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Graduate School of Development Studies
A Research Paper presented by:
Mugabe Moses
(Uganda)
In partial fulfilment of the requirements for obtaining the degree ofMASTERS OF ARTS IN DEVELOPMENT STUDIES
Specialisation:
Public Policy and ManagementPPM
Members of the examining committee
Dr Nicholas Awortwi (supervisor)Dr Des Gasper (reader)
The Hague, The NetherlandsNovember, 2009
CORPORATE SOCIAL RESPONSIBILITY:
The case of Mobile Telephone Service Providers in
Uganda
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Disclaimer:
This document represents part ofthe authors study programmewhile attheInstitute ofSocial Studies. Theviews stated therein are those ofthe author andnot necessarilythose ofthe Institute.
Research papers are not made availa
le for circulation outside o
the Institute.
Inquiries:
Postal address: Institute ofSocial StudiesP.O. Box 297762502 LT The Hague
The Netherlands
Location: Kortenaerkade 122518 AX The Hague
The Netherlands
Telephone: +3170 4260460
Fax: +3170 4260799
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Ded
c
on
To my parents John and Juliet my brothers and sisters;
Every dayuntilmy life withers
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Acknowled e en
Iwould like to thank the almighty God who has always been my guidance
throughout and especially so during my research. Special thanks to the
Principal, Nsamizi Institute of Social Development, Mr Charles Kanyesigye
and the Deputy, Mr Duncan Kalule for having given me this golden chance of
studying Masters at ISS. My sincere thanks also go to DR Nicholas Awortwi
for his guidance throughoutthiswork. Without his effort, my studywould not
have reached this far. My heart-felt gratitude goes to Dr. Des Gasper,whowas
not only my second reader butalso my convener and lecturer. His opinion and
encouragement have helped me in fieldingthis research.
I extend my sincere gratitude and love to my parents, my mother Julietand my
Dad John. Their dedication to see me succeed through education has been
overwhelming. Iwould wish to take this moment to thank my elder sisters
Edna, Enid, Harrietand Ellaand their families for their moral support given to
me duringthis study. Ithank my young brothers Owen and Kennedyfor their
encouragementand prayers. I cannot forget to thank Dan, Simon and Albert
who, despite their busy schedule accepted to proof read and give their in
sighting inputs. Finally my thanks go to my friends Jackie and Mugisha for
their moral support.
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Con en List ofTables 7
List ofFigures 7
List ofAcronyms 8
Abstract 10
Relevance to Development studies 11
Keywords 11
Ch p
e 1 12
1.0 Introduction 12
1.1 Background 12
1.2 Problem stateemnt 15
1.3 Relevance and Justification 17
1.4 Objectives and Research questions 17
1.5 Research Methods and Limitations 181.6 Organisation ofthe Research
Ch p
e 2 20
2.0 Theoretical Background 20
2.1 Introduction 20
2.2 Conceptualising CSR 20
2.3 Relevance ofCSRto Stakeholders 25
2.3.1 Economic Investments 26
2.3.2 Employees 272.3.3 CommunityPartnership 28
2.3.4 Customers 29
2.3.5 Stakeholder expectations 30
2.3.6 Analytical Framework 30
2.4 Conclusion 31
Ch p
e 3 32
3.0 Development ofTelecommunication 32
3.1 Introduction 323.2 Mobile Telephone Services in Uganda 32
3.3 National Regulatory Frameworkfor MTS providers 33
3.4 Company profiles and CSR statements 33
3.4.1 ZAIN - UGANDA 33
3.4.2 MTN - UGANDA 34
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3.4.3 Uganda Telecommunications Limited (UTL) 35
Ch p
e 4 37
4. O Stakeholders and CSR in Practice 37
4.1 Introduction 374.2 Key Stakeholders 37
4.3 CSR in Practice 38
4.3.1 Economic Responsibilities 38
4.3.2 Philanthropic Responsibilities 44
4.3.3 Legal Responsibilities 48
4.3.4 Ethical Responsibilities 50
Ch p
e 5 53
5.0 Conclusion and Recommendation 53
5.1 KeyIssues raised in the Research 53
5.2 Research Findings 535.2.1 Company perception ofCSR 53
5.2.2 Expectation fulfilment 54
5.4 Conclusion 58
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L o ble Table 1 ZAIN Tax remittances to the Government 40
Table 2 MTN Tax remittances to the Government 41
Table 3 UTL Tax remittances to the Government 41
L
o F
u e
Figure 1 Africa's Corporate social ResponsibilityPyramid 24
Figure 2 Analytical Framework 31
Append ce
A Questionnaire 63
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L! " #
o $ Ac % ony& "
ATU African Telecommunication union
CEO ChiefExecutive Officer
CSR Corporate Social Responsibility
CSRR Corporate Social Responsibility Rating
EU European Union
GoU Government ofUganda
ICT Information and Communication Technology
IDB International Development Bank
ILO International Labour Organisation
ITU International Telecommunication Union
MTN Mobile Telecommunication Network
MTS Mobile Telephone Network
PRO Public Relations Officer
UCC Uganda Communications Commission
UCRNN Uganda Child Rights NGO Network
UN United Nations
URA Uganda Revenue Authority
UTL Uganda Telecommunication Network
WBCSD World Business Council on Sustainable Development
MNE Multinational Enterprises
OECD Organisation for Economic Cooperation and Development RCDF Rural Communication Development Fund
MCDT Micro Credit Development Trust
USAID United States Agencyfor International Development
CEO ChiefExecutive Officer
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EU European Union
PERD Public Enterprise Reform and Divestiture
DRIC Divesture and Reform Implementation Committee
MTS Mobile Telephone Service
PRO Public Relations Officer
UTL Uganda Communications Limited
GoU Government ofUganda
ILO International Labour Organisation
UN United Nations
IDB International Development Bank
BCSR Business Council for Social Responsibility
UCC Uganda Communications Commission
UCT Uganda Communications Tribunal
UP TC UgandaPosts and Telecommunications Corporations
GSM Global Systems for Mobile Communications
PDA Personal Digital Assistant
SMS Short messaging system
ICT Information Communication Technology
NSSF National Social Security Fund
BON Build Our Nation
ZAC ZAIN African Challenge
TTC Textfor Change
HFH Habitat For Humanity
URCS Uganda Red Cross society
URA Uganda Revenue Authority
PWHC PriceWaterhouseCoopers
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Ab ' ( ) 0 c (
The economy of Uganda has increasingly been taken over by the private
sector. In turn the private sector is expected to fulfil the corporate socialresponsibilities to the stakeholders. In a bid to understandwhether companies
do fulfil their CSR, the researchwas carrying out in the MTS companies. The
research used the CSR pyramid produced by thatwas designed by Visser
(2005) to explore economic, philanthropic, legal and ethical responsibilities.
The methodology thatwas employed during the studywas through semi -
structured interviews and questionnaires. The analytical framework focussed
on four stakeholder categories which included government, employees,
communityand customers or clients. The MTS companies in questions are thethree dominant ones; Mobile Telecommunication Network(MTN), ZAIN and
Uganda Telecommunications Limited (UTL).
After analysing both the findings and the literature, this paper points out some
areas where MTS companies have done well in fulfilling CSRagenda, notably
in philanthropy and also in abiding to legal regulations but also reveals that
some companies do not fulfil their economic responsibilities owed to
government.
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Rele1 2 nce to De1 elop 3 ent Stud 4 e 5
As private sector marks a substantial reduction in the state administration of
economic sector, stakeholders rights are placed at stake. In a voluntary
manner thatthe corporations dealwith their stakeholders they may directly or
indirectly misuse their mightto turn awayfrom their obligations. As the
research aims at exploringwhether the CSR obligations are beingfulfilled, this
work becomes relevant especiallyto policy practitioners.
Keywo 6 d 5
Corporate Social Responsibility, Mobile Telephone Service providers,
Sustainable Development, Stakeholder expectations, Corporate minimum legal
requirements, Telecommunication.
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CHAPTER1
1.0INTR7
DUCTION
1.18
9 ck@ A ound
Corporate Social responsibility is a development conceptthat has come about
as a result of zealous search for development alternative. The shift of
economic power between different developmentagents, notablyfrom the state
to the private operators as development custodians has changed the focus of
howdevelopment is currently perceived.
In the first half of 20th century, the state was the major conventional
development actor and an apparatus for economic growth and development.
In 1980s, the state was seen as a failure in directing and steering economic
development (Vickers 2007). Discretionary state measures were seen to be
extremely costly and therefore stagnating development. Sally (1998:29,194)
noted; Interventions in the market process, property rights and resource
allocation by the state were no longer efficient (Sally, 1998:29, 194).
