3ed. T-us atidi'titt:'al furrds amc;ntittg to Uli$1:,223,386
(147: of

the iritia, contract price) vuil be;equireC tc, irprlerrert:hese elements Ly ine \Iinistries like tha
,;osts clo not take care
|\4inrstry cf Health. ln aodition these adCiiirna ':f expected monelary
chanEes due to inflationary Frressures in tl'e e:onorty over time'

ft I'axpayers continued to incur heavy firianr: ai bur,Jen f,:r the delayec irnplementatron of NOFBI
prhase rl
NOFBI phase rl's finai apprclued oan agreenent was signed in Cctober 2012 for tlS$
72,500 000. The loan ha5 a maturity penod 01 tv/o l'unJred and fcrty months from the date the lt:an
periocl rf
agreement became effeclive (vritn a grace rc,ricd cf e gl'rty four months and a repayment
yel started,
one nurdred and fifty s x rronths). Thus despite phase ll of the NOFBI project not
KenyantaxpayershadbVC,ctober20l4,bo-netheburdenof overl US$7995,000ontheproject
rate of lJli$
for arlvance fees to contractor LS$ 13 500,0ir0 (Ceing 2Ao/o of ccntrac: price), irterest
2,900,000 (being Zo/o of l-rs$ 72,500,000 fo: two years), mmanagement fees
of US$725,000 (1% of
for hvo
loan amount) and commitment fees of JS$ [i70,0C0 ()ang 72,500,000-13,500,J00)*0.75o/o
years). Taxpayers also paiclfor \OFBI cperations and naintenance tc Telkom Kenya Ltd of Kshs.
20,261,964.00 per month from 2010 - 201L. Fcltcnruirg the privatisatic,n of Telkom Kenya Ltd he
Ministry entered into a - 5C,% profit shaing conrract on NOFBI's net profit received from dark
Sgo/c
at K.shs.
fibre revenue from 2011 to date. Telkom has however maintained the fixed O & charges
wl

20,261,964 to date.

Conclusions

The Ministry has not been able to improve universai access to information, communicatior
and
13
projecl has provided reasonable dark
telecommunrcation services in Kenya as expecled. The NOFBI
to end users. lcT services have
and lit Fiber charges to lsps but the benefits are yel b be lransferred
unavailability of connec{ivity
not been made as reliable as expected due tr: frequent downtimes crealing
by ISP who
to users. The current O & M provider has not done its work satisfactorly as ev'tdenced
prcvided based on poor terrns.
lease dar,k fiber and are all (except KENET) yet to sign the current SLA
by the low uptake
The NOFBI rnfrashucture has not been utilized to the lull catacity available as shown
in implementation and
by lSp's and government institutions. Phase ll of NoFBI project has delayed
laid their own fiber and might no:
major lsps who are anticipated to lease the tast mrle have already
penod the project will repay itself'
lease the fiber as projected by the Ministry This will extend the

Recommendations
recommendations that the
14. ln view of the findings of the audil, the AuditorGeneral has made seve'al
next phases of the NOFBI project is
Accounting Officer in the lviolcT could take tc ensure tt^at the
implemented in an econ omic,, eff,cient and effective malner.
Tre recommendations call for more
activities of NOFBI
assertive actions and a dedicated office to maraga the opaational
Page xiii
OA.G - K
 Cr,rpt*r 1

Background to the Audit

lntroduc tion

1.01 This report examines the implementation of the National Optic Fiber Backbone lnfrastructure
(NOFBl) project. The Office of the Auditor-General conducted the audit as provided for under Section
29 of the Public Audit Act, 2003 and has prepared the report for tabling in Parliament in accordance
under Article 229(7) of the Constitution. The National Optic Fiber Backbone lnfrastructure (NOFBI) is
implemented by the lVlinistry of lnformation and Communications who has the mandate of general
oversight of the communications sector in Kenya.

Backgrti"ind cf the lrlatisr',ai Ortic Frber Backbone infrastructure project

1'02 As stated in the Govemment Cabinet tt/emo on the establishment of the NOFBI prolect "Over 80% of Kenya's
population had no access to basic telecommunication services by 2007, due to the rural urban network
coverage imbalances as well as the high msts of the services that were unaffordable to most Kenyans, An
optic fiber cable was mnsidered the best economical solution to achieve tlre required national bandwidth. The
NOFBI project was to establish a national public broad band network with access points in every county in
order to attract and stimulate private sector participation in the provision of rural telecommunications
services.
The NOFBI p0ect was also to supplement existing telecommunication and other forms of infrastructures
such as roads, railways and power lines in national development." The operations of the NOFBI project were
entirely financed by the National Govemment with additionalfunding from two concessional loans from
China
totaling US$ 109.5 million; US$ 37 million in 2007 for phase l, and US$ 72.5 million in October
2012for
phase ll.

1.03 NOFBI phase I was implemented between 2007 and 2009 and involved the establishment of a national
telecommunication back bone network using fiber optics cable traversing 5000 Kms within
road reserves
along major roads/highways in Central, Westem, Coast and Northem Eastem regions
of Kenya. At the time
of audit (in 2014), NOFBI phase ll was still ongoing and entailed adding 2'100 Kms fiber to further
improve the backbone's coverage ,reliability, provide wider bandwidth and expand - government.
e

OAG-K
Page 1
 Votiration for the A

1.04 Tlre A.rditol General authorized :he audit after ha'r;rrg ;r:r sidered that:

' The benefits of broadbanrj inr:'ude increast"d t,rtc''ke'productivity' iob creatior' efficiencies ir
the disrrillution of goods, seruices and i'fcrrnaton and reduction in the challenges of lovt'
popula:icn density anc physical remctenes's ftcn' cites.
' Success;ul implementalion oi the NC)FBt project has ihe potertialto tngease the Kenya's GDP
by uP to r 0%.
, By 2014 the Governrnent l"ad allocatec the l\4inistry cver 135 nrillion LJS$ for the NOFBI
prglect yet expected berefits had not tric <kid dorvn to the ordinary Kenvans. Cost of intemet in
Kenya was still high, only a few Kenyans coukl afforcl access to good quality oroadband network and
mcrsr Kenyans still lackecJ access to basic teEccnrrnttnicatpn services.

1.0S Ar audit 0n1he irnplementation r:f the NC)F3l pnllect rrould provide valuable information kl
parliamenl, ihe Executive, its managers and slake holcle.s anl offer recommendatiors to improve its
nanagemert so that its objectives may be atta ned and :axpayers receive the rig^t value for thr:
roney invested in the Project.

Page 2
OAG_K
 Cha pter 2

Design Of The Audit

0f,;ei:'lrv8 ct lhr A;,,J,1

2.01 The objective of the audit was to assess whether the lVinistry of lnformation, Communication and
Technoiogy (lMolCT) had implemented the National Optic Fiber Backbone lnfrastructure (NOFBl)
project with due care so as to enhance provision of communication services in the country and
ensure that:
i. Universal access to ICT services in Kenya was improved,
ii. lnternet charges were lowered;
iii. ICT services were made more reliable;
iv. The national backbone infrastructure was fully utilized to the full capacity provided; and
v. The project was implemented within projected costs and monitored as intended.

Audit questions
2.02 The audit sought to answer the following questions in order to achieve the above audit objective:
i. Has the Ministry of lnformation and Communication (lVlolCT) improved universal access to
information and communication services through the NOFBI project?
ii. Has the NOFBI project lowered the cost of deploying and operating broadband networks?
iii. Has the tt/olCT provided reliable ICT services through implementation of NOFBI protect?
iv. Was the NOFBI infrastructure utilized to the full capacity provided?
v. Was the NOFBT prolect implemented within pro1ected costs?
vi. Has the lvolCT effectively monitored the operations of the NOFBI project?

Scope of the Audit

2.03 The audit focused on the implementation of the NOFBI prolect by the MolCT, between 2007
and
2014.The audit examined the implementation of the NOFBI projects in eight counties (Kisumu,
Busia, Eldoret, Embu, Malindi, ft/ombasa, fvlachakos and Kajiado) where NOFBI phase had t
been completed and phase 2 when surveying started. tr/ost of internet data available are national
thus in some instance we were not able to assign causes attributable to NOFBI project alone.

OAG_K Page 3
2.0,4 \fve ex[ected the lVlolCT tcr have implenrentx the, {OFlil project as, outline,d in tieir strategic;
planninJ; anC contract documernts Therelrrre 1l^e per,ormance of the tiloC:T was assessec
lela: on to hotttr:
i Universal access to ICT services ir l(env';t lvas improted relative 1o the nurnber of
counties and government irstituticns ,vith NCFBI ;nternet ccnnectivity;
ii lnlernet charges rruere 'ov'vereci as c;omp,ared to the UN Broadbard Commrssion
benchmark on entry lervel broadband;
iii tCT services were rnade nore rel,abl: ir lo the ertentof d'rwn tirnes, speed and
rerlertion

consistency of internet cornections tl"c,ugh ire \OFBI infrastructure;

iv. The capacity provided in tre NOFBI rfrastrr-cture was uti'ized against the Kilometers of
dark and lit NOFBI cables; and
v. The lrlOFBl project was implemented as con'rastei to prolect rmp emerntation periods and
costs and monitoring terms outlined t i' the l/nlCT.

Detailed assessment criteria applied in the auci 1 srs highlighted in the find,rrgs under Chapter 4

Methods Used To Gather Audit Evidence

205 'We conducted the study in accordance with iniernational Standards of Supreme Audit lnstitutions
(lSSAl's) and audit policies and proceddr€ri €Stab ished by the Office of the Auditor General
ICAG) To understand the structure, laws and re3ulations of National Optic Fiber backbone
infrastructure (NOFBI) project, we reviewed t,{olCT strategic plan 2008 -21.012, cabinet paperon
establishment of the NOFBI project, the Keryan Cc'nstitution of 2010, Kenya's ICT Policy 2006,
Kenya National 2017 Master ICT Plan, the Draft National Broadband Strategy for Kenya 2013,
NOFBI phase ll concept note and master plan anc metro optical fiber cable analyses, Kenyas
Vision 2030 and Kenya's ICT Act, 2009 and:he JN broad band Comrnission. To gain a deeper
understanding of operationrs, activities ar',C chalenges of the NOFBI project the audit team
visited sampled regions and physically observed held various discussions and interviews
wtth staff in the MolCT, ICT Authority, Telkom and lnternet Service Providers and
revievred NOFBI network performance and management reports. The findings were
reported after comparing observations and analysis mace against the audit crheria agreed with
the auditee.

