ICT SECTOR PROFILE Uganda’s Information and Communications Technology (ICT) sector is dynamic and vibrant. The sector has registered double digit growth over the last few years. Figure 1 shows the growth in industry investment expenditure over the last few years. The bulk of investment expenditure was in the roll out of mobile broadband solutions and other Internet related infrastructure. Investment in the sector is expected to grow in the near future as the new service providers expand their networks coupled with the expenditure for the 3rd phase of the national backbone infrastructure network. Sector dynamism is a result of Uganda’s good ICT legal and regulatory framework, a stable macroeconomic environment and economic reforms pursued since the early 1990s. The telecommunications sub-sector, formerly dominated by a single national operator, has been progressively liberalised over the last 10 years. Because of it cross- cutting nature, the ICT sector plays a very big role in employment, job creation and quality/efficiency in other services delivery. For decades, the ICT sector in Uganda has been revolving around the Telecommunications, Postal and Broadcasting services. This has been mainly voice, very limited data handling and mail deliveries. The 1996 policy framework that liberalized telecommunication sub-sector resulted into radical changes that have given birth to an ICT service sector. The sector has been growing at a phenomenal rate over the last decade, especially in the areas of mobile devices, computer applications, information processing, storage and dissemination (Broadcasting and Internet Points of Presence at district levels) as well as mfinance, e-finance, global connectivity and online trade. The posts and telecommunications services activities, grew by 30.3 percent in Financial Year 2009/10 and it accounted for 3.3 per cent of GDP. The growth changes have had a profound impact on the whole Ugandan economy, making the ICT sector an important part of the economy. Communications Infrastructure The government of Uganda, through the Ministry of ICT, decided to implement the National Data Transmission Backbone Infrastructure and e-Government Infrastructure (NBI/EGI) project for high speed communications. This entails laying of Fibre Optic Cables and installation of related equipment, which include switches, optical transmission equipment, data communication equipment, fixed network equipment, video equipment, computers, servers, training and service. Ultimately, the fibre optic cable will link Uganda to the submarine cables on the East African coast providing access to the rest of the world through Kenya.
As East Africa has relied on expensive satellite connections for telephony and Internet access, local operators and software companies are looking forward to the submarine cable with improved connection speeds and lower operating costs. In addition, the optical transmission is more reliable and of higher capacity compared with microwave transmission. BPO (and other) initiatives fit well into the National Fibre Optic Backbone. National Backbone Infrastructure (NBI) Its roll-out is divided into three phases; • First phase -linking Kampala, Bombo, Entebbe and Jinja is complete. Services include Voice (VoIP), Video (conferencing), office automation and email. • Second phase - linking to the border with Kenya and extending up to Kabale in the south west is almost complete • Third phase - linking the North, North West and Masindi will complete all the loops of the backbone. Figure 2 is a representation of the three phases and their areas of coverage.
With national backbone optical fibres connecting districts, the IP backbone network will cover
Uganda’s major cities with a core data communications network and pave the way of providing diversified services such as the Internet, VoIP, and video conferencing. The first phase of the national backbone network will cover Kampala, Entebbe, Mukono, Bombo and Jinja with an optical route. The stations on the ring network will use a wavelength of up to 2×2.5G through DWDM, while the stations on the chain network will share a 2.5G SDH link capacity. There will be a complete network management solution for managing optical network devices and products that fully satisfy requirements for transmitting multiple services across the backbone. The second and third phases have been mainly designed to expand the scope of network construction. The 1,542km optical network will cover 19 cities including Luwero and Nakasongola. The wavelength-division multiplexed ring network has a rate of 2×2.5G and a link rate of up to 2.5G. The completed national backbone network will comprise two ring networks and one chain network. Multiplex section protection (MSP) technology protects the ring network as part of a network structure that delivers sufficient bandwidth for access nodes and avoids single point failures. Thus, service interruption caused by networking issues is eliminated. The government can lease the network to Uganda’s communications operators to utilise and benefit from the country’s backbone network, and on this basis, to carry out businesses such as e-hospital, e-shopping, e-education and others, that government itself can do to enhance service and inter-operational efficiency and effectiveness. This will also help Uganda attract more investment and generate employment opportunities. E-government infrastructure (EGI) The deployment of the e-government platform increases the transparency of government activities, enables departments to share public data and enhance inter-departmental coordination, reduces government administration costs, and generally improves work efficiency. With a dedicated government network, the Ugandan government can more easily construct and maintain its official website and implement a business information platform capable of attracting more investment and generating employment opportunities. Construction of the e-government infrastructure is running parallel with the construction of the National Backbone Infrastructure. The e-government infrastructure will focus mainly on services: government to government; government to businesses and government to citizens. 