International financial institutions based on this state failure to advocate for
Trade liberalisation with free trade paradigm, having rich political, economic
and moral tomes gearing to unfettered system of free imports and exports
(Irwin 1996, Bhagwati 2002). This led to globalisation prominence that
attracted more and more of foreign direct investments especially to the
developing world and therefore the Multinational companies or business
companies. The rights, powers and special privileges awarded to these
companies therefore call for CSR(Dahl, 1973:11)
However, designing strategies for trade and investmentand policies aimed
at alleviating poverty for CSR remains the responsibility of the state (Newell
2006). But due to anti-state bias, the norm of voluntarism and the
unprecedented power enjoyed by these business companies, weaker
governments fail to regulate them as they locate their CSR in areas ofweak or
non-existent societal or environmental fields and exploit the poor
communities. Therefore, government needs supportfrom donor communitie s
and working both with civil societies and researchers to a meaningful CSR
agenda(Newell Pand A. Muro, 2006).
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Simon Caulkin, (2005) noted that, Business is the key to beating global
poverty, butwe are talking much more than handouts, ( The observer, 13
March, 2005). In 2006, itwas reported in The Economist Newspaper that,
Philanthropywill have to shed amateurism that still pervades much of it
and become a modern, efficient and global industry, ( The economist, 25
February- Survey ofwealth and philanthropy). All these authors seek the
intervention ofbusiness companies as a developmentalternative especially in
developing countries which are still trapped in the massive povertywhere the
majority ofthe population continues to survive on less than a dollar per day. In
1950, the Sears CEO considered that profitwas a by-product of success in
satisfying responsibly the legitimate needs and expectations of the
corporations primary stakeholder group Hopkins (2007:114). He mentioned
this group in order of importance as Customers, employees, community and
stockholders.
As the states loss ofeconomic power became obvious and recognised,
different scholars, institutions and organisations were busy constructingwhat
CSR entails: CSR is concernedwith treatingthe stakeholders ofthe firm ethically or
in a responsible manner. Ethically or responsible means treating stakeholders
in a manner deemed acceptable in civilized societies. Social includes economic
and environmental responsibility. Stakeholders exist bothwithin afirm and
outside. Thewider aim ofsocial responsibility is to create a higher standard of
living,while preservingthe profitability ofthe corporation, for peoples both
within and outside the corporation Hopkins (2003:16, 2009:)
According to European Commission (EU), CSR is a concept whereby
companies integrate social and environmental concerns in their business
operations and in their interactionwith their stakeholders on avoluntary basis
(EC Green Paper, 2001). World Business Council for Sustainable
Development defines itas the continuing commitment by business to behave
ethicallyand contribute to economic developmentwhile improvingthe quality
of life of the workforce and their families as well as of the local community
and societyat large(WBSCD, 1999)
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For UK government, CSR is thevoluntaryactions that business can take
over and above compliancewith minimum legal requirements, to address both
its own competitive interests and the interests ofthewider society
Whereas some scholars argue; CSR is for business profits (Friedman 1970,Bowman 1973, Braybrooke 1976:224), all the above definitions address the
social, ethical, environmental and the legal (economic) concerns of all the
stakeholders. Therefore, if the Business is for profit, why should companies
engage in these other social responsibilities? If business companies were
absent,who is responsible for the above concerns andwhy not now?
In Uganda, like any African country the concept of corporate social
responsibility has not taken shape the way it has done in other developed
countries like those in Europe and North America. Moreover, little or noeffort has been made to assess the impact ofphilanthropic activities and other
CSR initiatives on the dimensions ofdevelopment. However some companies
have contributed much in times ofneed and this portray the rate or level of
contribution to development. When Washington was attacked by terrorists,
General Electric, Microsoft, Pfizer and Daimler Chrysler paid 10 Million US
dollars each to help in the rescue mission (David, Nikolai and Thomas, 2008).
United Parcel Service has become an importance actor in humanitarian
assistance. The company helped the Red Cross in providing food to Kosovorefugee camps in Albaniaand Macedonia. In Uganda, the CSRagenda emerged
in 1990swhen the economywas re-structured. In 1993, the Public Enterprise
Reform and Divestiture (PERD)was enacted and Divesture and Reform
Implementation Committee (DRIC) established. The reason for the reforms
was the economic policies that prevailed then; the Structure adjustment
programmes (SAPS) butalso the economic breakdown that had been brought
about bythe political turmoil ofthe previous regimes (Kibikyo 2008). Not only
did the former national enterprises comprise the private sector butthe marketregistered new entrants also, Mobile Telephone service providers inclusive.
After taking over government custodianship, the companies enrolled CSR as
part of their business and this is the reasonwhythe studywas undertaken to
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see if corporate social responsibilities undertaken by companies in Uganda
similarly have an impact on the societyas the ones mentioned above
In the related diverse scholarlywork, manyattempts have been made to
assess CSR performance and Visser (2005) is one ofthosewith a mark in thefield. He developed a CSRPyramid in the African contextthat is comprised of
Economic, Philanthropic, Legal and ethical Responsibilities. The Pyramid is
discussed in chapter 2 of this paper. Using this Pyramid, I focus on the
corporate social responsibilities undertaken by the Mobile telephone service
providers in Ugandawith special attention on the three companies which
include Mobile Telecommunication Network (MTN), ZAIN-UGANDA and
UGANDA TELECOM LIMI TED. These are three most powerful mobile
telephone companies thatare operating in Ugandaand have been in businessfor over a decade.
1.2 Proble B StateB ent
CSR is an area that holds responsible the corporations to invest in
communities in which theyare operating. The question that is likely to come
up here is; Is CSRa phenomenon that Uganda should be advocatingfor as a
developmentalternative? Why is the state not responsible for such investment?
Until mid 1980s, Ugandas economywas purely in hands of the state. Like
many sub-Saharan Africa, therewas a sloweconomic growth and the countrys
budgetalmost entirely relied on external borrowingand the country particular
had faced both economic and political turmoil due to ravagingwars. Itwas
very hard for the state to single handedly, transform the state into a positive
economic performance. In 1988, the first move to privatise state-owned
companieswas made and the subsequent sell ofgovernmentParastatal in 1989.
This was of course intended to reduce government costs and avoid hyper
inflation of that time. Currently the economic power is controlled by foreign
investments and growingatafastest speed. There has been a double increase
in domestic foreign investment from 2001 to 2008where the figures short
from US $ 150 million to US $ 368millions. While Uganda remains with is
chance offoreign capital inflow, it remains embroiled in a string ofchallenges
thatare most likelyto put it on haltas far as development is concerned. Weak
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infrastructure hinders proper allocation ofresources bythe potential investors,
uneducatedworkforce is likelyto be taken advantage ofand be exploited and
political interference that is marred with corruption. Yet , private sector (
Corporations) as an approach to development, are expected to be profitable
and pay taxes, provide employment, obey the laws, contribute to community
development and address other social concerns that may come as a result of
their operations. Surprisingly this private sector seems not to be paying
attention to the CSR agenda. according to World Bank (2006) Report on
povertyand Vulnerabilityassessment in sub-Saharan Africa, income inequality
in Uganda remains high and the Health indicators are highwith little progress
for the last10 years. Rural areas,where the majority live, still remain poverty-
stricken and infrastructure is in the worst state.
In CSR agenda, it is common that corporations try to project a suitable
outlook or image in order to capture the approval ofall the stakeholders. By
using their voluntary character, they try to magnify small changes into huge
ones. Hamann and Cutt(2003:225) explain that corporations implement small
changes and try to have influence over popular and policy discourses so that
questions likely to be asked by the stakeholders are put on hold by making
imaginaryanswers feasible.
Some researchers also argue thatthere is no policyframeworkfor CSR in
Uganda. Katamba (2008), notes that the Ugandan government does not
promote CSR practice, though some laws are indirectly related to it. He further
explains thatthese laws are notalways adhered to. The problem therefore, is
failure to know the contribution being made by business companies towards
development through their CSR initiatives. Whether companies do meet their
legal requirements and go beyond their philanthropic activities to communities
is a point in question. This research aims at discoveringwhether CSR in MTS
companies meets stakeholder expectations.
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1.3ReleC ance and juD tification.
CSR is a field that has, of recent, gained prominence where by development
has beenviewed possible ifresponsibilities can be redistributed from the state
to other non-state actors. In this case the Corporations and other organisationsthat have taken over the role of state in investment have the duty not on to
pursue for profits but also to cater for society needs without expecting
economic advantage.