Page 4
OAG-K
 Qhapter 3

Description Of The Audit Area

. er;ai ?rlr,vitrr* +t, l\? \CrBi l'.:,eit
3.0'l ln addition to Kenya's Constitution
of 2010, other legislations and regulations, the Government has put
in place National ICT Policies and 2009 legal framework to support the ICT sector The National Optic
Fiber backbone infrastructure (NOFBI) prolect is in line wrth Kenya's 2013 National ICT policy,s
recommended solutions of expanding the fibre optic network to cover hospitals, schools, and police
stations, progressively roll out free Wl-Fl in major towns within five years from 2013 and create
incubation hubs for ICT start-ups in each county. However, as stated in Kenya's 2013 National Broad
Band Strategy, "Broadband is not yet adequately addressed within Kenya's current national policy,
legal and regulatory framework. ICT policies with respect to energy and roads are not yet harmonized.
ln addition, there is also no clear legislative provision on public sector participation in relation to
broadband infrastructure or services. This has inhibited the effective and efficient deployment
and
utilization of services delivered and assessed through broadband as required by the Kenya,s
Constitution of 2010;'

Roles and Responsibilities of key players in the NOFBI project

3'02The NOFBI protect is implemented under the tt/inistry of lnformation and Communications (MOICT).
The mandate of the lVolCT as derived from Presidential Circular No. 1]2OOT of January
2007 and the
ICT Act, 2009 includes formulating and implementing public policy in ICT
sector including information,
broadcasting, communications and film development policies. one of the key functions
of the MolcT as
derived from Executive Order No. 2/2013 of May 2013 is fibre optics infrastructure
development and
management. The MoICT is also responsible for the dissemination
of public information, development
of national communication capacity and provision of public relation services.

3.03The MoICT has given the following roles and responsibilities to key players
in the NOFBI prolect:

a) Telkom Kenya Ltd (TKL) : ln 2008, TKL was contracted to provide pro1ect management services
during implementation of NOFBI phase l. TKL's terms of reference
as NOFBI's project
management team was to provide technical, administrative and legal services
of the projects
during implementation and commissioning, monitor and manage the
execution of the contract to
ensure compliance to plan of works as provided for in the contracts,
ensure that the contract rights
and obligations of parties are met as well as manage disputes
arising out of the NOFBI contiact,
supervise the implementation of the construction contracts and
oversee the smooth handing over
of the prolect as appropriate. ln tvlarch 2o1o after completion, of
NoFBI phase l, TKL was further
appointed as NOFBI's commercialization,operation and maintenance
(O&tt/) provider.

OAG-K
Page 5
 ifre ICT Aulhority, a seni-autorcmous gc)\r:rrrn€rr irg€frcy unoer the l/l:l0T Th': ICT Authoriy
v,as estabiishecl in N4ay 2r.)13, through r, L-egitl hlol,ce under the State Corp:lrafons Act, Cap'tr46
to; deveiop and positioir t(enya as the p"e'erred ilT destination in Afnca, cerelcp and
pronrote

compi;ttrre ICT industries in Kenya, der,elo: world clas.. Kenyar lC-1" institutions, itcrease access
and ul;lrzation for lCT, promote tne e-gover^nent services and rc, I out digital go\err mert initiative.

c) , 7*..rr, i:rf (:s A.:' . '" r ',F" yp Ttt: f-rnclions rf the 611[6rritV as regards to the NOFBI
proiec;t is to ensure oplirnal mai:agement or frequ+ncy spectrurn and numliering and addressing
resources, the achievement of universa' ac,.;ess 1o ICT services, the development and formulation
.f adequate standards lor tl're lCf sector in :he country, protect the righ:s o{ users cf ICT services,
prom,,-te development cf ICT systems arrc servrces in accordance wilh recognized internatior,al

stancards, practices and public demanCs. 'urther the advancement of tecltnologv retating
to t\e
ICT sector and contribute t0 overall Goverrrrent c,bjectves towards human, social and econon:ic
tjeve opment tl.rrough facilitarting universal acoess and use of lcT.

Objectives of the NOFBI Project

provision of communication
3.04 NOFBI'S main objective is to provide broadbanrJ connectivity to enhance
seruices to spur the growth of lnformation Ccmmunicaton and Technology (lCT) and Business
process Outsourcing (BpO) and improve universa! access to ICT throughout the country The NoFBI
project is also supposed to supplement exrsting telecommunication and other forms of infrastructures
project's specific objectives are
such as roads, railways and power lines in national development. The
to develop a robust ICT backbone infrastructure ihat:

i. Connects all districts and majot towns in Kenya with a bandwidth,

ii. Provides bandwidth to leaming and social institutions;
iii, Opens up r.ural areas by providnrg alternatNe investmenl opportunities through
the use

of information and communication technology; and

iv Facilitates the establishment o1 :ounty data and information centers.

The NOFBI Project lmplementation Process

phases
3.05The NOFBI project is being implemented in tv'ro

lmplementation of NoFBI phase l: invo'rred the establishment of a

national telecommunication
a)
road reserves along major
bac* bone network using fiber optics cab e trave'sing 5000 Kms within
regions cf Kenya' ln January
roads/trighways in Central, Western, Coast and Northern Eastern
phase I to three contractors: tvl/S Huawei
20C7 the Government awardeC construc:ion ol l'lOFBl
.egiorr, M/S Sagem for nineteen sites in coast and North
Technologies for eighteen sites in Central

Page 6
OAG_K
 Eastern re5.trions ZTEfor nineteen sites in Western region as depicted in r..ppenciix i to 4.
and tVl/S
The contractors were to deliver the cables and pipes, do civil works to prepare the way to lay down
the pipes, splice and connect the optical fiber cables, deliver the transmission equipment, install,
commission and test the equipment including for the network plus cables end to end and the
network management technical teams to handle the project maintenance and operation where
required. NOFBI Phase I was to be completed by 2009.

b) :*tr'^'F.'.::.'..f \i-F!: ir6gs involvedextendingtheNOFB| prolectwith2100kmfiberand

further improving the national backbone's coverage and reliability. Construction of NOFBI phase lt
was initially to begin in January 2010 and be completed by December 2010. Construction of phase
ll was awarded to ti//S Huaweion 7 July 2010. After completion of NOFBI phase ll, Kenya was to have
a more reliable, stable and efficient national backbone network that is used by the Government at
the National and County levels and also be available for use by private operators for the delivery of
connectivity services. lnitial N0FBI phase ll contract signed in July 2010 was for:

i. Expansion of Government Common Core Network (GCGN): By January 2010 the Government
Common Core Network (GCCN) covered government headquarters of twenty nine of the then
forty two lVlinistries in Nairobi. Through the expansion, all government agents were to be connected to
realize paperless offices. Expansion of the GCCN was to include the construction of core routing &
switching in the counties
ii. Core Routing & Switching: Core Routing & Switching were to be done at the defunct eight provincial
headquarters in Embu, Garissa, Kakamega, Kisumu, Mombasa, Nairobi, Nakuru, Nyerito form the core
sites for the Government information network
iii 35 Points of Presence (PoPs) in counties. The following thirty five counties were to function as point
of presences in counties; Busia, Kericho, Kisii, Kisumu, lMachakos, tvlalindi, Meru, Turkana, Uasin
Gishu, Kiambu, Kirinyaga, Muranga, Nyandarua, Kilifi, Kwale, Lamu, Taita, Tana River, lsiolo, Kitui,
Marsabit lt/andera, Wajir, Siaya, South Nyanza, Baringo, Marakwet, Kajiado, Laikipia, Nandi, Narok,
Sarnburu, Trans Nzoia, West Pokot and Bungoma.
iv Completion of the National Optical Fiber lnfrastructure: Phase ll's scheduled expansion
was to add
NOFBI links to the current transmission network to constitute ring-protection for telecommunication
services and establish connections to main counties. Some of the counties not connected
were to be
covered during this phase.
V, Consolidation and migration of Current Governrnent Applications to the Government
Data
Centre (GDC): The applications to be immigrated included the lntegrated Financial Management
lnformation System (lFMlS), lntegrated Personnel and Payroll Database (lPpD)
to either a new system
or the existing one.

3'06NOFB| phase ll prolect works were suspended since the MoICT requested for project
changes due to
reorganization and restructuring of the Government following the enactment
of the Kenya,s
Constitution. To avoid variations in the original total contract amount, the
alterations resulted to
variations to sorne of the above original NOFBI project works. Construction
of NOFBI phase ll had not
yet commenced at the time of the audit in November 2014.

OAG-K
Page 7
 \CF Bt Staxehc tders

3.07The llOFE,l prcject is an important lrvestment w ll^ nultr.seotorialstakehclders as showrt below:

L.
Mrnr.l.n ( )l l)rrrrltrli{,1 lloelopmcn( ?rrtntrs i
irrttl l'lirttnitrr
Public \ I

- ti
L .,l

tl
I'rrrlirrnrnl l

NOFBI ,,i

tt

ii
\ltiornl li'casar'1 Prir ate
SECTOR

lndus{t1 Regulators
I
I

Source: MOIC st-ategic Plan

Budget and funding of the NOFBI project activities

3.0gNOFBl project operations were financed by the National Government as follows.

prolect cost
a) NOFBI phase One funding: lnitial feasibility studies and project survey for the NOFBI
the taxpayers Kshs.6,550,000.00 and Kshs 199.854.806,70 respectively. ln addition a
prolect
The
management fee of Kshs.150 million was paid to Telekom Kenya Ltd during impbmentation,
entailing
financing of NOFBI phase I contracts were in three components The first two components
37 million from
Huawei and ZTE contractors were funded throu3h a concessional loan of US$
with GoK input of US$ 26'3
China and the third component, Sagem &:ntractor was complinented
million givrng a total ol us$ 63.3 million as tabulated below:

Page B
OA3-K
 I

able 1; supplier contract, impiementation schedule and Related ccsts

Scope cl Contract SUM

Contract Regior Currency Contracl sum sctredf/e
work (kshs)
ZTE 1342 Kms Anrir{,i2008
Western
CONTRACT
Region.
with us$ 18,757,788.54 1 ,500,623,C83.20 until p April
19 sites 200e /l
HW 1112 Kms lanu{fy zs
Central 200s
CONTRACT with US$ 17,746,933.00 1 ,419,754,640.00 ifntir
Region, 'l'lFeflruary
18 sites
200e/ 1

Coast &
SAGEM 1750 Kms Euros 14.853,569.96 ,515,064,1 35.92
North
1
.frn/,Fry zooa
CONTRAC-
Eastern
with 19 untif I
l
April
sites Kshs 442.789.359.99 442,789,359.99
Region 2ooil
I Total amount paid to Contractors (kshs) 4,878,231,219.11
Source: Ministry of lnformation and Communications Records
lExchance Ra'e Kshs 8C=1 uSS arrl Xshs { i2=,1 Euro)

b) l'iCFBl Fhase Two lur;d,',q' The Government entered into another concessional loan
agreement
with the Export - lmport Bank of China on 8 October 2012 to fund NOFBI phase lt for US$ 72.5
million. The loan had a maturity period of 240 months from the date the loan agreement
became
effective, a grace period of 84 months and a repayment period of 156 months. ln addition
to the
l
loan repayment, the loan cost Kenyan taxpayers an interest at a rate of 2% per annum,
management fees of 1% of the loan and a commitment fee of 0,75% per annum payable
ill semiannually on undrawn and uncanceled loan balance which accrued on a daily balance.
ll

ii
I

OAG-K
Page 9

il
 i: hapter 4

Findings of the Audit

Ac,aritagFS irf lhe \CFBI r':,elt
4,01 The NOFB'project provides a rearJy platfonn frr rrnradcas.ing infoma:ion tr: l(envans and ultimately
prorrotes natiorar political, economic and crrltural cohesicn its interoperabe lri"oacrbard network also has
potential to s.tpport security agencies tc respond faster to :mergencies and natural disasters to rrotect tre
public urithin Kenya and the region. The lower cosl rf corrnunication th:ough a rrational broadband furtl",er
attracts investnerts and soiutions to the conslaints of healthcare delivery systems in rural and
ma:ginalizect areas through e-healtr applicat or';s irr addition to prcmotlng b'lsiness
processes
quahty education
outsourcing, investment competitiveness, distance learning cpportunities and lower cost
as well as irclusion in society for peop,e living witl Jisabilities over the irternet.

