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UAE Investor to get 60% of Uganda Telecom, ICT Backbone for $250m – Museveni Orders

Ugandan government officials are racing to implement a presidential directive granting a United Arab Emirates (UAE) investment firm, ROWAD Commercial Broker LL.C., a 60% stake in Uganda Telecommunication Corporation Limited (formerly UTL) and the exclusive rights to manage the National Backbone Infrastructure (NBI).

In a letter dated December 22, 2023, Museveni wrote to ICT Minister Chris Baryomunsi, saying he had received “a letter from our friends from the UAE that want to invest USD 250 million in UTL.”

Museveni added: “You should accept that Rowad Capital acquires 60% shares straight away. The details of who put in more money can be settled along the way. They should have a majority on the board.”

The President, who has met Rowad Capital officials twice in the past six months, further directed that the UAE investors “should also be given the management of the ICT backbone which, I hear, had been given to another private operator without my knowledge.”

He wondered: “Who made that decision? What advantage did Uganda get in that? The telecommunication sector is a money puller/ accumulator. So many people use the telephones and pay for voice exchanges and messages. It is good for the Country that we now have 32 million telephone lines compared to the 23,000 of 1986.”

ChimpReports has learned that on December 22, 2023, the Ministry of ICT and National Guidance (MoICT&NG), Ministry of Finance, Uganda Telecommunication Corporation Ltd. (UTCL), and ROWAD Commercial Broker LL.C. signed a share subscription and allotment agreement.

President Museveni in a group photo with Rowad Capital Commercial LLC (RCC) members , Government of Uganda officials and Uganda Telecommunications Corporation Limited after signing an MOU for a joint business venture at the State House Entebbe on December 22, 2023

According to a correspondence from Attorney General Kiryowa Kiwanuka, the shareholding was agreed upon “following a series of negotiations” between the government and Rowad Capital.

In that agreement, one of the conditions provided in clause 5.1 requires the current shareholders (MoICT&NG and MOFPED) of UTCL to expeditiously ensure that the management and commercialization of the national backbone infrastructure are transferred to the company (UTCL).

On January 2, 2024, AG Kiryowa wrote to Baryomunsi, saying that whereas the contract becomes enforceable upon signature, the company and the shareholders need to meet a number of conditions for completion to be effective within 90 days from the date of signing; otherwise, the company and shareholders will be in breach of the agreement.

Kiryowa specifically requested Baryomunsi to “commence negotiations and conclude the Shareholders Agreement; the Government Support Agreement; and embark on discussions with the current management of the NBI on the modalities, the Financial (MoFPED) and technical (Ministry of ICT and NITA-U), implications, of transferring management of the NBI from the current arrangement to UTCL as envisaged under the Agreement.

On January 23, 2024, representatives of various government bodies, including the ICT Ministry, Finance Ministry, and Attorney General’s chambers, held a meeting and agreed that all relevant stakeholders were engaged to discuss the technical and financial requirements necessary for the smooth transfer of the management of the NBI to UTCL.

Data security 

However, officials have warned that NBI infrastructure is a gateway for critical government communications and transactions, and its transfer to a foreign company could have negative ramifications, especially in regard to data security.

“Government entities run critical services over the backbone, some of which include transactional services and payments, security surveillance through police CCTV cameras, IFMS by the Ministry of Finance, the National Identification Database by NIRA, and e-tax services by URA,” said a source.

“The transfer of this vital national asset from NITA-U, a fully government entity, to UTCL will greatly compromise national security. Critical systems like the NIRA Database, EC Database, and CCTV all run on the backbone, and we anticipate that the security and safety of information on these critical systems will be jeopardized, which could lead the country into a risky cyber position,” the source further noted.

The 4,300-kilometer optical fiber backbone is currently under the management of the National Information Technology Authority of Uganda (NITA-U).

The backbone has extended connectivity to ministries, departments, and agencies, including police CCTV cameras, courts, NIRA, and Electoral Commission offices country-wide, that were formerly connected to private Internet service providers like MTN, Airtel.

In his December 22, 2024, letter to Baryomunsi, President Museveni said he was tired of seeing foreign telecoms repatriating large sums of money to their home countries.

“… Quite a bit of this money is externalised by the foreign companies operating here,” said Museveni.

“Therefore, re-activating a company where the government owns 40% and that is well run on account of the private sector partners is a correct decision,” he added.

“The joint venture company of UTL will create jobs, pay workers, pay for utilities, and pay taxes like the private telephone companies are doing; but, in addition, it will also generate dividends for the country.”

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