Whereas much information that has been written on corporate social
responsibility, most of it has been written in the context of the developed
nations and has little reference to developingworld. Yet some companies
especiallythe Telecommunication companies that have penetrated the African
market have equally succeeded as those in the developed world. Though theyare able to report on what they are doing, they are unable to reportwhat
changes theyactually impact on the stakeholders. While I do appreciate their
efforts to be socially responsible, I find it an area of interest to studywhat
actually they do and whether what they do contributes to development and
also meets the stakeholders expectations
1.4 Objective E and re E earch que E tions
The main objective of this thesis is to analyse the corporate socialresponsibilities undertaken by the Mobile telephone service companies in
Uganda.
The main research question thatthe study seeks to answer is:
To what extent do mobile telephone service companies in Ugandafulfil corporate social
responsibilities?
In trying to find answers to the above questions, the following sub -
questionswere ofgreat guidance.
(a)Who are the major stakeholders ofCSR?
(b)Whatactivities do MTS companies provide?
(c) Howdo companies and stakeholdersviewCSR?
(d)Do theyfulfil stakeholders expectations?
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(e) Do theyfulfil the legal requirements?
1.5 Research methods andlimitations
This study is fundamentally qualitative in nature though fewtables and charts
were used. To gather the information better and achieve the objective, the
researcher employed two techniques; semi-structured interview and
questionnaires. The questionnaires were addressed to the PROs of the three
companies who are responsible for information dissemination for their
respective companies. The use ofquestionnaires to the PROs was because of
the time factor thatwas anticipated to be a hindrance once interviewswere to
be used. For the rest of the respondents, interviews were conducted. A tri-
dimensional dataanalysis is then used. This includes the reviewing ofliterature,
primary data analysis and secondary data analysis, all concerning corporate
social responsibilityaboutthe three MTS companies.
Regardingthe literature review, voluminous information is used ranging from
text books, research papers, journal articles, magazines and internet especially
concerning theories and concepts. Most of the sources of information have
been annexed atthe back ofthis thesis.
Concerning primary data, itwas collected over the month ofAugust2009,
specificallytargeting dataabout CSR in Mobile Telephone Service companies. The companies under the studywere MTN, ZAIN-Uganda and UTL. The
reason for targeting these companies was because of their prominence and
reputation as successful companies in the Telecommunication industry in the
country. MTN is the leading company in terms ofmarket share, followed by
ZAIN-Ugandaand UTL becomes the third.
Many sources were consulted in soliciting information regarding the
secondary data. The major sourcewas the Government ofUganda(GoU)and
the Uganda communication commission reports. More so, internationalorganisations which included International Labour Organisation (ILO), The
United Nations (UN), International Development Bank (IDB), UN Global
Impact, Business Council for Social Responsibility (BCSR), African
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Telecommunication Union (ATU) and the World Business council on Social
Development(WBCSD)were consulted.
The other source of information was local Non Governmental
organisations that included beneficiaries ofthe CSRactivities, The newspapersbusiness columns, and some magazines that report on corporate affairs in
Uganda like the CEO magazine and the Super Taxpayer Magazine.
In total, the sample sizewas 64 respondents. Three ofthese were PROs,
nine were employees of the benefitting communities, and fifteen were
employees ofthe three MTS companies, two corporate managers ofZAIN and
UTL, three journalists, fifteen researchers and two government officials
Duringthe research process, limitations facedwere; being in a competitive
environment, some respondents were hesitant to give necessary data for the
analysis, others opted to deliberately refuse the interview, the study involved
moving from one place to another and this proved costly both in time and
money.
1.6 Organisation of the researchpaper
The research paper is arranged into five chapters. Chapter 2 contains theories
and literature about corporate social responsibility rangingfrom the
international perspective to the local perspective. Chapter three discusses the
companies and their CSR environment in relation to stakeholders. Chapter
four discusses the CSRand stakeholders in practice, stressingwhat is done and
stakeholder expectations. Chapter 5 conta ins the summary ofthe findings, few
recommendation and the conclusion.
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Chapter 2
2.0 THEORETICAL BACKGROUND
2.1 Introduction
In the report published by British Telecom The sustainability review 2009,
the author starts bythe statement Our customers and our shareholders are atthe
heart ofeverythingwe do.In the same report, Sir Michael Rake, the chairman
ofBT (2007-2009) said
Im delighted thatIm able to personally selectthewinners ofthe Chairmans
Awards from hundreds ofapplications from BT people involved in community
activities. Im also proud ofour long-term supportfor, and our peoples
commitmentto, fundraisingtelethons and disaster appeals. Over the next year
our newvolunteering strategywill help even more ofour people get involved in
our communitywork, extending the benefits for BT and our charity partners.
Delivering his Corporate Social Responsibility Report2008, Didier Bellens, the
CEO Belgacom, the leading Belgian Telecommunication company noted;
I believe that embedding CSR into our business strategywill enable us to
address some challenges ofour society more successfullyandwill allowus to
progress together on a more sustainable basis.Bellens CEO, Belgacom.
While for the France Telecom, their corporate social responsibility is
summarised in threewords, include, PreserveandCare
All the massages above indicate that Telecommunication companies arevastly
engaged in CSRactivities and are highlytreasured in bringingabout sustainable
development.
2.2 Conceptualising Corporate SocialResponsibility
Hopkins (2003) noted that the concept ofCSRwas not prominent until the
Great Depression of1930s. But since then to 1960s, it became an important
issue not only for business but also in the theories and practices of law,
economics and politics.
In 1930, Merrick Dodd ofHarvard lawposed a question, Forwhom, are
corporate managers trustees? (Hopkins 2003). With this question he was
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engaged in a debate with Berle ofColumbia law school. Dodd was with the
view that corporations served a social service as well as a profit-making
function. However, the debate did not resume until 1970swhen it sprangagain
into prominence. Scholars believe that itwas exacerbated bythe fall ofBerlin
wallwhich symbolised the downfall ofcommunism. Since then, debates about
whatthe managers should do have been accumulatedvastly. Some economists
could not agree that corporate businesses should engage in social
responsibilities and pointed out that the sole purpose of business is to make
profits (Friedman 1970, Bowman 1973, Braybrooke 1976: 224). Friedman
followed a principle that CSR expenditure reduces the profits which in actual
sense are the companys capital for investment. Since investment furthers
business performance, a relative CSR expenditure will drop the level of
business performance thatwould otherwise benefit more and more people in
the future. He maintained that businesses have no moneyto spend.
Steiner (1974:84) could not buythe idea ofFriedman and his colleagues
when he advocates for a breakwith classical concept of profit as the sole
purpose ofbusiness. He argued thatthough business remains fundamentallyan
economic institution, it has responsibilities to help society achieve its basic
goals especially as it becomes larger and larger. As it grows bigger, society
tends to take a greater interest in its operations and the business thinks
carefully about its responsibilities as it is affected by this public interest
(Steiner, 1974:81). Naor (1982)wentfurther to tryand conceptualise CSRas an
obligation ofbusiness. He noted that business is a social activity conducted by
people for people and that satisfying the socially desirable needs and bringing
about increases in publicwelfare should be the major aim ofbusiness. Though
Naor is concerned aboutwhat is socially desirable due to multiple stakeholders,
he suggests that social desirability can be based on the majority consensus ofall
the public concerned (stakeholders).
The economic argument of CSR remained an issue ofcontestation over
the period of1970s. Whereas Steiner talked ofhowpublic interest is directly
proportional to the size of business, Edmunds (1977) interestingly suggested
how the business can decentralize and avoid social responsibility. He noted
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that social responsibility takes one-third of the total corporate executive
commitmentand since CSR involves foregone alternatives in form oftime and
profits, which in turn increases overhead costs, business companies can
decentralise to appear small economic units and reduce public pressure.
Argued and contested upon, a newwave in CSR agenda emerged especially
after the amalgamation of national economic units or governments into a
global one in 1990s. Global ReportingInitiative convened in 1997as an inter-
national multi-stakeholder effortthat creates a common frameworkforvolun-
tary reporting of the economic, environmental and social impact oforganisa-
tion level-activity(EOCD 2001). In 2000, EOCD guidelines for Multinational
Enterprises (MNEs)were revised to bring them up to date in the rapidly
changing global economy. Global Compactwas officially launched in 2000 inNewYork one year after UN Secretary General Kofi Anan challenged
business leaders to have shared values and principles and give globalisation a
human face (EOCD, 2000:16). European commission, in July2002, released a
communication callingfor public action to promote CSR(Commission ofthe
European communities, 2002b:8). The same commission developed a frame-
work ofhowbetter the CSR can be understood.