NOFBI project achievements

in lCT. By
4.OZ Connection of major towns through the NOFBi is amcng Kenya's remarkable achievements
selected regions
200g, the MolcT rrad laid 4415 Knns of NoFBI inf'astruct,rre covering major towns within
(1342 Kms in the Western Region, 1961 Kms in (loast & North Eastem Region and 1112 Kms Central
in

Region) as shown in Appendices 1 - 4. This was over 88% of the 5000 Kms of
NOFBI infrastructure
plan by 2012.
strateEized that the MoICT had set out to achieve in their strategic

4.03 Kenya's intemet penetration level also rose rrom abcut 10% in 2009 to over 47o/oby 2013. Kenya's
Commission advocacy
internet penetr-ation level by 2013 was in line witr the United Nation's Broadband
target of 40 pople for every 100 target. The larget had been achieved through
the NOFBI prolect and
penetration for wireless internet access
other backbone infrastructures in the country. Kerya's broadband
also increased from 2.4o/oinZ0l2to 3.3
o/o
in 2013. ln addition, the country's tolal broadband (fixed and
providing quality broadband
wireless) in line with Kenya 2013 national broad band's overall objective of
in figure 3 below.
services to allcitizens, further rose from 2,5o/oin 2012 to 3.4o/oby 2013 as depicted
1: Penetration trend

Key ICT lndicators

30 rf Inlgmsl subscribers

mlllion 20
Persons 10 {EEsl mated irternet users
0 -=+
2009 2010 201'
-r Toul fixed and wireless
Year orcadband suDscriPtions

Sarrce: OAG analYsis of ItlOlC data

Page 1 J
OAG-K
4.04 ln spite of the ahove achievements, the audit found that the NOFBI
project's aim of providing broadband
connectivity to enhance provision of communication services in the country, was inhibited since:
a) There was still inadequate access to ICT services in Kenya through the NOFBI project;
b) NOFBI services were unreliable;
c) The cost of internet services was still high;
d) NoFBI se'vices were not utilized to the full capacity provided;
e) The NOFBI prolect was not effectively monitored resulting to variations and delays; ancJ
0 The NOFEII project was not implemented within pgected costs.

lnadequate access to lcr services through the NoFBI project

4.05The MoICT desire was to improve universal access to ICT services to all regions in Kenya
through the
NOFBI prolect. Preliminary activities of the NOFBI prolect such as tender preparation, evaluation,
route
surveys and negotiations were undertaken by the tt/olCT in liaison with technical staff from Telkom
Kenya
(TKL). However, as acknowledged by the Communications Authority of Kenya, the penetration
level was
still low compared to the average African penetration rate of 7.4 per cent (CCK) despite the growth
in the
total broadband subscriptions per person. The presence and availability of the NOFBI prolect
had yet not
covered a large part of Kenya as depicted in figure 2 below:

Figure 2: Access cf NOFBT in Kenya

.lF i)
t'
li. r rtt I

L 9a .l I !r s

tt l:
Mrllr or

?
ll .r l.l

I
t'
( lrrt>.llc car tt-r
ra I
Source -
Communications Authority of Kenya (cAK)
Key: Red lines reflect optic fiber cable . OFC (New)of NOFBT phase
2 white pink tines indi6ate OFC (Existing) of
NOFBI Phase 1.

-K Page 11
4 i
{:X; \Lclt ins:e:ticns, documerrtilrv review o1 NC:[3, [)nlects anrl viiriot,$ inlerrierrs r;onducted with
Telko:n i(enra Ltd regioral managers, technicai (::i,i;Qrg t.f tl'e NOFBI orojecls;, dir;tric a(;countants, ICT
universrty he ads ard internet servir:e pri'ovider. l[]:' eng neers in the regions revealed lhat the NOFBI
projecl's banr:vr cth, presence anri availability acms: was s'iti iredequate as Jetaileo belcw

ai ,- ;r"F ' I 1"e rr, ,F -"' r. I rr"., ,"'rr :' r!,;: F,.: t .4-:S r.lt-,, t',' The aUCiit
fourd that the NOFBI ,:overaqe even \':lrn the fcu- (Central, Western, Coast and Northern
Easterrl lontrasted regions in Kenya \r/ttere NIFBI phase, had beer conslructe0 still had
inacequa,e coverage For insiance, viitrin Certral and North Eastern Region the extent cf
coverege of the NOFBI projec: was only .1396 krr yet the lanc regron is almcst 279,506 sq. km
covering sixteen counties. ln trre Westerr reglon the t'lOFBl project coverage was 1342 km
y'et
's
the lar d region is close to 131 ,582 sq. krn n tl e Ccastal regior: NCFB la st mile connectivity cid
not exist and many governmert offices rr,ere nc). ccnrected lc the lrlCtF[]l irfrastructtrre. There
was also no NOFBI infrastructure betwee', rnajor tovrrs like lt/azeras, Voi and lvlombasa' NOFBI
corneclivity between lVlilhoi Lamu is lia a mr:rr}vave link rvhich supports orrly Synchronous
-
standard
Transfer 1vlodule level 1 (STM-1) as a n ,*:itlunr. STVI-1 is a fibre optic transmission
equrivalent to 155.52Mir/s thus other inte'ret service providers cannot lease
NOFBI fiber in this

secjon. NOFBlfiber nodes available within the Coastal region were nol urtive'satr since theirfiber
terrnir"ated only in the t6wns and were no. arrywhare rrvithin the regrons lt traversed.

b) lacx ol NOFBI internet connectivity within some regions following privatization ol Telhom
Kenya. At the time of the audit inspectron in June 2014, the audit found that ttrere was no NOFBI
infrastructure between Voi, lr/azeras and Mcrnbasa. The region was conne(:ted to internet services
provided by the Telkom Fiber, owned by l-elkom Kenya Ltd as a private entity. Other lnternet
service providers (lSps) cannot lease fibtr in the seclion because the existing
link is owned by
the
Telkom Kenya following its privatization. Tre a.rdi. also found that the NOFBI link connecting
Weslern region to the rest of the country (betw:en \Vebuye - Eldoret * Nakuru -
Longonot -

Nairobi) and the Kitale Lo<ichar link were rurely on the Telkom Orange link, which limited
-
leveraging their
NOFBI uprake in the region. ISP's intervievred stated that they were uncomfortable
traffic back to Nairobi purely on the private Telkom Orar,ge link since it was expensive.

found lhat
c) The NOFBI infrastructure in some regions was purely a backbone link. The audk
regions, to link
the NOFBI prolect had no inroads, in tre \Uestern, Central and North Eastem
presence'
internet accessibility to councils and towns from their points of

(redundant link)'
d) The N9FBI infrastructure was found not to have any protection circuit
There was no protection circuit to leve.age on incase of disruption
of the services in the main
'eroute internet traffic
cicuit to ensure uninterrupted access A redunoant link is a backup used to
des,gn in NoFBI phase
wnen the main link fails or is damaged. T'his was because the structural
I

and redundan'3y c
was linear rather than ring network wni:h limited NCIFBI internet accessibility
tl^e regi,cns.
Page 12
OAG-K
 NOFBI servl(es were unrelianle

4.07 As stated in the [/olCT's strategic plans and the NOFBI project documents, NOFBI was expected to
bring reliable power'rf high speed, high bandwidth connectivity to Kenya. The audit assessed reliability of
NOFBI services provided against recommendations set by ITU Telecommunication Standardization sector
(ITU-T) - a division of lnternational Telecommunication Union (lTU) and a specialized agency of the United
Nations whose primary function is to ensure efficient and timely production of standards covering all fields
of Telecommunicatic,n on a worldwide basis, as well as defining tariffs and accounting principles for
international telecommunication services. These standards are referred to as recommendations. The audit
noted that the tt/olCT did not put ITU recommendations in place during the implementation and operations
of the NOFBI prolect :

' ITU-T Recommendation tt/.15 sets general maintenance considerations for new systems to
ensure that they are implemented so as to permit compatible international operation and
maintenance in the most effective manner, to reduce total (lifetime) costs and to improve the
efficiency of maintenance.
' ITU-T Recommendation |V.3341 and l\4. 3342 define the basic requlrements for quality of services
or service level agreements (QoS/SLA) management. Service Level Agreements (SLAs) are
considered an effective way of solving the problems of QoS guarantee between Service
Customers and Service Providers and these recommendations provide instructional explanations
about service level, quality of service, priorities and duties in the SLA content. The goal of the SLA
is to create a healthy relationship between the Service Provider and the Service Customer, and to
protect the legal rights of both the Service Provider and the Service Customer.

4.08 The management contract between the tt/olCT and Telkom Kenya Ltd states that "Telkom
shall
perform the services in accordance with generally accepted professional
techniques and practices ',.
However the audit found that the activities and operations of the NOFBI project
at times did not meet the
above ITU-T recommendations which resulted to NOFBI services being unreliable :

a) Telkom Kenya Ltd took long to

restore destroyed NOFBI links. As stated by ITU-T
Recommendation T.3342, SLAs are an effective way of solving the problems
of eoS guarantee
between service customers and service providers to ensure telecommunications
are managed
effectively. However the audit found that even though Telkom Kenya Ltd. As
the tvlolCT's appoinled
operation and maintenance managers of the NOFBI prolect had achieved
the SLA's they had with
the NOFBI clients, they took a long time to reach the destroyed sites which
extended the overall
resolution time which made NoFBI services unreliable. NoFBI customers,
who include the
Government of Kenya (GOK), Safaricom, KENET and Orange among
others, use the NOFBI
infrastructure as a critical component in their nature of business. According
to NOFBI customers
interviewed, they experienced extended downtimes owing to the
long response times taken by
Telkom Kenya Ltd. to restore NOFBI links in the event of a cable
cut or damage.

