UGANDA: OVERVIEW OF DATA INFRASTRUCTURE IN EAST AFRICA

By Sophie Nyombi,Brian Kalule Tuesday, April 13, 2021
  • SHARE THIS ARTICLE

In this article, the second in our series on data infrastructure in East Africa, the spotlight falls on Uganda and specifically the state of its cable and other network infrastructure, as well as mobile and internet penetration.

Overview of data infrastructure in Uganda

The ongoing expansion and improvement of data infrastructure in Uganda is playing a major role in the country’s economic development and boosting the contribution of the information and communications technology (ICT) sector to gross domestic product (GDP). This has risen from 2.5% in 2015 to[1] approximately 3.1% currently. It is estimated that the sector employs over two million people (with direct employment of about one million). A significant number of young people are engaged in activities such as ICT hubs, resale of value-added services and ICT innovation, bolstering much-needed youth employment.

As a whole, the communication sector’s contribution to tax revenues has steadily increased over the years, from UGX 155.58 billion (approximately USD 42,465,753) in 2008 to UGX 484.42 billion (approximately USD 132,492,545) in 2014/15, before registering a slight drop to UGX 457.64 billion (approximately USD 125,205,479) in 2015/16[2]. By the second quarter of 2020 the total revenue collected was UGX. 975 billion[3] (approximately USD 267,123,287)

The total optical fiber network, both Government and private owned, spans around 12,000 km covering 49 percent of the districts in Uganda.[4] As a mode of boosting data infrastructure, Government launched the National Data Transmission Backbone Infrastructure (NBI) Optic Fiber network in order to boost the usage of internet among citizens and government departments. There are 3517[5] mobile towers in the country, thereby leaving a gap of at least 3500[6] additional towers required to cater for full connectivity. As such, the uptake of ICT services, made possible through the substantial investments that Government and private sector players have made in data infrastructure, is changing the face of government service delivery and industries such as the financial sector.

Financial services have significantly increased their uptake of e-commerce channels, as demonstrated by ongoing growth in mobile money transactions, internet banking and e-wallets, paving the way towards a cashless economy. The total number of registered mobile money accounts stood at 27.7 million[7] at the end of September 2020. This translates into a financial service penetration rate of at least two registered lines for every three Ugandans.

Furthermore, several e-commerce companies have set up operations in Uganda, for example Jumia Uganda, Uber Technologies Uganda Ltd, Safe boda and Glovo Uganda, among others, which has also increased employment in the sector.

Various transactions can now be done online, such as payments for school fees and utility services such as water and electricity. Mobile payment of utility bills is the most used e-Government service (62.6%), followed by online registration for tax identification numbers (TINs).

E-payments have also become mainstream: 62.1%[8] of individuals have sent or transferred money within Uganda using an electronic method, most likely a mobile phone-to-mobile phone transfer involving mobile money. This has attracted several money payment systems to establish operations in Uganda. Collections of VAT, PAYE and excise duties from telecom companies amounted to UGX 523,121 million in FY 2016/17, compared to UGX 214,841 million in 2009/10.[9]

Data infrastructure growth and improvements in mobile infrastructure have also contributed to growth in the number of handheld computing devices, such as smart phones, in circulation. This has automatically resulted in growth in network-connected gadgets.[10]

As for Government, progress is being made in automating service delivery in Ministries, Departments and Agencies (MDAs) and Local Governments (LGs).

For example, by 2018, 248[11] websites had been developed across government MDA/LDs and approximately 297 systems/applications were in use across MDAs/LGs to promote internal efficiencies and support the provision of services to the public. During the COVID-19 lockdown of 2020, the judiciary adopted to e-court hearings system to dispense justice and the Uganda Registration Services Bureau adopted e-filings for business registrations and searches, among other things.

Furthermore, to improve service delivery and increase uptake of e-services, Government has developed common core infrastructure, such as the National Data Centre[12], and rolled out a series of horizontal shared services that cut across different public sector organisations and various e-Government systems across a range of MDAs/LGs. However, there is still duplication of IT applications and services within Government.

All in all, Uganda has made good strides in expanding and improving data infrastructure as an economic enabler, but there is still much to be done.

