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 m-
finance, 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) 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
PSP (Voice and Data);PIP 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
PSP and PIP Latest Technology International Limited
Foris Telecom Ltd
Excellentcom (U) Ltd
PSP and PIP (Voice and Data) Airtel (Celtel, Zain) Uganda
PSP(Voice and Data) Multichoice Uganda Limited
Link Wireless (U) Ltd
PSP(Voice and Data); PIP 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