In Africa, many countries have not moved on the same pace especially
with those in the developedworld. This has been attributed to bad governance
and political turmoil which have affected many countries in the region. How-
ever CSR has started taking shape, more so in South-Africawhere many com-
panies have subscribed to CSRInternational organisations like Global Report-
ing Initiative (GRI) guidelines. Moreover, the country hosts Mervin King, a
commission on ethical codes ofconduct in good corporate governance that is
based in Johannesburg (Hopkins 2003:202). Other companies are increasingly
getting involved in the social programmes like HIV/AIDS prevention and
cure. Examples of these companies include Coca -cola in partnership with
UNAIDS (Hopkins 2003:203).
Evidence from the literature clearly shows that CSR is a developmentalter-
native that should be adopted. Hopkins (2008:14)was the first to link CSR
with development, maintainingthat CSR can really pavewayfor development.
He further argues that, Clearly, governmentswill be the overall arbiter ofde-
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velopment through the public purse, but the failure, alongwith international
partner UN, in many developing countries has provided an empty space that
must be filled byanother entity-the private sector and its champions, the lar-
ger corporations (Hopkins 2008:14) However, what is much needed is the
clarity aboutwho the stakeholders are, their expectations and the CSR en-
gagement priorities. Some companies do puta substantial amount ofmoney in
communities but end up having no impactatall. Hopkins (2008) gives an ex-
ample ofCoca-Cola Companythat builta hospital in Somalia many years ago.
Without health system, the hospital did not have doctors, management system
and even other required personnel. In a short period, the Hospital had been
ransacked ofits equipment it contained andwas quickly used as a refugee shel-
ter and nowserves as a slum. This is because the companythat built it had no
prior thoughtabout sustainability. Therefore, the society (stakeholders) has a
stake in directingthe CSRactivities.
Amidst the many definitional constructs of CSR, Visser, a renowned
scholar in the field ofCSR redesigned aPyramid that had originally been for-
mulated by Archie B. Carroll. Carroll had developed afour-part conceptualiza-
tion, contemplating that business does not only have Economic and legal re-
sponsibilities as fundamental obligations to society butalso Ethical and discr e-
tionary (philanthropic) ones (Carroll 1979). In his interesting CSR pyramidal
framework, Carroll had assumed the business obligations to societywere fun-
damentallyvital to society in a hierarchical order of importance which was
Economic, legal, ethical and finallyPhilanthropic. Literally, Economic respon-
sibility means doingwhat is required bythe global capitalism, Legal responsi-
bility means doingwhat is required by global stakeholders, ethical responsibility
means doingwhat is expected by stakeholders and Philanthropic responsibility;
doingwhat is desired bythe stakeholders.(Carroll 2004).
In redesigningthe pyramid for Africa context, Visser (2005) put Economic
responsibility as the first priority, followed by Philanthropic, then legal and
lastly ethical. His reasonswere that, in Africa business companies operate in an
environmentwhere socio-economic needs are so greatthat philanthropic
activities are an expected norm. Legal infrastructure is poorly developed so
there is no pressure on the companies and lastly CSR is still atan earlyage of
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maturity in Africa. With high rate ofpoverty, Philanthropytakes a higher posi-
tion in Africa because business companies themselves cannot succeed in failing
communities though, ofcourse economics remains thevital part ofany busi-
ness entity. Whereas ethical codes are highlytreasured in developed world es-
pecially Europe, theyare not so much developed in Africa, the reason theytake
the least priority.
Using Visser (2005), the research study intended to show areas that firms
should make priorities while they commit their CSR engagements for devel-
opment.
Fig.1Africas Corporate SocialResponsibility Pyramid
Source; Wayne Visser, 2005
A closer look into what each responsibility category embraces is of a
crucial concern to later examine its relevancyto the stakeholders.
Ethical
Legal
Responsibilities
Philanthropic
Responsibilities
EconomicResponsibilities
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Economic Responsibility is historically believed to be the most
fundamental obligation of any business entity (Crane et al, 2008:62) . The
primary motive ofan entrepreneurship is to make profit. Therefore firms need
to perform in a manner that is consistently maximising earnings per share.
(Friedman 1970, Braybrooke 1976:224). A firm is required to maintain a strong
competitive position and a high level ofoperating efficiency.
Philanthropic Responsibilities entail charitable expectations of the
society(Crane etal, 2008:65). Managers and their employees have the dutyto
participate involuntaryand charitable activitieswithin their local communities.
Firms should assist private and public educational institutions as well as
helpingthose projects thatare involved in improving lives ofthe communities.
Such projects include health, agriculture, infrastructure, water and sanitation,waste management and even environmental protection. The rationale is that,
other than beingan expected norm in a society, business firms cannot operate
in failing communities and therefore the reason to engage in this kind of
responsibility.
Legal responsibilities on the other hand are concerned with what
governments expect the firm to do, that is, complyingwith the laws and
obligations. A law in this sense is a codification ofwhat is right or wrong
(Visser, 2005).Ethical responsibilities however embody the standards, norms or
expectations that are reflected stakeholders rights (employees, shareholders
and the larger community), in regard to howfairly or justlytheyare treated or
howbusiness companies respect or protect stakeholders moral rights (Crane et
al, 2008:64).
2.3 Relevanceof CSRto stakeholders.
There is no doubt that corporations or business firms have stakeholders
(Crane etal 2008:143, Hopkins 2003:17). Stakeholders are related to the firm in
different capacities. While some actas inputs (Investors, suppliers, employees
and customers) to the firm, others work as mutual partners (Governments,
communities, trade associations and even political groups)with it(Crane etal
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2008:143). Therefore they require, expect and desire the firm to be socially
responsive to their needs. Similarly Telecommunication companies are socially
responsible to their stakeholders in a range ofactivities that include economic,
philanthropic, legal and ethical. For the interest of my research, four
stakeholder categories have are considered.CSR in;
y Economic (Employee + Government category),
y Community partnerships,
y Governmentas a recipient ofLegal CSR
y And consumer- related CSR engagements.
The first category combines two stakeholders as theyare the most recipients of
economic CSRfrom the corporations
2.3.1 Economic investments.
The supremacy ofeconomic CSRactivities makes it considerably unique com-
pared to other social responsibilities a business firm has (i.e., philanthropic,
legal and ethical). While these others mayfocus their attention only on stake-
holders who may not necessarily be the shareholders, economic investments
are argued to bring returns on equity that are enjoyed by shareholders only
(Friedman 1970, Sundaran and Inkpen 2004). This was the classical idea of
corporate motive of making profit. However, of recent many scholars haveargued that a single motive cannot sustain the existence of a corporation.
There are other groups (stakeholders)who affect or getaffected by the busi-
ness (Freeman 1984, Hopkins 2003:13).Clarkson (1995:112), for instance, ar-
gues that "the economic and social purpose ofthe corporation is to create and
distribute wealth and value to all its primary stakeholder groups, without fa-
vouring one group atthe expense ofothers.Though it is not legally manda-
tory that a high-profit maximising firm should plough back a reasonable in-
vestment in philanthropic activities, it is in the current global system whereeconomic power and strength has shifted from state to private sector. The era
ofcapitalism has drastically reduced the influence of state and this is further
deepening due to the expansion ofthe multinational companies. Whilst, there
is not standard for thatand the factthat many companies claim being socially
responsible, a level ofprofit should correspond with the level ofCSR. In the
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economic turbulent crisis that is going on, big companies have been rescued
from collapse in the famous bail out system. Ifthe government can do that,
why nota companythat has taken over the role ofgovernment in investing do
the same to communities in alleviating poverty?
2.3.2. Employees
Employees are one of the important business stakeholders and are direct
beneficiaries of CSR practices and policies. Due to increased pressure from
globalisation and the growing competition, companies have been are constantly
compelled to consider streamlining their operations in a manner thatwill
increase productivityand contain costs that best suits the output per share. In
the process, employees sometimes find themselves on the demeaning end;with
lowsalaries, exploitation in terms ofworking hours and evenwith no any otherbenefits from the company. This research focussed on employees in relation
to three things: Salary, Bonuses and working hours. Though its difficult to
measure the concept offairness, it does not mean thattheword loses meaning
when it comes to economic employee treatment bythe company. Indeed, all
employees may not receive the same amount of salary but the disparity that
exists between the highestand the lowest determines howfairlythe company
treats its employees in remunerations. When the gap is bigger, then the
company is not all that fair. When rewarding bonuses, where do companies
base their judgement, who receives the bonus and atwhat rate? Is it on
performance, individual initiatives, intelligence or hard work? In their
arguments for business to reform, Waddock et al (2002), noted that the
company can receive a competitive advantage if the primary stakeholders of
employees gettheir payand benefits, safetyand health, rights atwork ofglobal
labour standards and fair/ ethical treatments. Employees as individuals need
organisational justice thatwill make them feel part of the firm. CSR and
justice share afundamental ethical assumption ofnormative treatment (Folge,
Cropananzo, & Goldman, 2005).whereas the Organisational justice entails
norms regarding the treatment of individuals within the firm, CSR entails
norms regardingthe treatment ofindividualswithin, groups ofindividuals and
environments external to the organisation. Therefore CSRas a justice done to
the employeeswill not be seen bythe individualswithin butalsowill be judged
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bythe environment(Individuals outside the organisation). It is therefore clear
that,whereas the individuals inside (employees) may not knowhow fairlythey
are being treated; an outsider mayverywell know the injustice being inflicted
on them. The reason aswhy corporate social responsibility becomes relevant in
that the firm goes beyond its immediate narrow monetary interest and
considers who the company is,what is ofvalue besides moneyand towhom
it has responsibility.