OAG-K
Page 13
 Telliom Kenya LtC (rKL)'s S-L ',nri.h NCFIt custcme s \'uils to ensure .hey repair
'e,view of NO:Bl
destroyed NOF|3l links witiirr ei::'rl rou's up0n arrival c,r srtr).,\u:it
and rraintenance )er[o''ran]e
'eplrts between 20'12 and 2014 revealed tha'on
operation
average Tell<orr K.enya Ltd. took alrrrcst sevel hours to repair the link r:nce on site, this
was within the agreed service le',el tirie. Hctvever the audit nok# trat, due to the bng
geographical distances on average TKL :oo< approxinater! fl fle ltours t,l mobilize staff to
destroyed NOFBI infrastruc'ture sii'ies
rhus NOFBI clierts rad to wait an average of
sixteen hours fcr Telkom Kenya -td to repdr a destrcyed NOFBI lirk. l-ime taken to site
(TTS) was found to be almost 56% o: the total time taken to replir a fault on the NCFBI
link (outage time) as tabulated Lierow:

labteZ traull resolution times

rime To Site ITTS Time ro Repa c Ourage
10 E
11
0 E
201 3 6
6 6 1 1.9
4
E
Average 663
i867
Source: NOFBI network performance reports

I According to irrterviews conducted with lSPs at times NOFBI links outages last up to 24
hours. The audrt reviewed an lSPs documenhtion on links leveraging on NOFBI from July
per month against
2013 to June 2014 and no6d an average d95.42% service availabiiity
ISP's service level agreement with their cuslomers which is up to 99'5%.

I NOFBI clients therefore lease backup links at additional costs which are eventually
pushed back to consumers. The audit roted that Telkom continued to deploy more repair
outage
teams across lhe country thus tirne taker to site improved over tirne and the overall
was gradually being reduced :

Fig ure 3: NOFBI fault resolution trends

NOFBI Fault Resolution Times

25
19.5
20
15 1

.t) '1.9
d 15 -{-TIME TO SITE ("ITS)
=
o a-TIME TO REPAR (ITR)
- 10 o
...-OUTAGE
6

0
1 t1'- 2014
2012
YEAR

Source: OAG-K analYsis of fXL drta

Page 14
OAG-K
 b) ' ' ITU-T Recommend ation 3441 states that lSp, who
has the prinrary contract with the service customer, has the responsibility to observe end to
end
quality of service of the entire network. Thus according to interviews conducted with
NOFBl,s
clients who are also in turn ISP revealed that any disruption of services to their customers was
unacceptable. Any downtime experienced was especially critical to them as network
operators.
However, NOFBI progress reports between July 2013 and June 2014 revealed that the
NoFBI links
often had arl average downtime of approximately 1.45 hours per day as depicted below which
made their internet service delivery unreliable.

Figure 4; NOFBI availability trends in 201312014 fiscal year

2A13114 NOFBI availabiliry trend

00
,= 95
E
g
'a
85
s
80
Jul-13 Aug-13 sep-i3 o*13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Mayf4 un-la
Month

-Availability% -average
Sour<'e: ()4,G-X anal.rsir ot \OI.Bl
Jrro.iect data

I
The causes of NOFBI faults between 2013 and 2014 as reported by Telkom
Kenya Ltd.
were due to sabotage, normal faults, damage by road contractors,
force majeure and theft
of NOFBI cables' As depicted below, faults by saboteurs (3100 and
road contractors (36%)
account for 670/o of all NoFBI infrastructure faults over period
the in consideration. No
proper education of the locals was carried out in
NOFBI sites to educate the public about
the importance of the NOFBI infrastructure in order to instil a
social sense of responsibility.
Also, there were no controls put in place to ensure that Kenya
National Highway Authority
(KeNHA) provided accurate data to NOFBI contractors
on the road or for road contractors
on their side to take due responsibility. The motive behind saboteurs
was mainly attributed
to disenfranchised employees (sacked former labourers) and economic
saboteurs due to
imperfect market competition/business rivals.

OAG-K
Page 15
 a

t.

Force l,4ajure, 7 7770

Thp,fi:, 1 55%

enls

c) \cFBI experience,J rre,.:".e'i sprt(. r i Y\h l '' JeE'aoed the 'q...jairfy ';f ssrrl:'es ' t{€"t'': As
any splices. Over :he
inltialy designed the optical cables had a ctearaflce r)f about 6 Kns witho.rt
repairs and
years the NOFBI cables have been :ui1 several times during constructions,
mairrtenance. The NoF:Bl cable cuts degraJe the
quality of services oflered and the fiore
transmrssions link in acldition to loss of intemet traff c. Repairing
and restoring the cable cuts
(Splicing), Transmissron Engineers of
invo,lve mounting of two optical fiber end faces together
links that are restored following
NOFBI clients interviewed complained heavily ol degradation in
cable cuts, do poor splicing
cuts, A,t times, teams sent by Telkom Kenya Ltd to restore damaged
equipment that are costly As
end ng in distortron of signals that require high end eror correcting
pointed out by N9FBI's Technical Managers too many splices within the NOFBI
infrastructure

reduce the overall lifetime of optical fibre cab e, which is estimated

lo be about 20yrs, and
This definitely piaces a heavy burden
eventually leads to the link optic cable ha'iing :o be replaced.
fibre cable and repair the links' The
to the tax payer since it is very expensive to replace fre optical
regions visited during the audit due
audit found that NoFBI services had been degradec in all the
to the numerous cuts:
r [5 stated by the Telkom Kenya Ltd. engine?rs, every NOFBI cable cut leads to two joints
to
lt is however not recommended
requiring between 50 to 100 meters of rep,lacemert cable.
make two joints of 1 metre apart as this creates reflections
that bum the card and affect servrces'
cut many times which has led to too
I\OFBI connection between Mombasa and lvlalndi has been
cable losses. At the time of audit there
many cable joints (even up to every 10 metres) and many
degraded the NOFBI services offered
were up to 20 joints/cuts in :he same length wirich heavily
in the Coastal region,
. Kangundo - Thika - Nairobi NOFBI
There was no redundancy link on the l.lairobi - Machakos -
network. The Machakos - Kangundo route which would
act as a backup link could not suppotl

t.raffic due to too many sPlices.

reverage on NOFBI through KENET such as
a ICT ofiicers in sampled lea"ning institutions u'hich
and Pwani University explained that
llachakos University, Teclnical Universitv of tvlombasa
Page '6
oAG --l(
 reliable internet services are liey for the institutions since core services which have been rolled
out to onlir,e platform are always compromised, due to NOFBI cuts and down times. This hinders
service delivery by the universities who are then forced to spend resources on paper
communication. The downtimes also affect learning and research activities for their students and
cause trouble with the administration, At some point, some students issued a stril<e notice due to
a persistent internet outage.

d) \'.;a :,,. r'i "'.er r \e.. t F, F.i .,r'. AS fepOfted by NOFBI

operations and maintenance teams, NOFBI had poor quality termination. Some connection
standards used in the NOFBI Optical Distribution Frame (ODF) left the system susceptible to
losses. NOFBI's current optical distribution framework utilizes the screw type of Ferrule
Connectors, which cause a lot of reflections due to misalignment of screw joints within the optical
cable, ln practice, Ferrule Connectors suffers more losses as compared to Standard Connectors.
The Ferrule Connectors type of Optical Distribution Frame contributed to almost 30% of NOFBI link
causing weal: unreliable internet signals.

e) Frequenl *r'ava,;af,.r;t.v i,l \0F8, rt

rrnr"eliable AS stated in ITUT_T
serurces i"iaoe
Recommendation 3341, in an e-commerce environment, customers require guarantees of
continuous quality of services offered since emphasis on real time is deliberate. Kenya's 2013
National Broadband Strategy defines quality broadband services as connectivity that is always
on
and that delivers a minimum of 5 li/bps to homes and businesses for high speed access. However
audit inspections and interviews conducted with Telkom Kenya Ltd. Technical l\lanagers,
Deputy
, County Commissioners, ISP Engineers, District Accountants, University Heads of ICT revealed
that
the network was at times unavailable making the quality of services offered unreliable due
to the
down times. The unreliability has forced some ISP's that use the NOFBI to invest heavily
on back up links
due to the sensitivity of services and type of clients they provide connectivity. NOFBI
unavailability was due
to:

' Frequent soil erosions and floods that left the NOFBI cables exposed and unavaitable.
Frequent floods were found especially in West Pokot and Turkana, Nairobi-
Narok link, along
-
Wajir Elwak link, lsiolo - eldera link, and Rhamu lvlandera links, where
- flash floods erode
the sub surfaces and the Kitale - Lokichar route along Nakabothan area which experiences
frequent mudslides.
' Vandalism. This was prevalent in West Pokot and Turkana areas while the residents
are
scouting for water from the fibre optic infrastructure, in the Machakos -
Kangundo route, as
residents look for copper wires, This has led to disruption in network supply
hence affecting
provision of services by affected organizations.
' Damage by road contractors. Found in the western region: along Kitale
- Lokichar, Kisumu
- Kakamega link, Kisii - Kisumu, Kisii - tt/igori and Kakamega Webuye,
- The situation was

OAG-K
Page 17
 ,/,/oise especially aronll K:i.sumu - Ka::a.nega lin'1, in the Certra'and North Eastern Regiln
,along lsiolo - IVoyale n:ute and witnir Sarissa tr:tur .

