Uganda’s Failed Rural ICT Projects Eat Up U.S.$10 Million

Mergers, Acquisitions and Financial Results

Several rural communication projects that have so far used up more than Ush20 billion ($10 million) could fail with some districts complaining of huge maintenance costs. At a recent district leaders ICT meeting in Kampala called to assess the first phase of the Rural Communications Development Fund (RCDF), it emerged that only 923 projects out of 3,863 that have been completed are still in operation countrywide.

Overall, however, the ambitious project that was meant to bring communication services to rural communities where telecommunication operators did not find it viable to invest, was supposed to roll out 4,786 projects during the first phase, which is ending soon.

Some achievements of the project include 71 Internet points of presence, 98 Internet cafes, 68 ICT training centres, 78 district web portals, 3,349 public pay phones, four research programmes and 43 ICT health projects. The district web portals are meant to provide a communication link between local and central government.

However, districts are grappling with maintenance challenges and a number of portals are turning into white elephants, district leaders said. "The costs of hiring and redesigning the web portals are very high," said Kaberamaido district officer Stella Aringo.

For instance, it costs Ush600,000 ($300) per annum to hire a company to host the web portal, while designing fees range from a minimum of Ush1 million ($501) to Ush3 million ($1,503) annually. The domain name, on the other hand, comes at an annual cost of Ush70,000 ($35). However, the 78 districts receive fixed budgeted amounts, and portals -- which often require redesigning -- are never included in the allocations.

But RCDF director Bob Lyazi insists that the job of the Uganda Communications Commission is to set up the web portals and the districts to meet maintenance costs, a situation that district leaders say is not sustainable.

In the six years to 2008, the RCDF had accumulated close to $10 million, of which $6 million came from the one per cent levy on revenues of telecoms operators. The leaders cite other costs too, like electricity.

"Power is a big challenge," Arua district chairman Richard Ferua Andama said. RCDF was started in 2003 to provide access to basic communications services within a reasonable distance to Ugandans as well as to leverage investment in rural communications development, thereby promote ICT use.

Since 2003, the World Bank and UCC have spent over $10 million in RCDF projects to bring communication facilities to rural areas that telecommunication companies deem unviable for investment.

UCC generates money through its one per cent levy on annual revenues of telecoms companies operating in Uganda as per licensing obligations.

Over the years, MTN, Uganda Telecom and Zain have contributed to nearly half of this investment in rural communications development, but district leaders are pushing for more.

With three other operators -- Warid, Orange and I-Telecom -- in the market now, it is expected that RCDF money will increase significantly.

The East African