2.3.3 Community
Globalization has brought greater complexities, limited resources and
interdependence. Communities and business are increasingly entering into
partnerships, recognisingthat shareholders and societal values are intrinsically
linked (Loza, 2004). In Most cases businesses engage in communitypartnerships with aviewofhelping communities financially. However notall
these partnerships are worth of praising because they may aim at building
reputation for the business, which largely benefit the business by providing it
with competitive advantage over others (Crane etal, 2008:273). In realitythe
increasing pressure that has emerged from communities or Civil society
organisations on business is not aimed at searching for philanthropic
contributions in financial terms but the need for the firms to provide
information on the impact ofall their social activities (Crane etal, 2008:275).
Ofcourse this is a riskyventure on part ofthe business as confidentiality is a
tool to their success in many times. This lack of social reporting and trust
between businesses and communities often causes conflict. Hopkins (2008:22)
put it A company practising CSRwill have provided dataand the sort oftrack
record that increase the level oftrust ofall the stakeholders in its activities. The
costs ofbreakingthis trustare high.
Other than that, companies should provide CSRactivities to communities
which have minimal access to state or private sector provisions especially inrural areas. Examples ofthese provisions include banking, public transportand
even supportto marginalised group (Tracey etal 2005). Definitelythese puta
difference to other lives ofpeople living in these communities especiallywhen
there is no hope of provision in the near future. However, though these
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community partnerships may exist, the question is, are theyaddressingwhat
they should be addressing in their corporate social agendas? Are they
addressingthe community/society expectations?
Our business dependsvery considerably on the health ofthe community. Ifthathealth is adverselyaffected by deprivation, crime,vandalism, racial tension, inner-
city decay, homeless or pollution, so, too, is our business health. Our opportunities
are reduced, our problems increase, our costs rise. So rather than moaningabout
these problems, it makes good business sense for BT toworkwith others and get
involvedwith addressingthem (Hopkins 2003:63).
Indeed, any responsible business would bear these daily problems that affect
the societieswithinwhich it is operating in. Dominic Cadbury, the chairman of
Cadbury-Schweppes, said;
companies across UKare increasingly recognisingthe importance ofbusiness
engagementwith the community. Companies have awealth ofexpertise and
skills. Theyalso have powerful products and brands. Together through
partnershipswith thewider community, they can create and deliver real benefits
(Hopkins 2003:63).
2.3.4 CustomersThe term Customer in most cases is applied to refer to the end-user of a
service ofa product. Haynes (1997:16) notes that Customers is a generic term
referring to anybodywho receives a service or product from some other
person or a group ofpeople. In this researchwe mean external customers as
the stakeholders within the Mobile telephone companies who use services or
products offered bythese companies.
Hopkinswrites, the statementthat customer is a king or queen has never
been truer than today (Hopkins 2003). In the massive development ofCSRideology, Business firms are increasingly shifting their attention at improving
the relationship between business management and their customers. This is
aimed at building stronger and long-term relationship with them. Further,
more approaches to customer identification, interaction that creates retention
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and profitability, have been thought ofby many companies (Thompson 2004,
Knox 2001and Gronroos (1996). Therefore more CSRactivities have targeted
the customers as a major stakeholder especially to the growing businesses.
However, in developingworld, these CSRactivities may not necessary reflect
the Customer needs, priorities or expectations thus have less impact or none at
all especially on development. Itake the impactto be there only ifthese needs
that CSRactivities are addressing can satisfactorily be addressed accordingto
what the customer expects. In terms of mobile telephone service in Uganda,
we talk offairness in terms ofproduct price available to customers, thewaythe
handling ofcustomer complaints are beingattended to
2.3.5 Stakeholder Expectations
Expectations are perspectives that a customer, a community member agovernment official or any other personwho has a stake in business has.Firms
are obliged to meet the expectation of the stakeholders (Donaldson and
Preston 1997, Berman et al, 1999). However stakeholder expectations are
relative to the way stakeholders affect, or are affected by the business firm.
This means different stakeholders have different expectation from the same
business firm. This is measured by administering an instrument such as
questionnaire or checklist on various stakeholders in a survey. In this regard
the stakeholders indicate the extent to which the company has effectivelydelivered services to their expectations andwhere it has fallen short.
The feedbackarising out of this survey helps the companyto improve on its
weaknesses and strengthen its performance. More so byanalysingthe company
profile and their public statements, conclusions can be made aboutwhatthese
companies are expected to deliver
2.3.6 AnalyticalFramework
The followingframework narrates and analyses the CSR services inwhich the
three companies of MTN, ZAIN-UGANDA and UTL are engaged. It
explores the stakeholders and their relationshipwith the firms under categories
mentioned in Vissers CSRPyramid
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Figure2: The AnalyticalFramework
Economic Philanthropic Legal Ethical
2.4 Conclusion
To sum up, Vissers Pyramid in recent literature has been used as a major yard
stick in measuring CSR . The same has been incorporated in the above
analytical frameworkto explorewhether MTS companies meetthe
expectations ofthe stakeholders. Employees, Communities, governmentand
clients have been key stakeholders in the analytical framework.
Company
Investments
Longterm
Short term
Profits
Employees
Salaries
Bonuses
Workinghours
Tax
Percentageshare
Togovernment
CommunityPartnerships:
Road-building
Hospitals
Schools
Orphanages
Public Safety
Government/corporate CSRPolicies:
Adherence toUCC, UCT
Guidelineswhich include;
Quality
standards ofservice
Universal accessto the network
Fair prices
Occupationalsafety
Trainings
Equal treatmentofstaff
Fair dismissal
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CHAPTER 3
3.0 DEVELOPMENT OF TELECOMMUNICATION
3.1 Introduction
This chapter avails the status ofMTS companies in Ugandafrom the time pri-
vatisation of telecommunication industrywas introduced in country and the
existing regulatoryand policyframework. It includes the profiles of the com-
panies under studyand also talks about CSR statements thatform part oftheir
business strategies.
3.2 Mobile Telephone services in Uganda
In Uganda, Telephone services were offered by a state-owned monopolyprovider, the UgandaPosts and Telecommunications Corporation, until 1993
when the first private companywas issued a license to operate as a second
network provider. Celtel (nowZAIN)was the firstto geta license but started
its operations in 1995. The company concentrated much in urban areas like
Kampala, Mbarara, Masaka, Aruaand other populated towns. In 1998, MTN, a
South African Company got a license as a second private Mobile telephone
service provider. MTN became relatively cheaper and extended its network so
rapidlyand even in rural areas than did the Celtel. The third private companywas created in 1998when UPTCwas unbundled and Uganda Telecom Limited
(UTL) formed. In June 2000, UTL was privatized and bought by Ucom
Limited, a consortium of three companies from Germany, Egypt and
Switzerland each. However of recent three other companies have joined the
mobile telephone industry in Ugandathough theyare no tas strongas the first
three. They include Warid Telecom, Hits Telecom and Orange Telecom.
Ugandas mobile telephony is afast growing sectorwith Ten million mobile
subscriberswhich is one-third ofthe total population (UCC 2008). The mobiletelephonyto population coverage is almost100% but geographically, it is 65%.
This indicates that some parts especially rural areas still need to be covered.