2. Key products and services in the sector There are a number of companies that deal in technology solutions, ICT human resource outsourcing, ICT training solutions, infrastructure and Hardware/ software solutions, Enterprise solutions, support and Business management solutions. Makerere University Faculty of Computing & IT launched the National Software Incubation Centre (NSIC), which is the first incubation centre on any university campus in East Africa. Housed in a new $8 million computing facility, NSIC is open to graduates of recognized
universities working on software development projects ranging from stand-alone applications to Internet-based/ mobile applications. Some of the software tools developed are; a hotel reservation system, a centralized procurement system, a real estate management and maintenance system, a Bluetooth social network tool, an asset management system and a human resource/payroll system. The students have also developed a university electronic directory, an inventory management tool, translated the Mozilla Firefox browser into a local language, a mobile instant messenger, an iLab system (e-library system) and an e-government implementation tool for local governments. Already, a number of top technology companies, like Google and IBM, have expressed interest in working with the NSIC. Convergence, Broadband and Internet Markets The strong growth of the fixed-line networks in recent years and an explosion of the number of cybercafés have helped to increase Internet usage which has also been accelerated by private and government initiatives in the deployment of wireless Wi-Fi / WiMax hot spots. There are an estimated 30 hotspots in the country, 95% in the Kampala metropolitan area. Estimated Internet users were 3.5 Million (2010). Additional impetus has been seen with the launch (in 2008) of 3G mobile broadband services in the country. FM Radio and Television Broadcasting Uganda is a pioneer in the liberalisation of the media in Africa. Private radio and TV mushroomed after the government loosened controls in 1993. Radio is the most popular medium. The central region around Kampala is home to dozens of private radio and TV stations (table 1). Rural radios serve ethnic groups and there is a cluster of religious stations. A pilot digital TV project is under way, and Uganda expects to switch off terrestrial analogue TV signals in 2012 to fully migrate to digital TV signals.
BBC World Service, Voice of America and Radio France Internationale are widely available on FM broadcasts. Postal and Courier Services 68% of the Ugandan population lives in rural areas and post courier services are still an essential mode of information and service delivery. The postal business has expanded and attracted new investments. The national target is to have postal access in any areas with more than 250 inhabitants. Business Process Outsourcing ICTs have now linked the entire globe through better and faster (digital) communications networks thereby rendering ‘time’ and ‘distance’ irrelevant. As a result, companies in developed countries have business models that capitalize on these global communication networks. These business models cut costs and improve efficiency by outsourcing services to a distant skilled work force. BPO is one of the fastest growing segments of Information Technology Enabled Services. Uganda has made several initiatives to develop the ICT/ BPO industry. Initiatives through the ‘Big Push’ strategy of 2000, the Strategic Exports programme (SEP) and the Presidential
Investors Round Table (PIRT) have greatly contributed towards improving the BPO business environment. The most common examples of BPO to be carried out in Uganda are Customer Support Services such as call centres; Policy Maintenance/Management such as human resource; Data Process Services such as payroll outsourcing and Technical Support Services. There are activities that require greater skill, knowledge, education and expertise to handle and these form an offshoot of BPO known as Knowledge Process Outsourcing (KPO). An insurance company might outsource data entry of its claims forms as part of a BPO initiative; it may also choose to use a KPO service provider to evaluate new insurance applications based on a set of criteria or business rules. Currently, KPO encompasses Research and Development, Product Development and Legal Process Outsourcing, as well as a number of other business functions. Categorically, the types of BPO services to be offered are: a) Transactional BPO Services: i. Customer Support Services ii. Telemarketing Services iii. Data Entry Services / Data Processing Services iv. Data Conversion Services v. Scanning, OCR with Editing & Indexing Services b) Skilled Value Added BPO Services: i. Technical Support Services ii. Employee IT Help-desk Services iii. Insurance Processing iv. Book Keeping and Accounting Services v. Form Processing Services: vi. Internet / Online / Web Research c) High-End Skilled Added Value BPO Services: i. Software Development Services ii. Legal Support Services iii. Medical services iv. Engineering Service The Uganda Business Processing Outsourcing Association (UBPOA) was registered in January 2010. It has members operating in various types of BPOs as shown in table 2.