The state of data infrastructure in Uganda

High-speed internet

When internet was first introduced in Uganda, it was perceived to be merely another form of technology for advanced communication. As a result, not much attention and priority was given to the planning and development of its infrastructure. However, increased demand for digitisation in almost all sectors necessitated high-speed, reliable internet connectivity across the country. As a result, high-speed internet infrastructure is now planned in the same way as any other national public service such as roads, water, energy and oil pipelines.

In 2018, Government established the National Broadband Policy (NBP) to facilitate the implementation of the National Development Plan (NDP). The NDP recognises that the ICT sector plays a central role in enabling economic and social transformation. As such, Government has prioritised the development and deployment of data infrastructure to enable connectivity for all, digital inclusion and affordability.

At the end of June 2020, total internet connections stood at 18.9 million, translating into a penetration rate of 46 internet connections for every 100 Ugandans. This new growth is indicative of the conversion of previous voice-only customers into internet users[13]. Mobile handsets remain the dominant means of accessing the internet, accounting for 99.86% of subscriptions in June 2020, compared with only 27 351 fixed internet subscribers. The total number of mobile internet subscribers was 19 917 120 as at June 2020[14].

Growth in internet connectivity continues. At the end of September 2020, total internet subscriptions had, for the first time in industry history, crossed the 20-million mark[15]. This equates to one internet connection for every two Ugandans. This exceptional performance is mainly attributed to the shifting work culture caused by the COVID-19 pandemic, which led many businesses to adopt remote working methods.

Fibre optic cable

Strategic investments, such as the National Data Transmission Backbone Infrastructure (NBI) optic fibre network, was launched and it helped propel internet usage among citizens and government departments, and support the attainment of high-level development objectives such as the Sustainable Development Goals (SDGs)[16]

Implementation of the NBI optic fibre network commenced in 2006/07, in tandem with the e-Government Infrastructure project [17], and is ongoing. Some successes to date include extending ICT services to community schools through interventions such as the Rural Communication Development Fund (RCDF). 

The NBI and eGovernment Infrastructure (EGI) project involves laying fibre optic cable to all major towns with transmission stations and has, since 2010, been the responsibility of the National Information Technology Authority (NITA), under the NITA – Uganda Act of 2009.

The NBI-EGI project comprises the following four phases:

Phase I

This entailed laying 168 km cable linking the towns of Entebbe, Mukono, Jinja and Bombo to Kampala, and including 27 Ministries and some Government Departments. This phase has been completed.

Phase II.

In this phase, a total of 1 400.734 km of cable was deployed, connecting Busia, Tororo, Mbale, Malaba, Kumi, Soroti, Lira, Gulu, Elegu, Masindi, Kyenjojo, Fort Portal, Kasese, Bushenyi and Mbarara. This phase has also been completed.

Under Phase III.

The NBI/EGI became operational in 2013/14 after NITA-U completed the extension of the NBI to the towns of Masaka, Mbarara and Kabale, and the Mutukula and Katuna border posts.

This phase also involved establishing an alternative fibre optic route to the undersea cables via Mutukula to Dar es Saalam; and completing the concentric rings across the country through the implementation of the Kyenjojo-Masindi route. Furthermore, a link was deployed across the border to Tanzania and Rwanda through Mutukula, Rusumo and back to Katuna to enhance regional connectivity.  The border town of Katuna was connected through the laying of the Kampala- Katuna cable route.

Phase IV

Phase four has commenced and entails extending the ICT backbone to the West Nile districts of Pakwach, Nebbi, Arua, Yumbe, Koboko and Adjumani, Katakwi and Moroto. In addition, the three border points of Uganda at Oraba with South Sudan, Vurra and Mpondwe with DR Congo will be connected to the ICT backbone for regional connectivity and to enhance the redundancy of the NBI.

Currently, the total fibre optic network, both Government and private owned, spans around 12 000 km, covering 49% of the districts in Uganda and 24% of the sub-counties, with presence at all border points[18]. Owing to route duplication by operators in both the public and private sectors, the effective national coverage is less than 4 000 km and the fibre network route is limited to the major urban centres. Most rural areas continue to be underserved.