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3.3 National regulatoryFrameworkfor MTSproviders
An effective regulatory system is one that is ruled bya clear legislative mandate
to assure that service is provided through a competitive market to as many
people as possible at prices thatfairly reflectthe cost ofservices (Noll 1999).In 1997, Uganda Communication Commission (UCC)was created. This was
after the government had issued the licence to the first second network
provider, ZAIN (formerly Celtel)andwas aboutto issue licence to more two
companies, MTN and UTL. UCC was created purposely to monitor
communication activities, establish tariffsystems to protect consumers, ensure
equitable distribution of resources throughout the country and more so to
promote competition
The Commission levies on the gross revenues of the operators a compulsoryamount of 1% which is set aside to cater for the rural development
communications. This is in linewith the equitable distribution ofresources that
is stated in its major objectives. There is also Uganda Communications tribunal
(UCT) that is an oversight body created to offer disputes resolution. MTS
operators can appeal to this tribunal if theyare aggrieved byanything arising
from the communications act or from the influence ofgovernment power tha t
may sometimes incline to favouritism of some operators. So far government
has not interferedwith any matter concerningthe MTS operatorswithouttheinvitation ofUCT (Shirley etal 2002)
3.4 Companyprofiles and their CSRMission Statements.
3.4.1 ZAIN UGANDA
ZAIN Uganda(formerly Celtel) is an MTS provider in the country principally
engaged in providing Voice and datatelecommunication services. It is one of
the subsidiaries under the umbrella of ZAIN Group which operates in the
Middle Eastand in seventeen African countries.
Licensed in 1993, itwas the first private MTS provider to operate in Uganda.
With its headquarters in Kampala, it launched its services in 1995 startingwith
the districts ofKampalaand Mpigi. By2001, the company had already covered
17 districts. However, currently the network coverage is countrywide. Under
the licence terms, Celtel paid $ 50,000(UCC 2007), as a one -time Market entry
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fee plus other non-monetary requirements which included connecting its
network countrywide and also providing services to customers on a full time
basis. ZAIN is ranked second market shareholder with 40% after MTN
Ugandawhich gota licence in 1998.
The Corporate Mission reads, to cement ZAIN as a leading global mobile
operator that provides professional,world-class mobile and data services to all
our customers, wherever theyare, worldwide. And we aim to achieve this by
exceeding our customers expectations, rewarding our employees, and
providing returns beyond reasonable expectations for our shareholders. All
ZAIN subsidiaries operate on a group mission statement.
The company received stiffcompetition after new entrants in the market
which led to financial backdrop but ofrecent performance has improved. TheNetIncomewas $ 224 million for the year 2008 compared to $126 m in 2007
(78% increase).
Since it started its operations, ZAINhas engaged invarious CSRactivities.
These activities are part ofZAIN group corporate strategies. The CSR mission
statement is;
y To guide and streamline the companys business processes in a socially
and environmentally responsiblewayy To produce a positive impact on societyand the stakeholders, nowand
in the future
y To invest in these communities to help fulfil their potential
3.4.2 Mobile Telecommunication Network(MTN)
Mobile Telecommunication Network Uganda (MTN), a South African
company, was issued a licence in April 1998 as the second mobile network
provider in the country. Its one ofthe subsidiaries under MTN South Africa.It became operational in October the same year and offered fixed-line,
payphone, mobile voice and data services. Its services are based on Global
Systems Mobile (GSM) cellular technology. As it is popularly branded due to
its corporate colour, the yello (reflecting both hello and Yellow), covers
over 72% ofthewhole country. In addition to the three initial services, MTN
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nowoffers internet services and the recent innovations are the mobile money
transfer and the Google SMS. It takes the first position in the market share
having 49% per centwith 3 million customer base.
Like ZAIN, MTN has been engaged in CSR from the time it becameoperational in the country. In 2007, after ten years in business, it had already
spent1.87b Uganda shillings (approx. $1.1m). In the same year, the company
launched MTN Foundation, an initiative created solelyto handle CSRactivities
throughout the country. The initial capital thatwas donated by MTN to the
foundationwas 600m Uganda shillings ($352,941).
The Mission statementfor MTN Foundation is Improvingthe quality of
life through caring partnerships. The Foundation has been engaged in many
CSR partnerships having philanthropic focus on Education (Including Scienceand Technology), Music, Arts and Culture, Health and HIV/AIDS,
Environment, Community developmentand also the lowcost housingthrough
strategic partnershipwith Habitatfor Humanit
3.4.1 Uganda Telecommunications Limited ( UTL)
Uganda Telecommunications Limited (UTL)was the third MTS provider to
be issued a licence. Itwas established in 1998after unbundling UPTC thatwas
owned bythe state and a monopoly provider ofTelecommunication services.
Two companies were formed; UgandaPosts Limited (UPL) and UTL. UPLremained government-owned but UTLwas later privatised in June 2000and a
bid for 51% shares was won by a consortium comprised of three multi -
national companies jointly called Ucom Limited. These companies were
Germanys Detecon, Egypts Orascrom and Telecel International from
Switzerland. Later the Ugandan government handed over 18% ofits shares to
the Libyan company, the Greencom and remained with only 31% at the
disposal ofpublic offering. Still it holds the third position in terms ofmarket
sharewith 8%.
The initial major mobile telephone services that the company provided
were both dataandvoice communications, through calls and short messaging
systems (SMS). In 2005, the company launched another facility, the high-speed
mobile internet that can be used with Personal Digital Assistants (PDAs)
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including mobile phones. The company is one of the success stories of
Ugandas privatisation reforms (Byaruhanga 2004). From the economic
dilapidated company(UPTC) of1970s to a locally invested private company, it
was able to enter the competitive market that had already seen ZAIN and
MTN both foreign-owned, launch their operations. Todaythe company boasts
ofcountrywide network coverage.
Uganda Telecommunications Limited is guided bya strategic CSR mission
statement;
Telecommunications play an essential role in safeguarding, enriching and
strengthening the social, environmental and economic foundation of Uganda.
Telecommunication has transformed our country through access to innovative
technologies that make a real and positive difference in peoples lives. Keyto this
journey is the relationships we have developed with the societywe serve. This is
why at Uganda Telecom corporate social responsibility has become an integral
part ofwhatwe do; in our challenges, achievements and thevision for the future.
We recognise the impactwe as a corporation have had on the environmentand in
the communities we serve, and fullyaccept the responsibility this bestows upon
us. We have embraced our responsibilities and have undertaken social investment
initiatives in education, sports, ICT for development and with empowering
disadvantaged children
Source: Uganda Telecom Limited Corporatewebsite
Conclusion
Interestingly, the three companies have all allocated 1% oftheir profits as an
investmentto CSR. Butthey have taken different priorities in the committing
it. While MTN has chosen sports as the key CSRactivity, ZAIN is committed
to invest more in education than any other activity. UTL, on the other hand
does not specify its priorities but talks of Education, Sports, ICT for
developmentand empoweringthe disadvantages children. In the next chapter,
these activities have been looked into in detail. All this said, the major
challenge lies in measuringthe impactthatthese companies engage in.
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Chapter4
4.0 STAKEHOLDERS AND PRACTICE OF CSR BY MTS
COMPANIES
4.1 Introduction
In this chapter, the study focuses on the descriptive analysis ofwho the
stakeholders ofCSR activities are and also looks at different categories of
CSR that the companies are engaged in, which reflects Economic,
Philanthropic, and Legal as well as Ethical commitments. The chapter
concentrates on the period between 2003 and 2009. Classification is done per
the MTS provider and howthey committheir respective CSRactivities.
4.2 Key Stakeholders
Today businesses are focussing on societyand external environments as a
result ofa numerous stakeholder groups coming up (Steadman etal, 1995).Yet
many definitions ofwho the stakeholder is are still contested. Butfewscholars
have given so far impressing statements ofwhata stakeholder means. Freeman
(1984:46) noted thata stakeholder as any group or individualwho can affect or
is affected by the achievement of the organization's objectives. To Phillip
(2003);a stakeholder is any individual or group ofindividuals that is the legit i-mate object ofmanagerial or organizational attention.
Hopkins (2003:49), knowing the reality surrounding the stakeholder
concept, was convinced that there are at least seven stakeholder categories
(termed the Seven Azimuths). He mentioned each, as owners or investors,
management, employees, customers, the natural environment, the wider
community including governmentand the contactors or Suppliers. Literally, all
these can affect or be affected bythe operations ofthe business around them.
Though to some, stakeholder is known bythe power he has over business(Phillip 2003), in the developingworld, this may not necessarily legitimisewho
a stakeholder is. In countries like Ugandawhere a great number of the
population is poor, companies need not to be influenced to remember
engaging in CSR. Managers are in position to know the conditions of the
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communities theyareworking in. Specifically in major beneficiaries ofCSR in
Ugandaare the communities, the employees and even governmentthrough the
fulfilment oflegal requirements and partnership
4.3
CSRin PracticeThe data explored here presents the CSRthat have been implemented bythe
MTS companies in their respective categories. That is, Economic,
Philanthropic, legal and Ethical responsibilities.
