Size and Structure

The Ugandan ICT market is growing at a cumulative annual growth rate (CAGR) of above 25%. This double digit growth has been registered over the last 5 years. The sector is mainly comprised of; provision of voice and data communication services, ICT training, website development and maintenance, custom software development. This upward trend is expected to continue as long as new players join the market.

The bulk of investment expenditure has been 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.

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. The sector has now grown at a phenomenal rate 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 accounts for more than 3.3 per cent of GDP.

Key Features of the Sector and Trends
Market penetration
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.

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 19 below shows the estimated market services penetration rates in Uganda’s telecommunications sector as of end of 2011.

Telecommunications statistics 2007- 2011

Source: UBOS Statistical Abstract 2012

The cost of international bandwidth has been reduced dramatically following the landing of the first international submarine cables on the East African coast in 2009/10. Uganda is now connected. This has caused a spur in growth of capacity with the international bandwidth by 5-fold.

Economic Activities in the Sector

Revenue drivers
The mobile market accounts for 63% of the telecom revenue followed by the fixed line segment. On the rise are headsets

Telecom Revenue Distribution

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.

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.

Demand Drivers

• A liberalized and well regulated ICT Market: Has created a conducive environment for private sector investment
• Increased demand for banking services
• Increased literacy
• Young growing population
• Positive government policies
• E-readiness of the Ugandan society allows for the development of various technology services directed to local, regional and global markets. These include investments in, high bandwidth infrastructure, fibre optic connecting, and countrywide to submarine backhaul trunks.

• Communications Infrastructure – The government implementing 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. This fibre optic cable is linked to the submarine cables at Mombasa.

• Latent local Market Potential: 70% of the Ugandan population is below 20 years of age.

• Low cost of operational licenses:  Uganda has the lowest ICT licensing and services regimes in Africa.

• High production rate of skilled labour force with good training background.

• 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.

Players and Key Trends in the Sector

Communications Technology

Ugandan regulation policy advocates for technology neutral approach and currently, there are many networking elements in play in Uganda.

Technology Platforms of Service Providers

Source: Uganda Communication Commission

    Investment and Business Opportunities

1.     Business Process Outsourcing (BPO) andKnowledge Process Outsourcing (KPO)
2.    ICT Technology Parks: these will boost the development of BPO Incubation and Innovation systems.
3.    E-Commerce & M-Commerce Solutions and B2B solutions
4.    Software Development
5.    Software Testing & Assurance.
6.    Data Integration.
7.    Data Warehousing and Data Management.
8.    Integrated Solutions Planning
9.    Hardware Equipment Assemble.
10.  Multimedia Development and Music.
11.  Internet Applications.
12.  E-Translation Services..
13.  Rural Communications.
14.  Broadband Service Provision.
15.  Software Solutions for Financial Sector.
16.  Network Computing /Management software.
17.  Intranet Internet &Extranet Applications.
18.  Professional Solutions for Manufacturing Industry.
19.  IT Education and Specialized Training and
20. Information Security and Management.
21. Setting up IT virtual zones
22. Website support and maintenance
23. Search Engine Optimisation
24. Uganda government through NITA is inviting Ugandans in Diaspora to participate in ICT projects listed under:

• • Creation of a National Data Bank to collect and store government data. The project is to be funded though Public Private Initiative (PPI).
  • Establishment and operation of an E-Government academy which will be used to train civil servants and other public sector workers.
  • Government Inter Operability framework project to link and enable IT systems across government ministries and departments to communicate with each other.  This project will be funded through PPI.
  • Set up and operation of E-Justice system aimed at automating the Uganda Justice system starting with the Commercial Courts. Government is looking for investment, set up and operation.
  • Establishment and operation of District Information Business Centers across Uganda. The centers will be used by members of the public providing access to internet and document processing services.
  • Set up and operation of E-Cabinet system which will serve as a database and communication portal.
  • Cabinet sensitization and ICT training. Provider will enter into a contract to supply trainers to train Cabinet, and Top Government officials across all Ministries, Departments and Agencies.
  • Set up and operation of a Messaging and Collaboration communication system for Government mail, voice over IP and document sharing.
  • Government IT Help Desk. The infrastructure is already set up. Contractor will supply Technical knowledge, and IT support staff.
  • Operation of a government call centre. The infrastructure has already been set up by government. The operator will supply services to government under contract.

Sector Specific Lincensing Requirements
(Refer to Appendix 3)

Incentives

Specific Sector Related Incentives
Reduced taxes and tax waivers on computer and their accessories.
Free land in UIA industrial parks.

Useful Addresses and Contacts