Telecommunication equipment manufacturing
Telecommunication equipment manufacturing
Business Model Description
Manufacture affordable electronic devices, such as mobile phones and tablets, for the national market and potential exports.
Expected Impact
Enable access to knowledge, information and economic opportunities through affordable mobile phones.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Case Studies
Country & Regions
- Uganda: Central
Sector Classification
Technology and Communications
Development need
Uganda has a major challenge in attaining SDG 9 - Industry, innovation and infrastructure.(III) Technology is indicated as one of the key drivers for Uganda’s socio-economic transformation – described as fundamental for the country's development.(I)
Policy priority
Uganda has embraced technology, yet not sufficiently enough to enhance its production and consumption patterns. The agenda prioritizes transforming Uganda into a knowledge society by 2025.(II) Transformation will be driven by processes for a smart e-government and innovations that reduce the cost of doing business and supporting data management.(II)
Technology
Policy priority
Technology and communications remain a cross-cutting issue in the majority of key strategy and policy documents such as Vision 2040 and the 3rd National Development Plan III 2020/21 – 2024/25.(IV),(V) The government wants to support access to information communications and technology (ICT) by scaling the local production of smartphones and computers thus lowering their price.(V)
Hardware
Pipeline Opportunity
Telecommunication equipment manufacturing
Manufacture affordable electronic devices, such as mobile phones and tablets, for the national market and potential exports.
Business Case
Market Size and Environment
26% of male and 16% of female Ugandans intend to acquire a smartphone within six months.
26% of male and 16% of female Ugandans intend to acquire a smartphone within six months.(5) The information and communications technology (ICT) sector showed significant growth between 2014/15 and 2015/16, from 6.6% of the country's gross domestic product (GDP) to 8.7%.(4) Sectoral estimations showcased an average growth rate of 19.7% annually.(25)
In 2018, only 44% of the population had a mobile subscription, translating to just over 19.8 million people.(4) 98% of Uganda's population is covered by 2G networks, while 78% is covered by a 3G network.(4)
In Uganda, 26% of men and 16% of women declared an intention to acquire a smartphone in the next six months.(5) In 2017/18, 84.2% of the population did not own smartphones.(2)
Indicative Return
20% - 25%
Benchmark statistics for the electronics manufacturing sector estimate a return rate of 20% to 24%. This rate is a benchmark calculated as a cost of equity with a country risk premium, reflecting an average return required by investors.(22)
Investment Timeframe
Short Term (0–5 years)
A consulted company started production in 2020 and sold 400,000 phones to the market, which allowed it to recover their investment within one year.(27)
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Business Model Unproven
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
While SDG 5 - Gender Equality and SDG 9 - Industry, Innovation and Infrastructure show moderate improvements, important challenges remain in terms of access and affordability of technology, mobile phones and communications.(III)
In Uganda, almost 72% of the population had mobile phones in 2017/18 (2), but the smartphone adoption is just 16% in Uganda compared with 30% in Sub-Saharan Africa.(4)
Affordability of devices and SIM cards is considered the top barrier to owning a mobile phone by 48% of men and 41% of women in Uganda.(5)
Gender & Marginalisation
There is a wide gender gap in mobile phone ownership, with 84% of men owning a mobile phone compared with only 69% of Ugandan women.(5)
There are also significant gender disparities in access to mobile networks between rural and urban areas. Urban areas have a 4% gender gap in mobile ownership, while in rural areas it is more than 5 times more at 22%.(5)
Overall, mobile phone ownership is 78.5% in urban areas, compared with 65.7% in rural areas.(2)
Expected Development Outcome
Improved knowledge and information transfer; improved trade balance due to import substitution
Reduced income barrier against possessing a mobile device; increased number of high-skill workplaces and manufacturing workplaces
Reduced price of smartphones and hardware in the country
Gender & Marginalisation
Owning a mobile phone contributes to women's empowerment. Surveys indicate mobile phones help women stay connected to friends and family, save their time, make them feel safer, give them independence and help save money.(3)
Primary SDGs addressed
5.b.1 Proportion of individuals who own a mobile telephone, by sex
9.2.1 Manufacturing value added as a proportion of GDP and per capita
9.2.2 Manufacturing employment as a proportion of total employment
9.b.1 Proportion of medium and high-tech industry value added in total value added
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Outcome Risks
Increased amount of e-waste generated (17)
Possible pollution arising from manufacturing activities (18)
Potential negative impacts on health, including concentration problems, sleep problems, impaired vision, impaired physique (19)
Impact Classification
What
Likely to have a positive impact by reducing inequality and exclusion. Establishing hardware manufacturing facilities will create decent workplaces.
