Uganda: Investment Climate - MTN, Govt Should Harmonize Their Interests

20 February 2019

After a golden era of growth and friendlier relationship with government, giant mobile telecommunications company (MTN) has taken a large tumble.

The troubles that have since imperiled MTN's close relationship with the state, however, have only been told from one side - government. An angry government has so far deported four of the company's top executives; the most recent being chief executive officer, Wim Vanhelleputte.

According to the ministry of Internal Affairs and police, the deportees were compromising Uganda's security. MTN has only released diplomatic press releases, which tell nothing other than confirming the deportation of its officers and assuring the public that everything possible is being pursued to ensure the matter is resolved amicably.

And this does not seem like an abrupt affair. In July 2018, security operatives raided MTN's offices in Mutundwe, a Kampala suburb. Again, both sides - government and MTN - did not clearly explain what was amiss.

MTN has also had trouble renewing its operating license. Again, President Museveni was not happy with the Uganda Communications Commission's (UCC) decision to lower MTN's license fees from US$100 million to US$ 58 million.

Whatever the conflict, something ought to be explained and resolved amicably. The unexplained raids, the disagreements over license fees and the subsequent deportation of MTN's senior executives have created tension in the hitherto calm investment environment.

Strangely, the telecommunications regulator, UCC, has said that technically it has no problems with MTN. UCC said MTN had followed regulations to the letter. The government crackdown, whether it's of a security nature, ought to be explained.

If reasons are not given, then such actions taken by public officers become dubious and victims or those associated with victims, start crying foul. Since the 1990s, the NRM government has been all over the world wooing investors to Uganda, and indeed MTN responded quickly in 1994.

It established itself firmly in the country as the second national telecommunications operator. A good investment climate where decisions are not determined on nuances and whims of certain powerful personalities, influences many things.

It determines whether, for instance, a manufacturer should double up investment or wean it. Creating a good investment climate has been a source of pride for the NRM government. A good investment climate fosters productive private investment, which is an engine for growth and poverty reduction. It creates opportunities and jobs for people.

It expands the variety of goods and services available and reduces their cost, to the benefit of consumers. It supports a sustainable source of tax revenues to fund other important social goals. Having a reliable investment climate means creating opportunities and incentives for companies to invest productively and create jobs.

This is key to achieving sustainable middle-income progress. Therefore, it is incumbent upon government to assure investors that what is happening with MTN is mere occasional turbulence expected when two entities' interests clash.

Government and MTN ought to harmonise their relationship and correct the mixed signals created by the deportations.

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