Mara Group-Uganda has partnered with Spanco, an Indian leading BPO off-shore company to form Raps Spanco (U) Ltd, which is setting up a 500 seater call centre and Makerere University College of Computing and Information Sciences, School of Computing and IT (CIT) (formerly Makerere University Faculty of Computing and Informatics Technology) has partnered with Capital Funds to set up a 1,000 seater call centre at CIT. 3. Sector outlook Market penetration Fixed-line and DSL penetration is low but has seen a renaissance recently on the back of
wireless local loop (WLL) rollouts, prepaid services and an increasing demand for broadband access. Table 3 shows the estimated market penetration rates in Uganda’s telecom sector as of end of 2010. There has been a general increase in penetration rates over the last few years as shown in table 4. The cost of international bandwidth has been reduced dramatically following the landing of the first international submarine fibre optic cables on the African east coast in 2009/10 to which landlocked Uganda is now connected via a national fibre backbone extending to its borders with neighbouring countries. On the access network level, 3% of fixed lines are using fibre for the last mile.
Internet subscription and usage
2009 came with the increase in popularity of mobile Internet subscriptions with a figure of 300,000 users. This steadily grew to 510,000 users in 2010. By the end of 2010, the total number of Internet users (fixed and mobile) was estimated to have grown to over 3.5 million as shown in figure 3.
Broadband capacity growth The landing of the cable systems at the East African coast has caused a spur in growth of capacity with international bandwidth growing
more than 5-fold as shown in figure 4.
Growth of call traffic
The growth in traffic, as shown in figure 5, was the result of increased service penetration and usage which resulted from increased promotions and the introduction of unlimited calling pricing schemes.
Rate of GDP growth vs. rate of Post and Telecommunication growth rate As the GDP growth rates went down in the aftermath of the global economic crisis,
growth rates of post & telecom were on the rise (figure 6) mainly due to the investment in the telecom sector and the diversification of product (data and value Added Services) in the market.
Revenue drivers The mobile market accounts for 63% of the telecom revenue followed by the fixed line segment
(figure 7). On the rise are headset revenues as well as Value Added Services. The entry of new operators has resulted in the emergence of a whole sale infrastructure market as new entrants adopt the infrastructure leasing approach to the market entry. Growth in fixed and mobile subscriptions Market penetration for voice is currently at 33.5% with population coverage of close to 100%.
Mobile subscriptions account for more than 90% of new connections (figure 8) whereas fixed wireless terminals account for more than 60% of the total fixed lines. 4. Key Strengths in ICT - sector Investment Potential a) Geographical location: enhances supply to regional markets in East and Central Africa.
b) Time zone: favours Business Process Outsourcing. Uganda has a convenient time zone location considering the major consumers of ICT related services of -8 hours from USA and Canada, -3 hours from UK and +6 hours to Japan. These time zone differences provide a unique opportunity for Uganda to do business with Asia in the morning, and to transact with Europe and the Americans in the afternoon. c) Latent local Market Potential: 20% of Ugandans have access to phones and much less percentages have radios, computers or access to Internet. d) Liberalized and well regulated ICT Market: Enhances private sector investment. e) Low cost of operational licenses: Uganda has the lowest ICT licensing and services regimes in Africa. f) High production rate of skilled labour force with good training background. Each year Uganda’s Universities produce over 10,000 graduates who can productively be engaged in the ICT sector. g) Fluent English speaking population/labour force with specialized ICT training. h) Good quality infrastructure supportive of future investments. i) Young population suitable for ICT work. Uganda has a young and vibrant population that can be trained into a high quality ICT labour force. 5. Specific sector related incentives. The government of Uganda has recognised the potential of IT-enabled services and has taken positive steps by providing numerous incentives. In 2002, the government reduced and also waived the taxes on computers and computer related equipment to encourage the growth of the ICT sector and its services. ICT companies do also benefit from the general government incentives in initial allowances and deductible annual allowances, (table 5) which are highest in computer and data handling equipment.