Who
Communities who are facing an affordability constraint, prohibiting them from owning a mobile device who are aggrieved by lower opportunities for access to information, finance and communication
Risk
Although mobile phones are already under production in Uganda, risks connected with competition, natural environment and pricing (and therefore revenues) remain.
Impact Thesis
Enable access to knowledge, information and economic opportunities through affordable mobile phones.
Enabling Environment
Policy Environment
National ICT Policy 2014: This policy describes the government's agenda to transform Uganda into a knowledge society by improving access to mobile networks.(6)
National Industrial Policy: This policy describes constraints and challenges in the manufacturing sector, together with solutions and government interventions. It also outlines priority investments for developing industry and manufacturing in Uganda.(23)
Rural Communications Development Policy for Uganda 2009: This policy targets rural communities, which are underserved in terms of coverage and connectivity, to support Uganda's information and communications technology (ICT) industry.(9)
Industrial Policy for Economic Transformation in Uganda 2020: This policy recognises electronics as one of the most important manufactured goods for Uganda's transformation.(8)
The government promotes local manufacturing through the policy 'Buy Uganda Build Uganda', launched in 2013.(26)
Financial Environment
Fiscal incentives: Plant and machinery - payment of value added tax (VAT) at importation on plant and machinery is deferred to a future date.(15) Exemption of tax on income derived by an operator in an Industrial Park or Free Zone who invests in information technology.(15)
Other incentives: Uganda offers an indefinite Initial allowance and depreciation allowance (15), such as the Initial Allowance. This allowance offers a capital deduction of 50% on qualifying plant and machinery and 20% on industrial buildings within 50 km of Kampala's boundaries.
Regulatory Environment
Trade (Licensing) Act: This Act describes the requirements and licensing process for anyone involved in wholesale or retail of goods.(10)
Data Protection and Privacy Act 2019: This Act regulates the collection and processing of personal information, as well as disclosure and use of personal information.(11)
Collective Investment Schemes (Conduct of Business and Miscellaneous Provisions) Regulations 2007: These regulations provide requirements for communications, responsibilities and compliance and reporting by investors.(13)
The National Information Technology Authority regulates all issues related to mobile networks and connectivity in Uganda.(12)
The Ministry of Trade, Industry and Cooperatives is responsible for issuing regulations and policies regarding manufacturing activities and trade in Uganda.(14)
Marketplace Participants
Private Sector
SIMI (Engo), Copia, Tecno, FERO, Huawei, Xiaomi, MTN Uganda, BMCE Bank of Africa
Government
Ministry of Investment and Privatisation in Uganda, Ministry of Trade, Industry and Cooperatives
Non-Profit
UKAid, GSMA, United Nations Industrial Development Organisation (UNIDO), United Nations Education, Scientific and Cultural Organization (UNESCO), United Nations Conference on Trade and Development (UNCTAD), African Development Bank (AfDB)
Target Locations
Uganda: Central
References
- (I) National Planning Authority. National Development Plan III (NDPIII) 2020/21 – 2024/25. (II) Ministry of Information and Communications Technology (2014). National Information and Communications Technology Policy for Uganda. (III) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press. (IV) Government of Uganda. Uganda Vision 2040. https://consultations.worldbank.org/sites/default/files/materials/consultation-template/materials/vision20204011.pdf (V) National Planning Authority. National Development Plan III (NDPIII) 2020/21 – 2024/25.
- (1) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press.
- (2) National Information Technology Authority-Uganda (2018). National Information Technology Survey 2017/18 Report. https://www.nita.go.ug/sites/default/files/publications/National%20IT%20Survey%20April%2010th.pdf
- (3) GSMA (2015). Bridging the gender gap: Mobile access and usage in low and middle income countries. https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/02/Connected-Women-Gender-Gap.pdf
- (4) GSMA (2019). Uganda: Driving inclusive socio-economic progress through mobile-enabled digital transformation. https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/03/GSMA_Connected_Society_Uganda_Overview.pdf
- (5) GSMA (2020). The Mobile Gender Gap Report 2020. https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2020/05/GSMA-The-Mobile-Gender-Gap-Report-2020.pdf
- (6) Ministry of Information and Communications Technology (2014). National Information and Communications Technology Policy for Uganda.