The NBP was put in place to enforce infrastructure sharing among operators, among other things, thus putting an end to wasteful infrastructure duplication. Operators are expected to share broadband infrastructure, according to the NBP, and not build new infrastructure where it already exists. This is known as the ‘dig and bury once’ policy[19].

On optic fibre penetration, 384[20] out of 612 sub-counties with 3G coverage do not have any fibre to support data backhaul. As such, there are limited or constrained access speeds. The penetration of the optic fibre network in rural areas is also poor. More than 60 districts do not have fibre in the ground while Kampala has around 282 km[21] of laid fibre cable.

Mobile communications

In the mobile sector, just 45%[22] of the country has 3G coverage, and this is mainly in urban areas, along main routes such as Kampala to Gulu, Kampala to Busia or Kampala to Mbarara[23].

Towers

There are 3 517 mobile towers in the country operated by the American Tower Company. These serve approximately 4 000 base transceiver stations (BTS), with an average tenancy ratio of just 1.14 BTS per tower which is very low by industry standards. Out of the available BTS, only 1 600 are 3G enabled. According to the Towerxchange report 2017[24], at least 3 500 additional towers are required to cater for full connectivity.

Sector policy on data infrastructure

Uganda’s Vision 2040[25], (currently known as the Third National Development Plan III (NDPIII)), consolidates previous national development strategies and future prospects and acknowledges the role ICT plays towards national development.

However, the NDP III notes a number of challenges that have emerged to hinder further growth of the sector.[26] Chief among these are the limited ICT infrastructure network; insufficient investment in research, the silo-based approach to planning, necessitating better coordination of ICT infrastructure development, and the need for innovation and human capital development.

The plan also recommends the digitisation and roll-out of e-services to all sectors, MDAs and Local Governments to harness the potential of ICT and rationalise ICT agencies to remove duplication and overlap of mandates.

The National ICT Policy 2014 seeks to address some of these gaps through deepening utilisation of ICT services by Government, private sector, not-for-profit ICT organisations and the wider citizenry. Furthermore, the ICT Sector Strategy and Investment Plan (ICT-SIP) aims to operationalise the NDP II and National ICT Policy priorities, through actions in ICT governance, human resource development, research and innovation, information security, promotion of ICT exports, and infrastructure development.

The National Broadband Policy (2018)[27] builds on the objectives of Vision 2014 and NDP I, NDP II and NDP III by highlighting the role of broadband internet as an enabler for socio-economic development. The policy also aims to coordinate the planning, development and management of all actors to prevent duplication, as well as to review the licensing regime in order to achieve universal access and service of communications.

The policy highlights five thematic areas that are key to ensuring increased access and use of ICT for national development: infrastructure, connectivity and devices; E-government service delivery, cross-sector infrastructure sharing, right mix of technology and network neutrality, promotion of research and innovation, regional integration and environmental consideration.

Further, the policy seeks to achieve 100% broadband connectivity at all district and sub-county headquarters, health centers  tertiary institutions and secondary schools by 2020, and connectivity at 50% of primary schools. Additionally, the current RCDF Policy is aimed at ensuring affordable broadband connectivity and access by all communities in Uganda.

In 2017, the Ministry of ICT and National Guidance embarked on the Digital Vision Uganda initiative[28] to leverage technological innovations to meet various national and international goals, including universal inclusion and sustainable development. This campaign aims to achieve a unified action plan that draws on various initiatives from all sectors and focuses on technology-based empowerment. The strategy is still under development with implementation done in phases.

Other supporting policies and strategies include the National Information Security Strategy (NISS) 2011, Transition from Internet Protocol version 4 (IPv4) to Internet Protocol version 6 (IPv6) address Strategy 2011, National Postal Policy, E-waste Management Policy 2012, Migration from Analogue to Digital Terrestrial TV Broadcasting Policy 2011, and National Broadcasting Policy 2006.

Some policies and strategies championed by NITA-U include Institutionalisation of ICTs in MDAs and LGs strategy; Business Process Outsoursing Strategy and Model for Uganda; National IT Research, Development and Innovation Strategy, as well as the National IT Data Collection, Analysis and Dissemination Framework.