6. ICT Market It is estimated that the Ugandan ICT market is growing at a cumulative annual growth rate (CAGR) of above 25%. These services are mostly from the ICT training, website development
and custom software development sectors. This upward trend is expected to continue as long as new players join the market; the present telecommunications and ISP companies substantially increase their penetration as well as upgrade their networks. Private businesses are as a group the most e-ready sector in the country. The private sector is investing at a steady rate in automation and capacity building. There is a steady source of investments in ICT that is likely to expand along with economic expansion. Other steady markets are the NGO and non-profit sector. International donor agencies are a major source of work for the ICT industry and the economy at large is still to a great extent dependent on foreign aid. The financial sector has recently begun expanding its automation and is also a major driver of the ICT market. Strides to make Ugandan society fully e-ready and allow the development of various technology services directed to local, regional and global market have been made. These include investments in infrastructure, high bandwidth fibre backbone, especially in fibre optic connectivity, between the larger towns and to submarine backhaul trunks. 7. Key Suppliers Telecommunications and mobile telephony The introduction of mobile telephony has revolutionised Uganda’s telecommunications sector since Celtel (later Zain/Bharti, now Airtel) launched the first network in 1995, followed by MTN in 1998, Uganda Telecom in 2001, Warid Telecom in 2008, and HiTS Telecom, in which France Telecom’s mobile unit Orange bought a majority stake in 2009. A number of other operators and providers of services are currently in operation in Uganda. Table 6 shows the number of communications and service providers that have been licensed. Type of Licence Provider Name NTO MTN (U) Limited Uganda Telecom Limited PIP Uganda Electricity Transmission Company Africa Fibrenet (U) Ltd PIP, PSP (Voice & Data) Smartel (U) Ltd Comium Data (U) Ltd i-Burst (u) Ltd PSP (Capacity Resale) Talk Telecom Solutions Limited Roke Investment International Limited Mo Telecom International Ltd Bandwidth and Cloud Services Group PSP (Capacity Resale);PSP(Voice and Data) Satellite Communications Networks Ltd
PSP (Voice and Data)
PSP (Voice and Data);PIP
PSP and PIP
PSP and PIP (Voice and Data) PSP(Voice and Data) PSP(Voice and Data); PIP
Fastcom Limited Maisha Networks Ltd Dam Solutions Ltd Mara Telecoms Ltd Kanodiko Systems Ltd Kampala Siti cable Limited Radio Communications Services Ltd Tangerine (Nomad Communications Ltd) International Telecom Ltd Fast Path Networks Maisha Networks (U) Ltd Janu Communiations Ltd Kit Tech (U) Ltd Bukasa Telecom International Ltd Kanyan Telecommunications (U) Ltd Augere (U) Ltd Smile Communications (U) Ltd One ... Solutions Ltd(NR Cyber Business Systems) Wimax (U) Ltd Datanet LLC Anupam Global Soft (U) Ltd TMP Uganda Ltd Afsat Communications (U) Limited Warid Telecom Uganda Infocom Orange Uganda Ltd Latest Technology International Limited Foris Telecom Ltd Excellentcom (U) Ltd Airtel (Celtel, Zain) Uganda Multichoice Uganda Limited Link Wireless (U) Ltd Africa Online Sure Telecom i-Tel Limited
Key • PIP ==> Public Infrastructure Provider • PSP ==> Public Service Provider • NTO ==> National Telecommunications Operator Communications Technology Ugandan regulation policy advocates for technology neutral approach and currently, there are many networking elements in play in Uganda.
Among them are: a) Ethernet LANs connection to the fibre-optic ring b) Leased data lines c) ADSL/HDSL/ISDN d) GSM/CDMA2000 e) Fixed Wireless data services f) Wi-Fi g) Frame Relay/ATM h) Dial-Up data i) POTS telephone service/ Voice over IP (VoIP) The common technologies used by the various service providers are listed in table 7.
8. Quality standards and regulations in the sector. Players in the ICT sector in Uganda
There are two major players in this sector: the Government and the licensed operators, but with room for Public Private Partnership. The Government policy is to have an ICT industry that is private sector-driven, with the Government’s role being to create an enabling environment. Regulatory authorities Government’s involvement is primarily of: a) The Ministry of ICT/ National Information and Communications Authority Uganda (NITA-U) for integration and coordination of the different ICT activities in both the public and private sectors and initiation and development of ICT Policy advice and strategy. b) Through the Uganda Law Reform Commission the Government sets an enabling legal framework. c) The Uganda Communications Commission (now merged with the Uganda Broadcasting Council) and Uganda Media Council oversee the regulatory functions and promote development of the ICT communication (Telecommunications and Postal Services), National Information Technology Agency-Uganda, Broadcasting Multimedia sector in the country including the rural areas i.e. Regulation and Standards. d) Uganda Investment Authority for promoting and facilitating investment opportunities in the sector as well as being the focal point for the ICT exports Strategic Intervention Program i.e. Promotion and Facilitation. e) The Uganda National Council of Science and Technology and Public Tertiary Institutions for innovation, research and development of ICT Policy advice and strategy i.e. Research and Development. Legislations Governing the Sector a) Uganda Communications Act Cap 106 Laws of Uganda The main objective behind the policy was to increase the penetration and level of telecommunication services in the country through private sector investment rather than government intervention. This policy framework focused on the provision of infrastructure under minimum competition known as the Exclusivity (Duopoly) regime. This limited competition was a key strategy pillar in the policy to attract private sector investment at a time when the market size was assumed to be small. b) Uganda Communications Commission Regulations Here below are the UCC regulations:o Radio Communications Regulations o Equipment Type Approval Regulations o Postal Regulations o Practice and Procedure Regulations o Tariff and Accounting Regulations o Fair Competition Regulations