. 11CFB! Equipmeni rnalfur,ction jue i,l high iernperatures. T"is had affected the (sii -
f/igori link.
, Damage to optic cables from burroviing anirnals (rodents), \lost prevalent where there
are sugar plantatiqrs: for instance a:orrg (al:amega - Vleb.rye link (V/estern regior),
-egror':).
lrlyahururu - Nanyuki l;nk (Central

4.0g Accordrng to the lSp's intervieweC due o tlie unrel;abp services, cnly a few of NCFBI cuslomers
of
have leased its fibre or have conducted surveys :r'd intencj tc lease fron, the NOFBI project. Two out
five sampleC lsps are yet to sign NOFBI's servio: level ageements {SLA) and conract. The ISP's are
waiting untii tl^ey disouss and resolve on how tc.rmproie tre SLA from the current agreed levels. the
dissatisfaction on SLA terms by iSPs ieasing l,loFtl dark fiper on the curen: SLA with clrrent operations
and management (O&t\Itwas as tabulated beiow:

Tabte 3 SLA and contracts signed

Customer SOF (Service SLL Signed Contract Signed
I
Order Form)
Safaricon YeS Have been cliscussing on irw T(r- signed the cortract but is yet tc be signed by

to improve lne SLA trom he Sa'ari:om

current agreed levels I

JTL Yes No Nc

xrrurr J ves Yes Yc

Yes (N3. Ceased the service this year June afler

BCS/Iquip Yes Yes
fai ing b get customers on th: link)
Yes
TKL No

Source: Analysis of interviews conducted with N0FBI's interne{ service

providers customers

Cost of internet services in Kenya was still high

4.10 One of the expected benefits of NOFBI was ower cost of communication that can attract investment
NOFBI prolect,
particularly in rural areas. The audit however foun,J that despite the implementation of the
countries. Also though
Kenyans were still paying more for internet thri the rJN target for developing
,rsers is still very high and the Govemment
NOFBI pri:es are heavily subsidized, internet c;osts to end
as initially intended.
Treasury Offices at the Counties were still using nodems instead of NOFBI

Kenyans were sPending more to access internet than the recommended

uN target'
a)
in the MolcT's 2008 to
ln,plernentation of the NOF Bl project was a key performance indicator
and communtcation
2012 strategic plan's goal2, of provid ing Kenyans w th affordable information
measure affordability of internet.
services, The tiIolCT documents are hc,wever sirent on how tc
Unrted Nations (UN)
Thus the audit agreed with the lJol C-'s otrcials to use the common
Page 18
OAG-K
 broadband commission entry level broadband target which is five percent of the average monthly
income. Five percent of Kenya's average gross domestic product (GDP) per capita, from 200g to
2014 of $443.80 is $22.19 per year or $1.85 per month According to the 20'10 ICT survey by the
Communications Authority of Kenya, many spent an average of $8.57 per month or 230/o of the
per capita for internet services in 200912010.The UN broadband Commission report as at
September 2013 for developing countries has an average of 30.1% of monthly income being
spent on irrternet services. This indicates that Kenya's internet costs are way higher than the
international UN benchmartrs.

-able 4, 3[,rr Fer Caprta

Description Unit 2009 201A 2011 2412 2413
GDP Per Capita (constant) Kshs 36,962 38,345.5 38.9s6,0 39,620,5 40.345.2
Source: Xenya National Bureau of Statistics E conomic Survey 2014 at exchange rate as at 301612014: t$ = kshs. g7.53

b) last cf rferret to the pnc ,ser was sf ,i yery rrgh The audit analysed NOFBI charges for
both dark and lit fibre to assess the cost of its internet services. The audit found that NOFBI
prices are heavily subsidized especially for the commercial internet service providers (lSp)
operators. Review of Telkom Kenya Ltd, and ItIolCT documents revealed the rates charged for
the lease of dark NOFBI fibre to commercial internet service providers were:
' US $ 22.5 per Km for KENET (which is a non-profit organisation that provides internet
services to learning institutions)
' US $ 23.44 per Km for Telkom Kenya Ltd. and Safaricom (NOFBI's largest clients) and
' US $ 50 per Km for others
' NOFBI lit fibre is leased at a rate of US $ 433 per E1 link and US $ 9,000 per Synchronous
Transfer Module level 4, (STIM 4 link - a fibre optic transmission equivalent to 622Mbps)

4.11 I The audit experienced a limitation in obtaining data on prices charged by some
internet service
providers (lSP's) to end users leveraging on NOFBI. This is because the
lSp's are private business
enterprises. Of the ISP's interviewed, only KENET felt the price as being prohibitive
and would prefer a
subsidy on unit price of lease of NOFBI fibre pair per Kilo meter for services provided
to the research and
education sector in order to reduce the cost of internel access by the education
and research community
to promote research and innovation. As stated earlier NOFBI charges us 22.5 per
$ Km to KENET, who
in turn charge learning institutions as follows:

Coastal Region: According to the ICT officer of Technical University of lVombasa,

they lease a
dedicated 4Ombps connection from KENET whose prices are at almost half
the prices offered by
other commercial ISP providers. The University however was still
of the opinion that the internet
lease price per 1mb is US $480per quarter is expensive for the
institution and limits their capacity
to increase bandwidth to sufficient required levels. Pwani University is
supplied internet services

OAG_K
Page 19
 bv r,.Ehl:- at20 tVlbps harrdw,cth, Pwani -lriversty is :aying LS i75:'per [VlB perquarier ortte
tlC:B; lease anC also lras a b:ckup,nk'r'om S;fa.c(,m at ab:ul the sanre rate US $856.1'l trer
14B:ar qlarter. The urrrversitr was also r)rthe opnicn that the :cst cf irte-ret is still high and
shc,.ilC be revised downv,rards

r ..: , -. \ : .> !.;:slr'. ir :, Alcrlrding t:, tre ICT officer c:f lV;rchakos Univers ty, lhre
ins-i:uiion's current interrnet recuiremenl is !C lvlbps derending on lhe reeds which is still low lhe
urirersity pays JS $900 per Quarter"r) KE:t'lET for:he 1 lr/bps lin< tc ,everage on NOFBI l:rough
KE',lET. ln total the university cays internet costs of (shs 20,000.J0 :er megabit per month wh:ch
suls up to Kshs. 232p00 pe'year incl.Lsiue of value added:ax (VA'I). Howel'er thev consiCer
the ar,rount spent on inlernet, still to be toc expe nsive for the ns ituttc,n ard llmil their capacif to
pays quarterly
inc.ease bandwidth to sufficiert levels lVl=ru Uni',e,'sitl of Science and Technology
pal,ments of US $ 18,000 tc KENET The un'versily ICT cfficials poirrted that though this is
for
cheraper:han wnat otherr r:omrnercial interret seruice providers (lSP's) offer, it is still expensive
the rnstitution and limits their capacity to ircrease bandwidth to reluired levels.

, Western Region: tvlasinde Muliro Universily of Science and Techr,ology pays US $ 200 per \4B
per
link. According
morth which sums up to JS $ 96,000 per year inclu,;ive of VAT to leverage on the NOFBI
it is still expensive for the
to the tCT officer, though cheaper than what other comnercial ISP's ofter,
requirement is 30
institution and limits their capaciry to increase bandwidth to sufficient level. The current
mbps depending on university needs wl",ich is still lor'r. The university
pap $24000 per quarter to KENET
for the 4Ombps link.

c) Treasury offices in the counties were using modems: The audit found that Government
Treasury and
Drstrict Treasury Offices were still using rnodems (dongles) funded by the National
measure srnce
are not connected to NoFBl. The modems we'e given to treaslry as a stop-gap
Counties do not have last mile connectivity of NCFBI phase I
which was only a brckbone
infrastructure:

. Central and North Eastern Region: Kajiado and Embu, District Accountants explained
that The District Treasury of Kajiado Central is not connected to NOFBI and :hey
services
transmit their reports lo the Natronal Treasury in Nairobi by accessing internet
from the cyber cafes. The cost is net from budge:ary allocation by the National
This was
Treasury. The quarterly allocation is US $ 66.19 for internet connections'
insufficient according to the District Treasury officers.
. Vvestern Region: ln Busia and Kisunru the District Accounbnts expiained
that the District
reports to Nairobi by
Treasuries are not connected to NoFBI and they transmit their
budgetary allocation by the
accessing internel services frorn rnodems. The cost is mel fr':m
National Treasury. The quarterly allo,:a:ion is US $ 68,55 per officer for internet
is insufficient and expensive.
connections. This acmrding to the District Treasury Oflicers

Page 20
OAG-K
 NOFBI fas not neing utiiized to its fuil capa,-.rti-
4.12 The Governmertt's intention from the onset was that the NOFBI project was to be fully utilized to the
available capacity. -he Government was to use the NOFBI within its offices and lease out the remaining
capacity. Contrary to this, the audit found that the utilization level of NOFBI links was low ranging from 0%
to 58.33% across different regions where it traverses .

a) t vf -: 7i''-- rr "P \ rE ,^,ri '"

Phase lof the NOFBI was constructed using 24 core
cable (2 core cable forms one channel, totaling 12 channels). NOFBI's volume capacity therefore
available for use is 12 X 4415 Kms, amounting to a total volume of 52,g80 Kms. of this, 52,980
Kms the volume in use by June 2014,for leased dark fiber was only 7502.8 Kms, which is 14o/o of
the network volume available, leaving unutilized capacity of 86% still available. As graphically
shown below Safaricom who are NOFBI's leading ISP in terms of leased dark fiber, utilized a total
of 6% of the infrastructure countrywide followed by Telkom Kenya Ltd. at 5%.

Figure 5: graphical representation of NOFBI dark fiber

NOFBI DARK FIBER UTILIZATION

-felkonr Kenva
ic(rn
Sa,',ar
6% 5o/"

KENET
Tozo

,TI
7oh

BCS/rQU lP
)".4.
r
fffaricom
r
f{elkom renva
./f e*u''
.//,'
{ !cs7rourn
Jh,alraure

Avaiiable
467.

Source: OAG.K analysis of MOICT documents

I
only two internet service providers (lsP's) have leased the lit NoFBI capacity
for a total of thirty
nine E1s (E1 is a link that operates over two separate sets of wires, usually
Unshielded twisted
pair (balanced cable) or using coaxial (unbalanced cable)
and two Synchronous Transfer tt/odule
4 (STIt/4's) links countrywide. An E1 link has a capacity of 2.048 tr/bps
and an STtvl 4 tink has a
capacity of 622mbps,

OAG-K
Page 21
 I
I

b! \ i- -

l-i:enseC lnternet Senrrce P.clviCers rlSF's]in rlenvi: increasecl frcnr fifty tv'o in 2009 o cne
hur:rec and sixty nine rn ll01ii, of wh cir c,tt y five ISP's had lerrera(ted on l(Ortsl directly by 24" 4.
The five ISP's leveraging on the NOF3I r0l"eser^r.s a ntere 3% of tlre loial nurrbe'rof 169 ISF''s in
the country. t
C) .,'f I 't r r' .. .'..'r',t 2.-' . . '":"3 ( ''r-" ."' Thg i{O[:Bl !
l

pro.ecl, as stated in tite 20ii6 Cabiret l/emc,rand,rrr detailirg its i,rrmatior,,along with otler
corrmtrications networtt infrastructures ialready c0nS.ructed,r li:n/a !\ere to ensure optimlm
usege of the country'$ i.rternationai ba:rdwidth capacity available. Kenya's ervailable intenet
n
bardwidth capacity increasec by ove'r fily per :ert in 2013 corrpated :o a thirty two per cent
increase n 2012. This increase was :rttribrrtable :o i"creased unoersea ccrmmJnications capac;ity,
which rcse to 862,210 lVegab'ts per $€,corC (N/bps) 1un 574054 Mlrps in 20''2."he
ir', 2013 up
cor-ntry's satellite capacity hcwever de<;li'ted to 264 li/bps :er:ause it was used mainty as a
I

back.rp fcr the country's fiber netwcrll. l3y 20r3, only forty tw: percetrt of the country''s tctal
I

internarronal bandwidrh capacity avaiiatrle rras utlized as depicted belcw. The lovv utilizatior of the
bandwidth was attributed to slow aocptron of lechnclogies such as I'l0FB by organizations in

Kerya.

