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‘Astronomical growth’ in Uganda’s ICT sector

Interview - July 2, 2014
The ICT sector contributed 7% to Uganda’s GDP in 2013, up from 3.4% the year before, according to Godfrey Mutabazi, Executive Director of Uganda Communications Commission (UCC). In this interview with United World, Mr Mutazbi also speaks about investment opportunities in ICT, increasing access to telecoms in rural areas, and how the UCC has helped in the development of mobile banking services?
Can you tell us a little about the Uganda Communications Commission, particularly, regarding the legal framework and the regulatory matters?

The Uganda Communications Commission (UCC) is the regulator of the communications sector in Uganda, and its mandate covers broadcasting, telecommunications and postal/courier services. This sector has, over the years, registered astronomical growth, and is ranked amongst the fastest growing in Africa.

UCC’s technology-neutral and firm regulatory oversight has led to significant decreases in retail prices of communications services in Uganda – among others – invariably enabling Ugandans to enjoy affordable and easily accessible communications services.

The Commission is also very proactive in promoting state-of-the art telecom services in Uganda, working with universities and regularly participating in local event projects. We are sponsoring mobile-telephone distribution, and soon we shall cover the entire country. We are one of the few countries in Africa that have achieved 100% GSM coverage, and a penetration of over 95%.

Please comment on the ICT revolution that Uganda has experienced in the last decade

Inevitably, ICT is the fastest-growing economic elements in Uganda. The largest proportion of the growth referred to above, has largely been in the telecommunications subsector, and it has chiefly been driven by the unprecedented expansion of mobile telephony. Furthermore, the telecommunications subsector contributes about 7% of the national GDP, and approximately UGX 346.8 Billion (USD 140 Million) to the Uganda Treasury for the calendar year ending December 2013.

Currently, mobile subscriptions stand at 18.3 million, for a population of approximately 35 million people, with half of them below the age of 18. In terms of teledensity, from 34 million people Uganda has over 18 million subscribers with 3.6 million mobile Internet users. We are well connected all over the country with 3G, and have 100% network coverage over Uganda.

However, I believe that the most important thing is that we measure how many people are on the Internet. We are looking at the broadband penetration, and the scale is going down. When it comes to broadcasting, we are one of the best countries in Africa. We have over 200 FM radio stations and 20 television stations. When it comes to information, we are well covered and represented. We have laid down a lot of fibre optic cables, both with private and government. Private is doing well. We have penetrated Rwanda, Tanzania, Sudan and the Congo.

Improved terrestrial networks and infrastructure, and the increased availability of affordable smart phones and other interned enabled portable devices, have fuelled the rapid uptake of mobile broadband services in the country. Internet access and usage is growing by leaps and bounds. Total Internet bandwidth in the country was 26,194 Mbps in December 2013, up from the 24,930 mbps the year before. Mobile Internet connectivity stands at 3.6 million by the end of 2013 compared to 2.7 million in 2012.

Who dominates the industry—the private sector or the public sector?

It is basically the private sector leading the industry because most of the major companies are privately-owned. We do have Uganda Telecom Limited (UTL), which is jointly owned by the government and a private partner. It is easy to see that the industry is largely driven by the private sector.

What is your strategy to increase the access to telecommunication services in rural areas?

We are one of the first countries in Africa to put in place a universal access fund. Through its Programme Rural Communications Development Fund (RCDF) – as the fund is called – UCC has, since 2003, played a big role in catalysing the growth of Information Communication Technology (ICT) in Uganda. RCDF, which develops appropriate ICT projects for the underserved areas, aims to provide access to basic ICT for rural communities of Uganda.

There have been targeted interventions by RCDF in the key areas of e-Health, e-Education, e-Business and e-Governance. We have managed to reach about three quarters of the country’s rural population by providing Internet Points of Presence (PoPs), internet cafes/ICT training centres, district web portals, public pay phones, GSM network expansion, school ICT laboratories, and heath ICT facilities, among others.

What investment opportunities are available in the Ugandan ICT sector?

We are very dynamic, because technology is evolving at a fast pace. We need new technologies and applications. The fact that Uganda is a popular ICT investment destination is not in doubt. Little wonder that the communications sector in Uganda accounted for about 7% of the country’s GDP in 2013, compared to 3.4% the year before. With an increasing population, improving standards of living, expanded infrastructure deployments and investment, high literacy and quality education, and a young technology-savvy population, the sky is the limit. As the sector regulator, we are actively encouraging value-added services deployments and innovative technology adoption, and we foresee a bright future for Uganda.

We need more investment in data, because that is what the global community is heading. We need to make data accessible. That requires a lot of investment in infrastructure. We want to focus on data services, and singles out data services as one area with plenty of lucrative investment opportunities, especially in an economy that is market driven, and hungry for innovative but relevant services. As for the highly lucrative fibre optic, there is a lot of room for investment. We need to go get it done and roll it out to all parts of the country.

The communications sector may be experiencing some challenges, but overall it offers significant investment opportunities. The seven major licensed telecom firms are doing brisk business, there are a number of pay TV providers, more than 200 FM stations, and all these ensure Ugandans get value-for-money.

Which US companies are you currently dealing with?

When it comes to telecom, we do get a lot of hardware and software and telecom infrastructure from American companies. Our Internet broadcasting has been done by an American company. Our Quality of Service and spectrum measurement equipment is a mostly American product as well. We do a lot of business with Americans.

What are the main challenges the industry faces?

Well, of course, we need investment. Funding is a challenge. In terms of infrastructure, investment is very critical. If you’re coming to invest in infrastructure, there must be an uptake. Who is going to use that infrastructure? If you are going to invest in data services, who is going to consume it? These are really the main challenges: capital and infrastructure.

How has this institution helped in the development of mobile banking services?

The use of mobile money services has continued to transform the conduct of business, especially for SMEs, and expanded financial inclusion for the unbanked population in Uganda. Mobile money financial services continue to grow in both volume and demand for transactions.

As of December 2013, mobile money registered subscriptions stood at 14.2 million compared to 8.87 million in December 2012. The annual cumulative value of transactions had risen to UGX 18.6 Trillion in December 2013, representing a 60% increase over the same period in 2012. We have been very technology-neutral. When we encounter new services, we always embrace them, and are very flexible in order to give new technologies an opportunity to come on board.

We have been very flexible with mobile money transactions because they are done on a platform, which will be regulated by the Bank of Uganda. We have encouraged telephone companies to embrace mobile money services, plan it, without any hindrance but still maintain strict regulations. Regulation here has been very friendly towards the mobile money industry.