The loan was signed by visiting EIB vice-president Plutarchos Sakellaris and the vice-chairman of the Seychelles Cable Systems company Benjamin Choppy – who is also principal secretary for information communication technology – at the Ministry of Finance’s Liberty House headquarters on Friday.

The loan will fund a 1,930km cable from Mahe to the existing Eastern Africa submarine cable system in Tanzania and is expected to come into operation by the second half of 2012.

A grant agreement relating to the project was also signed by Mr Sakellaris and principal secretary for finance and trade Ahmed Afif.

The signings took place in the presence of representatives of the government and its two telecommunications company partners in the project – Cable &Wireless and Airtel.

Mr Choppy said after the signing: “The signature of the loan agreement to finance Seas (Seychelles East Africa System) is a key milestone for the project, which will bring a quantum leap in the development of the ICT sector in Seychelles.”

The fibre-optic link is expected to improve both telecommunications and internet access in Seychelles, with international transmission expected to be seven times cheaper than current prices.

Direct cable-based internet links should bring improved healthcare and education links, enhance job opportunities and slow down the emigration of skilled Seychellois.

“The Seychelles to East Africa submarine cable will bridge the digital divide and enable much cheaper communications than current satellite links. This project demonstrates the EIB’s commitment to supporting internet access essential for companies and communities in the 21st century,” said Mr Sakellaris.

The project will also benefit from a €4 million grant from the EU-Africa Infrastructure Trust Fund to support shareholding in the project by the government of Seychelles.

A statutory dividend from this equity stake will be used to provide free internet access for schools, libraries, hospitals and other social development-related services.

The EIB is the European Union’s long-term lending institution and provides financing for projects around the world, including Africa, the Caribbean and Pacific regions.

Mr Sakellaris said the bank is committed to support projects that deliver sustainable, economic, social and environmental benefits.

He said Europe is a close friend of Seychelles, and the EIB a strong partner that has been active  here since 1978, funding eight different projects. These include cooperation with the Development Bank of Seychelles (DBS) and support for the water sector with the renovation and expansion of the Le Niol water storage and treatment plant.

Mr Sakellaris said he will be joined during his visit here by the EIB’s water experts, who will be examining possible support for the water supply and sanitation system on Mahe, Praslin and La Digue, along with the building of a new waste water system on La Digue.

This will be the first time the EIB has examined a water project purely to address climate change in the African, Caribbean or Pacific region, he added. €10m is being considered for the project.

Mr Afif said Seychelles is very grateful for the collaboration it has with the EIB, and even more grateful for the confidence and renewed trust shown in Seychelles, especially after the recent economic reforms.

On behalf of the government, he thanked the EIB for all its interest in projects for Seychelles and looked forward to more fruitful collaboration.