Figure 7: Kenya's international bandwidth utilization

tnl-r^.ta{il-l OIJn<rlrlrJt}r rrf ta.r-tto'1 2(,1 :}

Available
Bandvrri<Jt )r

-a
I

trtl ll scd Eancl wt c! t ir

ilOlCT
I

utilization charts
d) Low utilization of the NOFBI projects in counties. The NOFBI projects core i

of low utilization of
and physical verification documents also pointed to under-utilzdion. The trend
data communications
the NOFBI project was evident in the carrier hcuses (physical sites where
-.
media converge and are interconnectecll visited by the audit teams
in the counties ln all the
regions visited during the audit, the Telllom l.enya Ltd. technical managers
felt that he level of

awareness of the NOFBI prolect was low sirce the MoICT had
not conducted campaigns to
benefits of the NOFBI
enhance tl.re county govemments av/areless on the existence and
ba;kbone
Page22
OAG. K
 I " NOFBI has a 24 core capacity terminating in every node, of these, some are lit and
others are Cark. Users of NOFBI dar[< fibers were found to be Safaricom, KENET and Telkom
Kenya Ltd. while NOFBI lit capacity was often used by e-Government. Fibre has a very high
capacity anC a single pair lit even at 2.5 GBps can support an unlimited number of customers.
Audit inspections of NOFBI in addition to interviews with the Telkom Regional Heads and the
users of NOFBI dark fibre revealed that due to the low utilization of the NOFBI project the few
internet senrice providers (lSP's) that have leased NOFBI may not bring down internet charges as
market forces would dictate:

a
I : -,s I i e'; : '
The current connectivity for the lit NOFBI links within the Coastal regions are:
lt/ombasa to tValindi - STIV 16, lVlalindi - Garsen - lVilhoi - STIVI 4 and lVombasa Kwale
- -
Diani - STIV 4.The core utilization of these carrier houses, had an average of 17oh for the lit
capacity, 24.7o/o for dark and leased capacity, and 58.3% of dark and spare capacity which is
an indicative of the unused capacity.

a
Certrai and llorth Eastern Region: Though the link for lit capacity was available in these
regions, NOFBI terminated only in the carrier houses and had no last mile connectivity.
Therefore there are no customers for lit NOFBI fibre in most terminals. The audit noted that
the core utilization of the carrier houses (physical sites where NOFBI data communications
media converge and are interconnected.) was highly unutilized. The carrier houses in these
regions had 78o/o of dark and spare capacity with an average of only 3.33% for lit capacity,
and 18.33% for dark and leased capacity, NOFBI links in the carrier houses in these regions
were found in Athi-river - [Machakos, ft/achakos -
Kitui and Athi-river - Namanga. The
utilization levels by lSPs within these regions were also found to still be very low.
Uiilization
levels ranged from 8.33% in the Garissa Hola link to 50 o/0, being the highest,
-
Nanyuki, Nyeri- Murang'a and Meru - lsiolo links.
in Nyeri -

I
Western Region: At the time of audit only three lSPs were leveraging on
the NOFBI
structure (Safaricom, Telkom Orange, and Jamii Telkom). These three lSp's
had only leased
dark fibre that totals only 1B7km, yet NOFBI Phase I covered a total
of 623 km in the region.
The utilization levels in the western region carrier houses comprising Kisii,
Kakamega,
Kisumu, Mumias, webuye, Busia, Migori, lsibania and Kericho gave
a very low trend of
unutilized portion of 68% of dark fiber not leased and only 32% either
lit or dark that is leased,
The highest utilization by lSPs was found in the Kisumu Kisii link
- at Sg.3 % with the lowest
with 0% utilization rate in the Kisii- lsibania link.

I OAG-K
Page 23
 i.''-', "*''' '''2:" 't'-;'

4.,3 li over tnre, rhe procee::s rece',ea f'om the NCFB Sroiec: being an ircorte
v,ras expected that
generating project, would be used in paytng for ciperatini ernd mainterance losts anc tl'e project wlll le
self-reliani. Hcwever the auCit fcund ihat NCF:BI lias n>t been comne'r:iaized as i]:ended. ln all ire
n4anage's f,:ll that 5s le/gl of avrareness of this rc,ble Gove-nment
regions visired. lhe Telt<om l'ecl:nical
initiative was still low since the t\/clcT harJ ncrt can)aigned or crealec awareness to the courty
project. Lrw
Governments anc internet service prc,viders aboul the e>:islerrce and benefils of the \OFBI
leased out
commercia za:ion of the NOFB project has led trt he intrasructure's extra c;apacity no: ceing
to generate the much needed revenue. Thus tax:eiyers were cerng subjectec to 'reavy linancial
burdens

as detailed in paragraPhs belout:

a) NOFBIs monthly operation and maintenanc,3 fee ivas llshs. 20261,956 0C givinE an annualfiglre
o, (shs.243,'143,568.00 effeltive frrrm \larch 2010, NOFB project records reflected that by
Kshs 496
Itrla-ch 2A12, managenrent of the NOFBI p.oject had cost the :ax payers approx:matelv
million, yet NOFBI's t,rterl cumulative r,:lenrres frorn both dark and lil fibre was
onll' Kshs.
14iJ7g7,337.00 for the sarne period and ta<payers have to pay the difierence
cf Kshs
352,127,727.00.

Figure 8: NOFBI revenue trends from January 2010 to october 2012

r\OfBl Rcveruev! C&M Costs

t l ! t
.E.i}<E+++---+--++...#D++'+-'" " ' " " ' '
E
6I
I
t
+ IOIAI REV€Nut m5 t
I
+.03MCSTS f

*
.,"'i:$'::{0.,..1.i*{$t-1H".":..i$'\.\":t*$$'${r1}t'l-'$-\$:*'}.:,.t
Msth[ nr[u

Source: OAG.X analysis of NOFBI proiect documentr

project with Telkom Kenya

b) ln June 201 1, the Government signed another 3ontract for the NOFBI
"l',lOFBl dark fiber services" at
LtJ. to share the net profits received from Telkom's provision of the
five years till June 2016'
50% in consideration of its managemerrt servioes from lVlarcfr 2012,for
generated by "NoFBl dark
The net profits was to be calculated after taking into account revenues
Telkom Kenya Ltd' for generating the
fiber services" minus all direct or indirect costs supported by
was to be remitted tc' the
r€venues. However, revenue for NOFBI Lit rr Telecom services
audit, Telkom Kenya Ltd' generated
Government. Based on the information availed at the time of
and maintained o&M charges of
only US $ 239,540.75 lrom November 2012upto June 2C14
Kshs. 20,261,964 per month for the same perioC
Page24
OAG-K
 enue for June 2(t1 4
N0 et t(M LEASE HARnF PATF PFF ([, NT
I E
LL
I lila : 2?, 44
( 724 6 29C
t a29 5C 26 45a
E Jan,i relkorn 635 8 50 ?a 70n
ITOTALS
204.640 75

Tabic 6: Lit fiber cha es and revenue for June 2014

ISF I'10. tf CHARGE RAIE PER LINX (USD AMOUNT /iJSD)
LINKS
1 Safaricom E1 link 26 433 33
|,zat
I Orar ge E'1 Link 13 4JJ JJ 5 633
STli/4 Link L 9000 8,000
TOT^i C
34,900
Source: Telkon; Xenya

c) Further analysis revealed that the NOFBI project was losing an opportunity to generate 1.8% to
4% of the revenue for lease of dark fibre services monthly from the damaged 164 Kms link in
the
Athi River - Namanga route which was never repaired. The link has an opportunity cost of
US $
3,844 per month for ISP's charged at USD 23.44 per Km or US $ 8,200 per month for lSp,s
charged at US $ 50 per Km.

d) ln addition, despite the fact that N0FBI pro;ect is not generating sufficient revenue to maintain its
own operating costs, taxpayers are also being subjected to repaying the concessional
loans
received from Exim China to finance the NOFBI project totaling over US$ 110
million (US $ 37
million for phase I and US $ 72.5 million for phase ll plus additional loan management
and
commitment fees). By August 2014 the government had already paid Kshs.
1,264.3 million
towards the NOFBI phase ll loan

e) The prolect evaluation of NOFBI reported positive values for Net Present
Value (NpV), lnternal
Rate of Return (lRR) and payback period but the prolect has not generated
revenues sufficient to
break even and therefore the commercial aspect of the prolect has
achieved minimal results. ln
addition, the overall productive lifetime of optic fibre cables is estimated
to be about 20 years, but
at a utilization level of 140/o five years into the life of the project, 2lok
ofthe lifetime of the network
is depleted.

OAG_K
Page 25
 I

.; '".

4.'4 Ti-rer att.itfcurdthatthel(OI:'Bl p'o;ectha. r',6,;treerrtr,fflr:tuelynra-ag:rrl stnce

a) ",i-\ ri ''f'',r | ,
l'.;l 'itli '.':'! 'f 'NOFBI phaSel
"t.Sr
v/as iTplemented in 2007. l-lcweve' tl'rEr audit ft::rnj that firte )'ears later the Athi - Rtver to
l

Na,rarga NOFBI pnase i link in the Ce'r.ai ard l{crth Easlern ReEionl;, l-aC nany cabe cJts
w1ich nad not beel repaireC since lll07 This i':cr to lacli of nterrrel (;orne]tiviiy and access in l

l,(ariado iounty. This site was don€: lry t\l/S H taule but was neve' co-r]m sined by lvlcl(:T or
ac;epted by Telkom F.enya Lid. durin3 hardcver

rtqF ,-!+I =:.----.