4.3.1 EconomicResponsibility
The primary purpose of any business existence is the economic
responsibilities. Its a duty of companies to be efficient, invest in profitable
ventures and also fulfil the responsibility ofpaying tax to government. During
the study, the researcher looked atthree areas under economic responsibilities.
These are Investments (profits, long and short term), Taxes and employee
welfare. However it is to be noted that, because of the sensitivity of
Telecommunication industry, it is difficult to get the financial investment
figures aimed at increasing shareholder returns. The researcher looked at Rural
Communication Development Fund and the Micro Credit Development Trust
as a CSR community investment that entered multiple stakeholders into a
partnership. The percentage profit shares paid to governmentwere explored.
This helped the researcher to discover howtransparentthe companies are.
RuralCommunicationDevelopment Fund(RCDF)
As a policy requirement to provide equal access of communication
countrywide, Rural Communication Development Fund was established in
1997. Each company commits 1% of its revenues to the fund, in partnership
with World Bank and the communities. This was initiated by the Uganda
Communications Commission. From 2003 to 2008, MTC companies had
contributed US$ 6million and the World Bank had accumulated US $ 10
Million towards the project. The fund was founded to provide districts with
internet, ICT training centres, Web portals and the public payphones. Whereas
the projects have been running since, the project seems to still far from
success.
Power is a big challenge. The project is at stand still Richard, Arua District
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Chairman. Micro Credit Development Trust(MCDT), Uganda
While the RCDF benefit from all the three companies as a result of 1%
compulsory levy, MCDT is a partnership between MTN and the Grameen
Foundation USA thatwas launched in 2004 in Uganda. The partnership gave
birth to a project named Village phones. The partnership is an online micro
credit projectwhere Grameen Foundation USA, MTN and Five other local
financial Institutions entered into a deal to give loans to communities so that
they buythevillage phones. These phones are specifically made to operate in
areaswhere the network is difficultto access and also where electricity is hard
to get. The phones are rechargeable and they have long antennae that help
them receive the network. Communities applyfor loans through these micro
credit institutions and buythe phones at subsidised price. The calling ra tes are
also subsidised and cheaper too. Theyare boughtand used for business; those
who do not own their mobile phones make calls at public payphones (Village
phones) since they are cheap. This has extended communication in villages
since they are somehow easy to buy and maintain in terms of airtime. The
company also launched solar powered mobile recharge centres for these
rechargeable phones in areas where the trust is operating. According to
USAIDReport2008;
yThe project surpassed five-year goal of5,000 newcell phone businesses, es-tablishing6,700 newbusinesses in Uganda in justthree years, growingata
rate of150 newbusinesses per month.
y On average, Village Phone Operators sell five times more airtime than that
used byatypical urban customer usinga personal mobile phone.
y Village Phone Operators have been able to educate their children, access Pri-
vate healthcare, and growtheir businesses. Some have expanded into other
businesseswhich help to create more jobs in their communities.
y Farmers use thevillage phone to receive market information to better negoti-
ate prices for the goods they produce
ZAIN and UTL have not had other commercial partnerships with the
communities that one would really call economic corporate social
responsibilities. The overall financial investmentthese companies make as core
businessventures arevery hard to obtain due to the competitive nature oftheir
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business. Askedwhattotal amount ofmoney MTN spent on CSR initiatives in
the year 2007/8, the senior manager could not reveal;
I have towithhold some ofthe information you require because it reveals
exactly howmuch profits MTN makes. Such kind ofinformation is notfor
public consumption Tom, Commercial legal and Litigation officer.
Taxespaidtogovernment.
It is obvious that government provides incentive structures, inducements and
other benefits to operatingfirmswithin the economy. These may be in form of
tax holidays and grace periods and even the very fact that they are granted
licences to operate is an incentive on its own. Therefore the firms or
companies ought to pay taxes to the government. In real sense, governments
exist to provide amenities to society. In instances where firms function on
behalfofthe state, the functions ofgovernment shiftto the firms. But because
firmswill always avoid any expenditure to maximise profits, it is a government
duty to impose tax to firms so that the social costs can be met. Under this
corporate responsibility the researcher explored how much the three MTS
companies in Uganda paid as tax to governmentfrom 2003 to 2009
Table1 showing ZAIN tax remittances to government (US Dollars)
PERIOD VAT PAYE CORP. TAX WHT EXCISE TOTAL
2003
118,583 494,781 - 545,825 1,159,190
2004
- 480,216 155,826 1,043,112 1,679,153
2005
80,832 633,930 78,535 1,750,946 25,608,287
2006
1,633,489 937,850 402,873 3,037,877 6,012,089
2007
2,849,442 2,931,144 139,110 7,837,574 13,757,270
2008
5,945,826 1,991,510 2,007,900 10,330,209 20,275,445
2009
4,701,710 1,287,969 1,291,825 5,670,332 12,951,836
TOTAL
15,329,882 87,574,400 4,076,069 30,215,875 81,443,270
Source: Uganda Revenue Authority
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Table2 showing MTN tax remittances to government (US Dollars)
Period VAT P AYE CORP.TAX WHT EXCISE TOTAL
2003 11,869,026 1,684,657 7,808,667 3,665,342 7,872,263 32,899,957
2004
15,205,202 1,994,890 12,437,060 4,713,342 9,710,356 44,060,852
2005
16,450,240 2,336,858 20,024,200 6,900,108 12,250,790 57,962,198
2006
19,635,584 2,438,843 21,646,477 7,322,985 14,816,477 65,860,362
2007
26,504,061 4,664,715 24,997,276 9,546,954 22,550,495 880,846
2008
18,226,52 4,553,995 13,531,871 2,276,212 23,098,405 61,345,868
2009
10,270,693 3,818,013 4,894,187 21,226,141 18,516,096 39,621,602
Total 101,757,458 21,491,971 105,339,738 55,651,084 96,577,132 302,631,685
Source: Uganda Revenue Authority
Table 3 showing UTL tax remittances to government (US Dollars)
Period VAT PAYE CORP. TAX WHT EXCISE TOTAL
2003 2,685,839 1,072,786 95,227 591,750 854,726 5,300,328
2004 4,916,161 1,710,882 383,957 1,989,357 9,000,357
2005 7,119,554 1,993,004 3,833,329 2,967,659 12,463,546
2006 6,406,777 1,779,956 1,431,187 4,463,014 14,080,934
2007 7,034,792 1,932,162 734,945 5,600,639 15,302,538
2008 7,246,098 1,824,053 1,501,299 6,376,969 16,948,416
2009 5,538,946 1,043,202 402,281 3,403,341 1,038,770
TOTAL 40,948167 11,356,045 95,227 8,878,748 25,655,705 74,134,889
Source: Uganda Revenue Authority
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From 2003 to 2009, ZAIN Ugandawas not paying corporate tax to the
government. Corporate tax, according to Uganda Revenue Authority, is
ordinarily a companys income tax. It is 30% of the profits made by the
company and is paid only if the company makes profits. Responding to the
researchers question why there was no corporate tax shown for ZAIN and
UTL, the Uganda revenue Authority official said;
Those companies have not been exempted from paying corporate tax.
That means they have not been making profits Julius, Customs Tax
Department, URA
Employeewelfare(salaries,bonusandworkinghours)
Telecommunication industry in Uganda is believed to be one of the most
profitable in the country. It employees a great number ofpersonnel, more so
the newly graduated employees. However, it remains hard for the MTS
companies to reveal howmany employees they have on their payroll. Literature
approximates over 500 direct employees of each company (Katamba, 2008).
Justina, ZAIN CSR manager talked to the researcher and said that itwas not
the companys policy to discuss how many employees they have. She
considered it to be a sensitive issue that can be used by a competing firm.
Economically, CSR looks at employees in terms ofsalaries and other incentives
beyond the remuneration which include Work-life balanced and the way
overtime hours are paid. Aware that the workers had differing amounts of
remunerations depending on the level of organisational hierarchy, the
researcherwas interested in understandingwhetherwhatthe employees get is
whattheyactually expect. Three senior managers were interviewed, one from
each company. In addition, five employees were randomly interviewed from
each company to have their views ofwhat they expect from the company.
Again, Justina, the CSR manager, ZAIN, was asked aboutwhat she thought
aboutthe companys remuneration;
As Itold you,we consider employee information confidential because ofthe
nature ofour business. However on my partam happywith my salarythough no
one is ever satisfiedwithwhat she/ she gets.
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She said that she believed the company payswell its employees and thosewho
are not satisfied are so because of human nature of always wanting more.
Mark, the corporate affairs manager UTL said;
As a competingfirm,we strive to getthe best personnel. We have to offerattractive salaries in order to getthe personnel from other sectors. Am sure our
staffis happywithwhatwe give them.