However, despite this outstanding policy framework, ICT access and affordability are still a challenge for sections of the population such as the indigent, rural populations.[29]

Regulation of data infrastructure

Once dominated by state monopolies that struggled to deliver services to the nation, the ICT sector has undergone substantial liberalisation and a number of private sector providers operate in a very dynamic and competitive environment.

The key players in the sector are:

  • The Government of Uganda through the Ministry of ICT and National Guidance which oversees the sector and provides the necessary policy framework to guide implementation.
  • The Uganda Communications Commission (UCC) which regulates telecommunication sector and it is also responsible for managing and implementing the RCDF.
  • National Information Technology Authority - Uganda (NITA-U) which regulates the sector and is also responsible for rolling out the operation of the NBI and e- government infrastructure.
  • The mobile telecom operators (MTOs) such as MTN Uganda, Airtel Uganda, Africel Uganda and Uganda Telecom.
  • Internet service providers (ISPs) which include, Smile Telecom, Roke Telkom, Simbanet/Zuku, Lyca Mobile, Tangerine Liquid Telecom, and Datanet.com LLC,
  • Fibre companies such as Data net, Csquared Ltd, Bandwidith and Cloud Services Group, East African Broadband Services Ltd among others.
  • Tower companies such as the American Tower Company (ATC), among others.[30]

The legislative framework for the development and deployment of data infrastructure is built on various laws and regulations, two key laws being the Uganda Communication Act 2013 and the NITA-U Act 2009:

  • The Uganda Communications Act 2013 regulates telecommunications, broadcasting, radio communications, postal communications and data communication and infrastructure. One of the most important provisions of the Act is that it obliges licence holders to share infrastructure.
  • The Uganda Communication Licensing Regulations 2019 provide for the regulation and licensing of telecommunication services.
  • The NITA-U Act 2009 established NITA-U as the sector regulator. It is also responsible for providing high-quality information technology services to Government, among others. The NITA-U (E- Government Regulations) 2015 promote e-government services and electronic communications and transactions with public and private bodies, institutions, and citizens.

Licensing requirements

National Telecom Operator (NTO) licences are granted under strict coverage, spectrum, local listing and local employment requirements:

  • All holders of NTO licences are required to cover the entire geography of Uganda so as to enable universal access and promote effective competition and quality of service.
  • Spectrum, being a scarce and finite national resource, needs to be managed and utilised efficiently, optimally and rationally. In Uganda, these resources may not be owned by private telecom service providers. The principle for all operators is ‘use it or lose it’. When selling a stake through a merger or acquisition, no operator can lay claim to spectrum.
  • All NTO licence holders are required to list 20% of their shareholding on the Uganda Stock Exchange.

Operators are required to reserve a certain percentage of employment for citizens of Uganda. This applies to strategic and general positions.

Challenges in the sector

High costs

The duplication of optic fibre routes by different operators has driven up the costs of maintaining the infrastructure, as well as internet prices, thereby denying internet access to many people.

Generally, the cost of bandwidth in Uganda is considered high and could impede the growth of the local ICT sector.  By way of example, the average monthly cost of broadband without a data cap (but with limited speeds) on a shared link is UGX 300 000 (approximately USD 84). This compares to bandwidth prices of around USD 5.37 per month in Iran, USD 37 per month in India and USD 12 per month in Syria[31]. Government should implement its policy on infrastructure sharing among operators in order to put an end to infrastructure duplication. Further, the Government should implement expansion of the NBI optic fibre. This will make data infrastructure more accessible and cost friendly.    

Social media tax/ Over The Top Services Tax (OTT)

The social media tax has impacted negatively on mobile operator revenues. An unintended consequence of the tax is that  Government does not generate the anticipated revenue as people curtail their social media use or find ways to circumvent the taxes through virtual private networks. As a result, the Excise Duty (Amendment) Bill 2021 is proposing to repeal the payment of OTT and introduce excise duty at a rate of 12% on internet data. This will make internet costs more expensive. In light of this, a nuanced analysis on the sector is necessary so as to balance government interests with accessibility to the internet and promoting innovation.  

Heavy handed regulatory action

During the 2021 general elections, Government ordered all ISPs to shut down the internet for five days. The internet shutdown resulted in major losses for ISPs and e-commerce traders. These excessive measures by government understandably give pause to tech stakeholders in the region and could in the long term hinder investment.