G
Fi,
G

t lt
.,}
r \. .r.tf
.
-rD
i.. 1'-
picture 1: Athi River .Namanga damaged NOFBI phase I sec{ion that was not commissioned
Source: OAG

protect
b) NOFBI phase I was not designed properly: The preliminary activities of the NOFBI
undertaken by the
included tender preparation, evaluation, "oute survel's and negotidions were
lvlinistry of lnformation and Communrcation in liaison with technical staff
from Telkom Kenya
was frequently
(TKL). The installation of cables in some regions was not to he correct depth and
vandalism,
destoyed by soil erosions and floods that lefl the cables exposed and unavailable,
(rodents). ln addition' the
damage by road contractors, high temperatures and burrowing animats
following effects:
backbone infrastructure design was linear instead of ring whidr had the
rl
I

. The linear network did not have reduncancy and had no alternative route
in case of
so trat when there is a cut,
damages. The main network and protecti,rn are on the same cable
both protection and main network are dowr '

phase ll to close lhe loops

As such the Government has to i,1cur nore taxpayers funds in
backbone be extended to
in phase I's infrastructure and integrate equpment to allovt'the
all the 47 county headquarters in Kenya'

Page 26
OAG-K
 c) ' t Contract for the
implementation of NOFBI phase ll was awarded to N//S Huawei on July Tth2OlO. The contract has
since had tvuo amendments, the first in one in 17 October 2011, and a second one in 23 ltLay
2014. ln lVarch 2013, tM/S Huawei, the contractor, was paid advance payments of US $ 14.5
lVlillion (20% of the contract sum of US $ 72.5 million) to start preparing for phase ll project
delivery. However, project works were again suspended, for over two years, as the MoICT
requested for project changes, in compliance with new requirements due to reorganization and
restructuring of the Government following Kenya's 2010 Constitution. By October 2014,1he lVolCT
was still in the initial plans of implementing NOFBI phase ll and had not yet put in place a
dedicated office to provide supervisory services and ensure effective implementation of the NOFBI
prolect.

d) The NOFBI Cable was experiencing numerous cuts, which were costly to repair, The cuts
were either due to vandalism, damage during road constructions, rodents and floods

e) NOFBI Project has not beer: ,r,piemented withrn projected costs. Major alterations of phase
ll
included removal of some items e.g. Digital Hospital solution which was to cost US
$
4,115,426.00 Telepresence solution which was to cost US $ 6,107,960.00 and other accessories
although the total cost of protect has not changed. This would mean additional funds
amounting to
US $ 10,223,386 which is 14o/o of the initial contract price and will be required to implement
these
elements by line Ministries like the Ministry of Health. ln addition, these additional
costs do not
take care of expected monetary changes due to inflationary pressures in the economy
over time.
0 Taxpayers continue to pay a heavy financial burden for the delayed implementation
of
NOFBI phase 11. NOFBI phase ll's final approved loan agreement was signed in
October 2012for
US $ 72,500,000.00. The loan has a maturity period of 240 months from the
date the loan
agreement became effective (with a grace period of 84 months and
a repayment period of 156
months). Thus despite phase ll of the NOFBI prolect not yet started,
Kenyan taxpayers had by
October 2014,borne the burden of over US $ 17,995,000 on the project for
aadvance fees to
contractor US $ 13,500,000 (being 2Oo/o of contract price), interest rate
of US $ 2,900,000 (being
2o/o of US$ 72,500,000.00 for two years), management
fees of US $ 725,00 O (1yo ofloan amountJ
and commitment fees of US $ 870,000 (being 72,500,000- 13,500,000).0.75%for
a period of two
years).

g) Taxpayers also paid for NOFBI operations and maintenance

to Telkom Kenya Ltd. of Kshs.
20,261,964,00 per month from 2010 -2012. Following the privatisation
of Telkom Kenya Ltd, the
MoICT entered into a 50 - 50% profit sharing contract on NOFBI's
net profit received from dark
fibre revenue from 2011 to date. Telkom Kenya Ltd. has however
maintained the fixed o & lv
charges at Kshs 20,261,964.00 to date.

OAG-K
Page27
 C hapter 5

Conclusions
5 01 The N4ciCT has achieved signiricant s;trides with:hr: in'plemen:ation'r'rthe NCFBI phase lproject.
be transl'e:red
NOFBI has provided reasonaole clark and lit fibre crarges to lSPs but .he benefits are'1e1to
to end LS,]rs, The tvlolCT has hovrever not teer al-le to improve universal acoess to informatton,
communicatior and telecommurication services ir Kenla as expected. ICT services have also nct been
mace as reliable as expected rlue to frequent do'rntimes creating unavailability of sen'ices to users;.
The

currert 08l/ prcvider has not clone its work satisf;actoril/ as evidenced by lSPs who lease dark fibre
and

are all (ercect KENET) are yet to sign th* crinent SL,{ pr'ovided based on )oc'terms. The
NC'FBI

infrastructure has not been utilizerd to the full caoacity a,'a lable as shown by the lovr uptake of
lS'P's and
prcie:ted
government inst;tutions. The NCFBI project was not beer inplemented ac,tording lc the initial
costs leaving Kenyan taxpayers vuith l^uge financra' burdens'

5.02 phase ll of NOFBI project has delayed i- implenentation and major lSPs wno are anticicated to
projected by the
lease the last mile have already laic their own f bre and rn ght not lease the fibre as
pro.|ect has two aspects,
ministry. This will extend the period the prolect w:ll repay tself. The NOFBI
developmental and economic, Though not making profits, sccio economic benefits
lor public and pnvate
may not be easily
entrties leveraged on the NOFBI such as financial institutions, government departments
the
quantified NOFBI's prolecl evaluation reporterJ pc,sitive returns and paybac< values over time, despite
project not generating sufficient revenues to break even Tl^rerefore the commercia aspect
of the project

has achieved minimal results. ln addition, the overa I pro,luctive lifetime of the optic
fibre cables is
estrmated to be about 20yrs, and at a utilization level of 1a?b five
yea.s into the life of the projeclonly 25ok

of the network's lifetime had been depleted by 2Ct'4

Page 28
OAG-K
 Chapter 6

Recommendations
6.01 ln view of the findings and conclusions of the audit, the Auditor-General, has proposed the
following recontmendations for implementation by the Accounting Officer, of the tMinistry of lnformation
Communicatiorr and Technology:

1. '0 e'kar,ae;'ivEisai a(-a.ess ia -- st--, res ' ierye tl.,rc,uEi tne \cFg, prc:ec.llhg !{fir,1g',,
sho..r,i

i. Expedite the implementation of NOFBI phase ll so as to expand the bandwidth, coverage,

presence and availability of the fiber optic network to all the forty seven counties
in Kenya

ii. Ensure NOFBI fiber nodes are adequately available within the regions it traversed and not
terminated in the towns

iii. Finalise the repairing and

commisioning of the Athi - River to Namanga NOFBI link to avail
NOFBI services in the Central and North Eastern Regions

iv. Reduce prices and close the access gap for under - served populations to make
ICT services
affordaole

v' Look for methods to ensure that NOFBI operators, build the last mile access
networks in
more regions in order to get the rcr services to consumers

vi' Enhance the structural design of NOFBI phase ll to ensure NOFBI internet accessibility and
redundancy within the regions it traverses

vii' Foster lnfrastructure sharing among ICT service providers to enhance

ease of penetration
and enable universal access.

2. To improve the retiability of NoFBlservices the Ministry

should:
i' Harmonize ICT policies with respect to energy and roads to reduce
damages to NOFBI cables
during constructions

ii' Review NOFBI's operations and maintenance contracts in order

to enhance its services and
decrease down times and outages experienced within the infrastructure

OAG-K
Page 29
 ii ,l)rea:e sufficient awi:ireness of the irrpo'iance cf f'.OFBl ir rural areas whe-e fiber cuts ilri
!a llallsm is ramPranl:.

i\,, Procure competitively an Cperati;,ns ard lVlanagement servir;e':rcvder sitrce the clrrert
s,eruice provider is no longer a gov€nlnlent en:ty

v --ake
a more robust approach in iriveslillating atleged sabolager inr:;idetrces artd take pLrniti\re
:neasures to dete,r slrch cases as c;apacitatec bv tie ICT A.:t 2303, on general prohrbition cln
anti-comPetitive conduct

vi .jnharce inter-agenc;y collaboration espr:cially with Ministry of l'ranspo'1 and lnfrastructu'e, to

:dopt an integrated infras:ructure deveiopment approach that will see ducts incorporated in
nac oesigns thus avoid rereated ftber c,lts dL ring constructionsi

vii, Ixa,nine conneclor equipnent's used in NoFBI : opticai distri:ution framework to redu:e
30% of the losses being experienc;ed r:u'rentll d.re to poor:erminalion

viii. Erhance ways to reduce damage to ttre NOFBI cables and also ensure that damaged cabies
are repaired as quickly as possible to aloid frequert downtires

ir, Consider various ways to ensure that Telecom Sperators and lSPs who
provrde ICT senvices
speed
through the NOFBI prolect have equipment's that give optinal caOacity, bandwidth and
to end users.

3. To bring down internet costs in the country the M'mistry should:

i. put in place mechanisms to increase SP's leveraging on NOFBI to fully commercialize the
connectivity
Fiber Network to improve on its utilizat on and let market forces favor low costs of

ii. Ensure that the subsidized NolFBl internet olsrs trickle down to end users
to enable Kenyans

with the common United Nations (UN) broadband commission entry level
get internet in line
broadband target which is five percent of the average monthly income
by the
iii. Look for ways for subsidies or incentives to rcduce the cost of internel access
in the country
education and research community to promote research and innovation

iv. Liaise with other Government agencies to enharpe the provision of NoFBI services within

Government institutions at a subsidized rate

4 To increase the utilized capaci$ of the NOFBI project the Ministry should:
i. provide a clear legislative provision 0n puclic sector participation in relation to broadband
and utilization of
infrastructure and services to ennance the effectire and efficient rleployment
Kenya's constitution
services delivered and assessed thruugh broadband as required by

Page 3)
OAG-K
I

I Put ntore effort in public awareness of the opportunities that the NOFBI networli presents,
espet:ially to content providers and also to actively involve Government in utilizing the cable
as it 'olls out public services countrywide such as Huduma centres for greater stakeholder
engagement

iiii. Get a more robust way to commercialize and encourage the utilization and adoption of the
l NOFBI by organizations in Kenya so as to lease the current 86% unutilized capacity of still
I

available the NOFBI dark fiber

IV Look for aggressive ways to encourage internet service providers to leverage on the NOFBI
i services offered I
l
5. /To implement the second phase of the NOFBI project more economically the MOld should

t. Put in place measures to complete NOFBI phase ll expansion prolect within the current
contract terms without further amendment to the contract.

Enhance inter-agency collaboration especially with tvlinistry of Transport and lnfrastructure,

county lands, housing and urban planning departments and county roads public works and
transport departments, in identifying and mapping out any underlying infrastructure to enable
issue of proper way leaves hence minimizing chances of disruptions whenever new
infrastructu re contracts are bei n g u ndertaken.

iii Put in place mechanisms to ensure there is a dedicated office within the Ministry that monitors
and supervises the NOFBI prolect and operations and maintenance provider to ensure
contract terms are adhered to and service level agreements are achieved. This will enhance
the effective monitoring of the prolect both in implementation and management.