After failing to catch up with Public relations officer, MTN, one senior
manager allowed the researcher to interviewhim. He also said that MTN is a
leading MTS companyand truly cares about its employees. he said most ofthe
employees are happywithwhatthey get, him inclusive.
Ofcourse is aleadingtelecommunication company. We are paidwell. I really
dont complain over it The Respondent
From the MTN Group literature, the company strives to achieve the top
quality employees and creates conditions that promote and retain the
employees. They offer attractive salaries to the staffand apartfrom the salaries,
the executives and the senior managers are given travel allowances, a company
car and the contribution to the retirementfund. For this case, the contribution
to the retirement fund is paid to National Social Security Fund (NSSF).To
MTN employees, bonuses are rewarded in line with preset performance
indicators and approved by the Remuneration and the Human Resources
Committee. The employeeswhowere interviewed confirmed it.
All the three companies almost have the same structure about the salary,
bonuses and the working hours which is from 09:00am to 05:00pm in the
evening. While it is the same across all MTS companies, Justina, CSR Manager
ZAIN, revealed that the company had not been paying performance
allowances for the lastthree years since 2007. She attributed this to the recent
financial setbacks thatthe company suffered.
UTL does not differ from the two companies. Employees interviewed
conformed that the salaries they get meet their expectations and they are
satisfiedwith it. However theyall agreed thatfor thosewhowork during night
shift dont getthe bonuses they deserve.
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It is really hectic,weworkfor long hours. The company should think ofadjusting
on our payments. Denis; UTL employee, Customer Department
4.3.2 PhilanthropicResponsibilities
These are charitable and voluntaryactivities thata corporation or a company
engage in to improve the lives ofcommunitieswithinwhich it operates. These
are actuallywhatthe government oughtto be doing. They comprise ofa range
ofactivities such as health, education, environment, culture and all thosewhere
the company does not expect backan economic advantage.
Much as the three companies have engaged in activities of giving out
money and other donations, most of these events are promotional aiming at
creating their own reputations. The comprehensive data below is the
considered CSR activities and the process of their delivery by each company
under study.
To beginwith, ZAIN has engaged in many events since its operations
begun in 1995. However, its stake in CSR came to prominencewhen two CSR
programmes were launched in 2006; Build Our Nation (BON) programme
and ZAIN Africa challenge. ZAIN believes that education is the lacking
ingredientto foster development in Uganda. Justine, the CSR manager ZAIN
posed a question to the researcher;Whatwould Uganda be ifwe all knewwhatto do, that iswhywe in
Education?
Both programmes were launched to foster the development ofeducation in
Uganda especially in response to the second Millennium Development Goal
which advocates for universal primary education. Through Build Our Nation
programme, ZAIN has partneredwith the Ministry ofEducation and sports to
help Primary schools through donation oftext books. Since 2006, 28,000text
books have so far been donated to 140 primary schools. An electronic random
selection systematic draw involving schools across the country is held each
quarter ofthe year and thewinners gettext booksworth US $ each. So far, text
books in circulation are 360Million Uganda shillings (Approx.US $211,764)
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ZAIN African challenge (ZAC) on the other hand target universities
where through inter-university tournament. ZAIN put US $ 1,000,000 to be
won both in grants and prizes by the competing universities. The winning
university takes US$ 5,000 and the participants take US$ 500 each. The
tournament brings together 100 Universities across Africa and so far 4
universities have benefitted in Uganda. Nkumba Universitywon US $30,000 in
institutional grants. Makerere University, Mukono University and Mbarara
University ofScience and Technology have so farwon US $ 5,000 each.
In 2008, ZAIN Uganda partnered with Text for Change (TTC) an
HIV/AIDS awareness programme to advocate for free testingand counselling
services by sending massages to ZAIN subscribers in Mbarara District each
week. The programme was also supported by AIDS Information Centre,Dutch foreign Ministry .A huge number ofclients was tested and this was a
successful mobile phone based platform for increasing awareness in health
services. Other CSR notable philanthropic activities alreadyaccomplished by
ZAIN were the donations to Jinja Women In Need, an organisation for
internally displacedwomen in camps that included clothes, Utensils and other
items for needy communities.
MTN has also had its Philanthropic contributions in manyareas. The four
projects that have benefited are Habitatfor Humanity(HFH) Uganda, MamaBag KitProject, U-Connectand the Malaria Consortium. Also, MTN is quite
different from other companies as most of its contributions to society are
through sports. In 2004, the company launched an initiative, the MTN
Foundation thatwas to be responsible for all the CSR activities itwas to
engage in. The allocated fund to run the Foundation is 1% ofthe profitafter
tax. This does not mean that before 2004, the company had no prior
engagements in CSR.
Habitatfor Humanity(HFH) Uganda is probablythe most historical bene-ficiary ofMTN UgandaPartnership agenda. HFH is an International organisa-
tion that has its subsidiary in Uganda. Its a non-profit making organisation
that helps in eradication of poverty by building low-cost houses to the rural
poor especiallywidows, orphans and those affected with HIV/AIDS. The
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partnershipwas entered in 1999; one year after the company had launched its
operations. By 2004, when the MTN Foundation was launched, 122 houses
had already been built. Since then, other 105 houses have been built. The cost
ofthe 227 houses so far contributed by company is US $199, 314.
Mama Bag KitProject is another beneficiary, a projectthatwas initiated by
Uganda Red Cross Society(URCS)to help the expectant mothers in thewar-
ravaged northern Uganda. MTN Uganda entered into partnershipwith URCS
in 2004 and pledged to supportthe projectthrough MTN Marathon, an annual
event that is organised by the company.MTN Marathon also started in 2004
and draws many participants from across Sub-Saharan Africa. The proceeds
gotfrom the Marathon are all donated as charityto the Mama bag KitProject
operating in the northern Districts ofUganda. For the previous five years an
amountworth US $ 74,470 has already been donated to the projectfrom the
annual Marathon proceeds.
In 2006, MTN partneredwith Ministry ofEducation and Sports to connect
internetfacilities to Primary schools through a project called U-Connect. The
initial schools thatwere connected were 9 and so far over 40 schools have
benefitted. In addition, manyworkshops have been organised to impartteach-
erswith computer schools and more than 1000teachers have participated and
the programme is still running.
In March 2008, MTN donated US $117,647to Malaria Consortium. Malaria
Consortium works with the Ministry of Health to prevent Malaria, TB and
other neglected tropical diseases in Uganda. The organisation is involved in
raisingawareness through information education programme and communica-
tion and behavioural change programmes. Not only does the consortiumwork
within with the National Malaria control Policy guidelines but also gears to-
wards achievingthe Millennium Development Goals. The Company donation
to Gulu Primary School ofUS$ 138, 235 is another contribution that deserve
mention. Thiswas given in May2009to renovate the dilapidated structures of
the school. It houses more that 1000 pupils and is located in Gulu district
northern Uganda.
MTN, beinga sports fanatic, more and more funds have been put in sports
like Proline Soccer academy, the sponsoring ofsports teams, Music awards and
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many other sports activities. However, some of the respondents encountered
during researchwondered whya big company like MTN would keep dashing
money in sports, something considered leisure in Uganda.
Accordingto Robert, Monitor Newspaper employee,
MTN should emulatewhat newcompanies are doing now. Heritage Oil Com-
pany has already constructed a road and school in Hoima districtand yet it is
no bigger ..Why cant MTN do the same?
Talking ofcommunity support, UTL as a number three player in the coun-
trys mobile telephony cannot be undermined. Asked aboutwhatthey dowith
the community, Mark, the corporate affairs manager replied;
that iswhywe exit. We exist becausewewantthe communityto develop.
On the companywebsites there are so many interventions that the company
undertakes within the community though not all can be considered philan-
thropic. The partnership between UTL and Kulika Charitable Fund remains a
distinctfeature in the companys CSR campaign. In 2005, the company signed
a memorandum ofunderstandingwith Kulika to sponsor 56 students on un-
dergraduate level. Students were to choose local universities of their choices.
Thatvery year, a pact ofUS $441,176was paid to Kulikato cater for full fees,
accommodation and even pocket money. In 2006, the company donated
computers to Koch Goma Secondary school in Gulu district. In the same year,
the company organised inter-university gamesworth US$147,058and the top
winner got US$ 5, 880 prizes plus the trophy. Other contestants also got other
prizes both in cash and items.
A Dormitoryfor Tooro Babies Homeworth US $15, 000was constructed
in 2006and the dormitorywas handed over to Bishop Egidio, Kasese Diocese,
in 2007. The company provides 50% ofthe monthly internet subscription fee
for Sanyu Babies Home, a