- (7) National Planning Authority. National Development Plan III (NDPIII) 2020/21 – 2024/25.
- (8) Konrad Adenauer Stiftung (2020). Industrial Policy for Economic Transformation in Uganda. https://www.kas.de/documents/280229/9581001/CDA_KAS+Reality+Check+12_Industrial+Policy+for+Economic+Transformation+in+Uganda.pdf/34cdb812-3de4-87e2-7281-0256682ba53f?t=1594904315863
- (9) Uganda Communications Commission (2009). Rural Communications Development Policy for Uganda. https://researchictafrica.net/countries/uganda/Rural_Communications_Development_Policy_for_Uganda_2009.pdf
- (10) Government of Uganda (2019). Trade (Licensing) Act. http://www.mtic.go.ug/wp-content/uploads/2019/08/Trade-Licensing-Act-Chapter-101.pdf
- (11) Government of Uganda (2019). Data Protection and Privacy Act.https://www.nita.go.ug/sites/default/files/publications/Data%20Protection%20and%20Privacy%20Act%20No.%209%20of%202019.pdf
- (12) National Information Technology Authority-Uganda. About NITA-U. https://www.nita.go.ug/about-nita-u
- (13) Government of Uganda (2007). Collective Investment Schemes (Conduct of Business and Miscellaneous Provisions) Regulations. https://businesslicences.go.ug/kcfinder/upload/files/The%20Collective%20Investment%20Schemes%20%28Conduct%20of%20business%20and%20misc.%20provisions%29%20Regulations%2C%202007.pdf
- (14) Ministry of Trade, Industry and Cooperatives. Background and Mandate. http://www.mtic.go.ug/background-and-mandate/
- (15) Uganda Revenue Authority (2019). A Tax Incentives Guide for Investors in Uganda. https://www.ebiz.go.ug/wp-content/uploads/2020/03/TAX_INCENTIVES_GUIDE_FOR_INVESTORS_IN_UGANDA_October_2019.pdf
- (16) Uganda Bureau of Statistics (2018). National Labour Force Survey 2016/17. https://www.ubos.org/wp-content/uploads/publications/10_2018Report_national_labour_force_survey_2016_17.pdf
- (17) Krause, M. (2017). Electronic Waste as an Externality. How the EU influences Welfare in Western Africa and how the Status quo can be improved. https://www.researchgate.net/publication/322108795_Electronic_Waste_as_an_Externality_How_the_EU_influences_Welfare_in_Western_Africa_and_how_the_Status_quo_can_be_improved
- (18) The Irish News (2018). 'How our smartphones are hurting the environment'. https://www.irishnews.com/magazine/science/2018/03/02/news/how-our-smartphones-are-hurting-the-environment-1268849
- (19) Davis, C.P. (2018). Smartphone Dangers: Could Your Cell Phone Be Bad for Your Health? https://www.onhealth.com/content/1/dangers_cell_phone_health
- (20) Calabrese, L., Golooba-Mutebi, F. and Mendez-Parra, M. (2019). Industrial Development in Uganda. https://set.odi.org/wp-content/uploads/2019/12/Jobs-Africa-Uganda-Updated-draft-FINAL.pdf
- (21) H. Jafarieh, H. (2001). Technology transfer to developing countries: a quantitative approach. https://core.ac.uk/download/pdf/81447.pdf
- (22) PwC analysis based on Prof. A. Damodaran data, 2020.
- (23) Ministry of Tourism, Trade and Industry (2008). National Industrial Policy. http://www.mtic.go.ug/wp-content/uploads/2019/08/National-Industrial-Policy.pdf
- (24) Statista Database.
- (25) World Bank (2020). Digital Technologies Could Help Uganda’s Economy Recover Faster. https://www.worldbank.org/en/news/press-release/2020/07/08/digital-technologies-could-help-ugandas-economy-recover-faster
- (26) PwC. Buy Uganda Build Uganda. https://www.pwc.com/ug/en/press-room/buy-uganda-build-uganda.html
- (27) UNDP/PwC private sector interviews, 2021.