6.02 The Ministry has accepted the above suggestions and recommendations and have
actively
begun implementing them. Key highlights that according to the tMinistry have been
started after receipt
of the draft report were:
,

The operationalization of the Universal Services Fund to facilitate expanding the penetration
of
broadband infrastructure to all counties.
ll Roll out of NOFBI Phase ll to address the inherent issues that are in Phase I infrastructure
Review of the current Operations and lt/aintenance Contract with Telkom
Kenya a view to
making it more robust, or terminating it and seeking new cable managers
lncreased uptake of the Terrestrial network by attracting transit traffic
from neighboring
countries, and also interconnecting the National Backbones with other Backbones
in the region
under the Northern Corridor Arrangement. Detailed response of the tr/inistry
to the report is at
appendix six of this report.

OAG-K
Page 31
 i

I
i

t,
i

Appendix ''i; NOFBI Phase 1 Ccr,tractors and tneir Rou:es ZTE Regicn ,r'leslerr, Regior'
1342 Km)
1

l-ol,iciroggi
02}<m

29[.rm
Kaku il
I
I

Lodwar
I I

)r
94km
Busia Mumia 52k I
Lokichar
'll eor.,t I IT

21 3km

i.,-\
Kitale
11 Eldoret I

08km
Kericho
Migori km
l-.- I

Bomet Narok Longonot E/s Nairobi fr

lsebania
I

FBI Equipment,r NOFBI Fibre,- Telkorn Fibre

Page 32
OAG-K
 il i.' : NCF Bl Phase 1 Contractor and their Routes HLiAvlEl CONTRAQT /{Central
-r- l I
12Y,r

Nakuru Nvahu ruru Nan ki

,
il.--
-l 62K^
r
oq 51 Km 28 Km
lsiol o
il
56,5 253
Nyeri I lVlarwa IMeru
I TERMINAL
aa ADM
REPEATER
Sagana
36 Km JUNCTION
13 Embu NOFBI OFC
Km Muranga Existing TKL
I Ducts
48.2 Mwingi
Nairobi Mbogo
Km
Thika
62 Km 47 Km
t
t" ;i 155
46
39 tMwingi lVlbu Km
48 Garissa
VU
( 0.3 Km

Kitui
39 Km

l
l Machakos

Kajiado Namang
Km a

_K
Page 33
 [-

Appe^Cix JNOFBI PhasP r rs anc fle,r Routes SAGEM CCNTF.A(," \

Eastern Region 1:84XM)

li
l/la lldel'a rl
I
)
Moyale 7
Rhamu
264 144
I
El Wak
ii
181 l

Marsabit Wajir
I

I
26C Habaswe
o in
I

lsiolo Eldera
l

Page 34
OAG-K
 a

pendix 4: NOFBI Dnase i Cc,ntractors and their Routes SAGEM (C\lrRAC . tt'

R,..; ..' i t,
I

Hola rf Gariss
Km
a
\
11 0
{?
Garse
n
Microwave
Radio
(23Km)
Link ll
111
IViilhoi Lamu
Km lsland

Malin
di
63

Kitifi

62 Km
Mazera
S
Mombasa

66

Kwal
e Diani

NOFBI Equipmentr NOFBI Fibru; Telkom Fibre

Il

_K
Page 35

I
 a

Appencir 5: Supporting Ts[ie-s lo the A

{enya s nterhet pe^etratlon eveis

rdicator
;nternel subsc.ribert .96,!75 6,152,6M c
50r 4t
,'9,
Estimated internd users 1{,305,592 13.53i,658 1 02,C55
28.7 at E 4i1
Internet penetration f?c
rota fixed and wireless broadband subsc-iptions .99a ',,0A2.701 1.435,2f 7

Broadband subscriptions pet 100 inhabitants

4t 'r4
Source Communications Authoritv rf (enya lM illC 20'f i1 - 2!17 st'ategic plan)

\OFBI dark fiber leased

l,lo lnternet Service No. of TOTAI NOFBI % of used dark fiber out ol the lotal
Providers (lSFl )tlOFBl Kms networl NOFBI network volume
i€?SBd vclume (Kmsi
1
Safaricom 3024 5 53i?E
Telkom Xenya 2526 3
t
2
Kenet ?24 53tlE I
535.8 rat 1G {
4 JamiiTelecom
53€?8 I
f,
I Bcs/Liquid
Comm I

Total 7502,6 536i€ 14

Source: Telkom Kenya Ltd

Keny a's ISP's and international bandrridth

Performance lndicator 2009 2010 2011 2012 201 3

Licersed lnternet Service Providers 52 57 90 165 169

CapaCity in mbpS : totalundersea Bandwidtr capactt1r' 202,506 434,870 574.056 862 210
SaEtlite bandwid$ capaoty 214 650 650 264

Total available Bandwidth Capacity 202,720 435,520 574704 862474

Utilized Bandwidth, international undersea 20,c00 32,152 264.426 365 330
bandwidth:
intemational satellite I 210 119 158 83
bandwidth

Totar intenational bandwidth util ized n,210 32,271 264,584 365,413

Source : Communication AuthoritY

* i( Page 35
oAG
a
!

and Technology's response on audit finding

Appendix o:/uinistry of rr,formation cor,i*,unicatio;"

on audit
i.udit Findi luln of lnformation Commun ication and in the
rc cunently being addressed in the expan sion of the infrastructure
There was still The cited inadeq uacy with respect to c0verage ks extremely disj ointed and
merous cuts 0n the network m aki ng s0me lin
inadequate ongoi ng N OFBI Phase il Regarding the NU SM, road works and
ibility ll is in deed true th dt due to cases of vandali
access to ICT unu able leadin s to lack of connecti vity and ACCESS linear network the Phase lt
affected Since NOFBI Phase WAS
services in oth ers some sections o{ the network h ave been
th rough rin network configuration to enhance accessibility and
Kenya through mplementation iS providing diversity and redu ndancy s
pted ACCESS.
in the main circuit SO AS to ENSU re uninterru
the NOFBI aval labi lity in CASE of disru ption of services

BI WAS expected to bring reli able

p0wer of high speed hig h bandwidth
The tu in stry CONCUTS with the com menl th dt the NOF
provides dark fiber pair to the service providers wh ich are virtually
2. NOFBI services connecti vity to Kenya. ll noteworthY that the NOFB 0n the equipment that the
and speed imitation is solely dependent
were unreliable unlimited capacity bandwidth The capacity bandwidth deploy Regarding the frequent
wh 0 rent the dark fiber cables decide to
service providers (T elecom Operators and lSPs) and Commercialization
into an Operations and Maintenance
0uiages and long lead tim ES for repair the Ministry entered iS cunently being reviewed tn
to enh ance the servi CCS in N OF BI This arrangement
Contract with Telkom Ken ya in 201 2,
of
and maintenance of the cable AS well AS c0m mercialization
order to provide a m0re robust reglme for the operations
lce Level Agreements with T elkom Kenya the Operations and lvlaintenance
servlces NOFBI cable customers have Serv
AS well ec fees
man of th e which out the mean times to
market forces of supply and demand in a competitive environment
3 The cost of The telecoms markel in Kenya is f ully liberalized and
regulator Comm unications Authority in its published Annual Report for the
internet are al play T he ann ual reports by the ind ustry
services tcensees (Appl ication Services providers) in
services was Fi nancial ear 201 2-201 3 notes th at total n umber of lnternet
that the number of lnternet USETS increased by 40
1
The repo( also notes
still high in 2008/2009 were 58 while n 201 2113 were 1 558. q growth can be attributed to the increased usage of the
per cent, to stand at 0 654 925 in the Financial Y eal 201 2t1
3 hi
Kenya internet
and ed ucation, availabi lity of d wide affay of affordable
internet for bas ic services such as banking healthcare
ac phones and tablets, AS wel AS the nnovative promotions and special offers and affordable
ACCESS devices such smart
bundled internet services
the Com mu nications Authority has operalionalized the
Universal
4. NOFBI services ln order to address the challenges, the I/i NI stry through
play a crucial role in expanding the penetration of broadband infrastructure
' were nOt Services F und -US F The USF is expected to Ministry has
generating sufficient revenue to maintain its 0wn operati ng costs, the
utilized to the to all c0u nties. Regarding the project not
Kenya the 0&M Managers. It should nonetheless be
with T elkom
full caPacitY noted the observation, and has initiated remedial action
not spontaneous, and a maturity path (5-Tyears) has to
be followed before mosl of
provided noted that the uptake of NOF BI cable
^t period of uptake (0-5years) will have to be supported before it breaks even an d eventu al ly
the capacity c used. The initi dt
the target USETS and clients for NOF BI are primaril v
becomes seltsustain ing. wirh respect to NOFBI awareness, NO FB and are
Education sectors who are ful ly apprai sed of
T elecommunications Services Operators and Research and
for greater stakeholder engagement, the Ministry will put more effort in public
active USCTS of the same. However tc also actively
presents, especially to content providers. The Government
awareness of the opportunities th at the Network
in volved in the cable AS ir rol ls out Huduma centres
and the Ministry brought this matter to the
NOFBI T he section from Athi River to Namanga WAS damaged by road construclion
pursued Destruction of cable due to sor erosron, floods is constantly
project was not roads supervising [/ inistry. The matter is stil being
and Maintenance agreement The tM inlstry h AS in place a projecl steering
effectively bei ng addressed through the Operations
teams in place. Under di rection and 0n beh alf of the lVlinistry
monitored nor committee and a technical mplementation committee and
project tech nical supervision to ensure efiective implementation. NOFBI Phase
implemented the t,l Authority provides the d ay to day
Kenya Limited AS the appointed project managers. The company
canied
WAS monitored and logistics managed by T el kom
As the Ministry implements NOFBI Phase all the
out the assignments stipulated in the project man agemenl agreement.
lessons learnt in have to service
by the team and wishes t0 state that the
6. The Ministry than ks the office of the Auditor General for the work done
taken and are actively being implemented. Key highlights include
and suggestions and recommendations h ave been in
a of the Universal Services Fund to facilitate expandi ng the penetration of broadband
recommendati The operationalization
ons offered infrastructure to all counties.
ioll out of NOFBI phase ll to address the inherent issues that are in Phase I infrastnrture
Review of the current Operat;ns and Maintenance Contract with Telkom
Kenya a viarv to making it more robust, 0r
terminating it and seeking new cable managers
neighboring countries' and also
increaseO"rptaf,e ofthe ienestrial network by attracting transittrafficfrom
in the region under the Northern Conidor
int.*nn..iing the National Backbones with other Backbones

Page 37
OAG-K