Onerous licensing requirements and fees

The newly introduced licensing regulation 2019, requiring NTOs to undertake local listings, has caused shockwaves among existing operators and may deter further investment.

In addition, in terms of the new regulation, the Uganda Communications Commission (UCC) dramatically increased licensing fees. These rose from USD 10 000 a year to USD 30 000 a year for ISPs, which is high compared to other parts of Africa. After the UCC was taken to court, the regulator agreed to reduce the licensing fees.[32]. Regulations requiring investors to turn to the courts for remedies, such as this one, may deter investment. It is important that the Government avoids imposing overly stringent requirements that may deter investment but rather put in place incentives that attract investors – given the key role that ICT services are set to take in the National Development Plan.

Capacity challenges

Although the Ugandan market is highly liberalised and considered quite dynamic, it remains highly monopolised by a few entities, hindering optimal competition. Airtel Uganda and MTN Uganda together control 82% of the Ugandan market, with the former’s share standing at 45% and the latter controlling about 37% of total mobile subscription. Uganda Telecom, which provides both fixed and mobile services, has only 8% mobile market share and Africell only 5%.

The failure of the regulator to deal with the dominance of MTN and Airtel, despite market reviews indicating market dominance, has resulted in some operators remaining marginal and others being forced to exit the market. For example, Vodacom and K2 exited the market in 2018.

ATC is also a dominant tower company in the market with over 70% market share. High costs have been a major barrier to entry. There may be need for UCC to implement adequate competition regulations with the aim of reducing the market dominance.

Future of the sector

Three exciting developments pose opportunities for players in the ICT sector broadly and for data infrastructure providers in particular. These are preparations for 5G technology, a review of spectrum and efforts to promote innovation.

On the regulatory front, the UCC in consultation with the industry is reviewing spectrum band plans in preparation for 5G. Further to this, the regulator in collaboration with the industry is establishing the first technology test bed in the country.

Further, there is a proposal to build a Stateline Station in Uganda. The Plan is to launch the first satellite in 2022.

In the recent past, Government has taken the lead in the development and deployment of data infrastructure, as demonstrated by its extensive involvement and investment in ICT infrastructure, which by 2018 stood at USD 105 million.

That said, investor appetite is high owing to conducive market factors such as ample space for greater internet penetration and strong demand for digital services among consumers and businesses alike.


[1] NBP, September 2018

[2] UCC Annual Market and Industry Report 2015/2016

[3] Industry Performance Report Q2 2020

[4] National Development Plan III (NDP III) 2020/2021- 2024/2025

[5] Uganda National Broadband Policy, September 2018

[6] Uganda National Broadband Policy, September 2018

[7] UCC Market Performance Report Q3 2020

[8] National Information Technology Survey 2017/2018 Report

[9] NBP, September 2018

[10] UCC Market Performance Report Q3 2020

[11] National Broadband Policy, September 2018

[12] NDI III 2020/2021-2024/2025

[13] UCC Industry Performance Report 2Q 2020

[14] UCC Industry Performance Report 2Q 2020

[15]  UCC Market Performance Report 3Q 2020

[16] National Information Technology Survey 2017/2018 Report

[17] https://www.nita.go.ug/projects/national-backbone-infrastructure-project-nbiegi

[18] National Development Plan III (NDP III) 2020/2021- 2024/2025

[19] Uganda National Broadband Policy, September 2018

[20] Uganda National Broadband Policy, September 2018

[21] Uganda National Broadband Policy, September 2018

[22] Uganda NBP, September 2018

[23] Uganda NBP, September 2018

[24] Uganda NBP, September 2018

[25] Uganda Vision 2020

[26] Third National Development Plan (NDP III)

[27] National Broad band Policy, September 2018

[28] National Information Technology Survey 2017/2018 Report

[29] National Information Technology Survey 2017/2018 Report

[30] https://www.ucc.co.ug/list-of-telecom-providers/

[31] National Broadband Policy, September 2018

[32] https://www.monitor.co.ug/uganda/news/national/ucc-consents-to-reduce-licensing-fees-for-internet-1898434