o Licensing Regulations o Universal Service Regulations o Interconnection Regulations Policies Driving the Sector a) Telecom Sector Policy The current telecommunications policy and regulatory environment in Uganda was established through the telecommunications sector policy framework of 1996, the Uganda Communications Act of 1997 (Laws of Uganda Cap 106), and the licenses that were issued to the two National Telecommunications Operators. Key components of the policy strategy were the creation of an independent regulator, implementation of a limited competition period (specifically in basic telephony services, cellular telecommunications services and satellite services) and the unbundling of the Uganda Posts and Telecommunications Corporation. b) Postal Policy This policy recommendation is intended to form the basis for a postal policy framework that will be formulated by Government and lead to a more efficient and effective postal sector c) National ICT Policy Framework The scope of the ICT Policy covers: • information as a resource for development • mechanisms for accessing information, and • ICT as an industry, including e-business, software development and manufacturing. The policy looks at various categories of information from different sectors, essentially aimed at empowering people to improve their living conditions. The sectors include: health, education, agriculture, energy, environment, business, science and technology, etc. d) Rural Communications Policy This policy lays focus on three key aspects for the development of Uganda as an information society and these are: Coverage, Connectivity, and Content. Coverage: It is considered vital to broaden coverage in order to reduce the percentage of Ugandans that are underserved and thus attain the WSIS target for access to basic information and communications services. Connectivity: This is to specifically address the country’s future goal of a broadband-enabled information society especially with respect to education institutions and government’s service delivery plans. Content: This is emphasized because local content production and utilization are essential for the entrenchment and consolidation of information society in any country. 9. Investment trends in the sector (as extracted from the UIA database)
i. Growth in number of licensed projects
ii. Growth in employment generated.
iii. Growth in amount of investment.
10. Investment Opportunities in ICT Sector a) ICT Technology Parks: these will boost the development of BPO Incubation and Innovation systems. b) Business Process Outsourcing (BPO): call Centre Services and Business Support including; recent infrastructure and call centre development, Uganda geographical and time zones location as well as the big pool of skilled cheap labour force favour investment in the outsourcing services. Uganda has developed a BPO strategy that is very supportive. c) E-Commerce & M-Commerce Solutions and B2B solutions: there are few companies with specialised/customised E-Commerce M-Commerce solutions. d) Software Development and Training Opportunities. e) Software Testing & Assurance. f) Data Integration. Online Database Integration provides the facilities to a single office to access other offices’ branches data spread across a territory from the same source. g) Data Warehousing and Data Management. Uganda’s natural location gives it an edge in hosting data recovery centres. h) Integrated Solutions planning in a demand-driven supply chain. It is a must to deliver right products at the right place, right time and right price. There should be inventory turns and avoid stock outs while meeting business goals and objectives. It is not enough to just react to the needs of customers and hope you have what they want, you must anticipate demand before it happens and plan accordingly. i) Hardware Equipment Assemble. There are no ICT manufacturing activities in the country. The best way to enter this area is through assembling. A variety of resources to support equipment assemble are abundant in Uganda. j) Multimedia Development and Music. The Multimedia business is still in its infancy and whatever production made in Uganda is faced with stiff global and regional competition. More investment to exploit the local talents and innovation is needed.
k) Internet Applications. l) E-Translation Services. The local population cannot easily access many documents and information. Currently there is a need to electronically translate those documents into local content. m) Rural Communications. n) Broadband Service Provision. o) Software Solutions for Financial Sector. p) ICT Business Incubation. q) Network Computing /Management software. r) Intranet Internet &Extranet Applications. s) Professional Solutions for Manufacturing Industry. t) IT Education and Specialized Training and setting up of ICT virtual zones. u) Information Security and Management. 11. Key contacts (relevant government departments) a) Ministry of ICT/ National Information and Communications Authority Uganda (NITA-U). URL: www.nita.go.ug Tel: +256 414 705720, +256 414 705710 Fax: +256 414 251 775 b) Uganda Law Reform Commission. URL: www.ulrc.go.ug Tel: +256 414 346200, +256 414 341138 Fax: +256 414 254869 c) Uganda Communications Commission. URL: www.ucc.co.ug Tel: +256 414 339000, +256 312 339000 Fax: +256 414 348832 d) Uganda Investment Authority. URL: www.ugandainvest.go.ug Tel: +256 414 301000 Fax: +256 414 342903 e) Uganda National Council of Science and Technology. URL: www.uncst.go.ug Tel: +256 414 705500 Fax: + 256 414 234579
