Gradu ate School of Dev elop m en t Studies

CORPORATE SOCIAL RESPONSIBILITY:

The case of Mobile Telephone Service Providers in Uganda

A Research Paper presented by:

Mugabe Moses (Uganda)

In partial fulfilment of the requirements for obtaining the degree of MASTERS OF ARTS IN DEVELOPMENT STUDIES Specialisation: Public Policy and Management PPM

Members of the examining committee Dr Nicholas Awortwi (supervisor) Dr Des Gasper (reader)

The Hague, The Netherlands November, 2009

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Disclaimer:
This document represents part of the authors study programme while at the Institute of Social Studies. The views stated therein are those of the author and not necessarily those of the Institute. Research papers are not made availa le for circulation outside o the Institute.

Inquiries:
Postal address: Institute of Social Studies P.O. Box 29776 2502 LT The Hague The Netherlands Kortenaerkade 12 2518 AX The Hague The Netherlands +31 70 426 0460 +31 70 426 0799

Location:

Telephone: Fax:

Ded c

To my parents John and Juliet my brothers and sisters; Every day until my life withers

on

I would 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 throughout this work. Without his effort, my study would not have reached this far. My heart-felt gratitude goes to Dr. Des Gasper, who was not only my second reader but also my convener and lecturer. His opinion and encouragement have helped me in fielding this research. I extend my sincere gratitude and love to my parents, my mother Juliet and my Dad John. Their dedication to see me succeed through education has been overwhelming. I would wish to take this moment to thank my elder sisters Edna, Enid, Harriet and Ella and their families for their moral support given to me during this study. I thank my young brothers Owen and Kennedy for their encouragement and 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.

Acknowled e e n

Con en
List of Tables List of Figures List of Acronyms Abstract Relevance to Development studies Keywords Ch p e 1 1.0 Introduction 1.1 Background 1.2 Problem stateemnt 1.3 Relevance and Justification 1.4 Objectives and Research questions 1.5 Research Methods and Limitations 1.6 Organisation of the Research Ch p e 2 2.0 2.1 2.2 2.3 Theoretical Background Introduction Conceptualising CSR Relevance of CSR to Stakeholders 2.3.1 Economic Investments 2.3.2 Employees 2.3.3 Community Partnership 2.3.4 Customers 2.3.5 Stakeholder expectations 2.3.6 Analytical Framework Conclusion 7 7 8 10 11 11 12 12 12 15 17 17 18

2.4

Ch p e 3 3.0 3.1 3.2 3.3 3.4 Development of Telecommunication Introduction Mobile Telephone Services in Uganda National Regulatory Framework for MTS providers Company profiles and CSR statements 3.4.1 ZAIN - UGANDA 3.4.2 MTN - UGANDA 5

     

20 20 20 20 25 26 27 28 29 30 30 31 32 32 32 32 33 33 33 34

3.4.3 Uganda Telecommunications Limited (UTL) Ch p e 4 4. O Stakeholders and CSR in Practice 4.1 Introduction 4.2 Key Stakeholders 4.3 CSR in Practice 4.3.1 Economic Responsibilities 4.3.2 Philanthropic Responsibilities 4.3.3 Legal Responsibilities 4.3.4 Ethical Responsibilities Ch p e 5 5.0 Conclusion and Recommendation 5.1 Key Issues raised in the Research 5.2 Research Findings 5.2.1 Company perception of CSR 5.2.2 Expectation fulfilment 5.4 Conclusion

35 37 37 37 37 38 38 44 48 50 53 53 53 53 53 54 58

     

ble
40 41 41

Table 1 ZAIN Tax remittances to the Government Table 2 MTN Tax remittances to the Government Table 3 UTL Tax remittances to the Government

Figure 1 Africa's Corporate social Responsibility Pyramid Figure 2 Analytical Framework

A Questionnaire

Append ce



24 31 63 7



 

o F ue

ATU CEO CSR CSRR EU GoU ICT IDB ILO ITU MTN MTS PRO UCC UCRNN UN URA UTL WBCSD MNE OECD RCDF MCDT USAID CEO

African Telecommunication union Chief Executive Officer Corporate Social Responsibility Corporate Social Responsibility Rating European Union Government of Uganda Information and Communication Technology International Development Bank International Labour Organisation International Telecommunication Union Mobile Telecommunication Network Mobile Telephone Network Public Relations Officer Uganda Communications Commission Uganda Child Rights NGO Network United Nations Uganda Revenue Authority Uganda Telecommunication Network World Business Council on Sustainable Development Multinational Enterprises Organisation for Economic Cooperation and Development Rural Communication Development Fund Micro Credit Development Trust United States Agency for International Development Chief Executive Officer 8

"&

# "!

o Ac ony

EU PERD DRIC MTS PRO UTL GoU ILO UN IDB BCSR UCC UCT UPTC GSM PDA SMS ICT NSSF

European Union Public Enterprise Reform and Divestiture Divesture and Reform Implementation Committee Mobile Telephone Service Public Relations Officer Uganda Communications Limited Government of Uganda International Labour Organisation United Nations International Development Bank Business Council for Social Responsibility Uganda Communications Commission Uganda Communications Tribunal Uganda Posts and Telecommunications Corporations Global Systems for Mobile Communications Personal Digital Assistant Short messaging system Information Communication Technology National Social Security Fund

BON Build Our Nation ZAC TTC HFH ZAIN African Challenge Text for Change Habitat For Humanity

URCS Uganda Red Cross society URA Uganda Revenue Authority

PWHC PriceWaterhouseCoopers

The economy of Uganda has increasingly been taken over by the private sector. In turn the private sector is expected to fulfil the corporate social responsibilities to the stakeholders. In a bid to understand whether companies do fulfil their CSR, the research was carrying out in the MTS companies. The research used the CSR pyramid produced by that was designed by Visser (2005) to explore economic, philanthropic, legal and ethical responsibilities. The methodology that was employed during the study was through semi structured interviews and questionnaires. The analytical framework focussed on four stakeholder categories which included government, employees, community and customers or clients. The MTS companies in questions are the three dominant ones; Mobile Telecommunication Network (MTN), Z AIN 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 CSR agenda, 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.

( 0) ( '
10

Ab

As private sector marks a substantial reduction in the state administration of economic sector, stakeholders rights are placed at stake. In a voluntary manner that the corporations deal with their stakeholders they may directly or indirectly misuse their might to turn away from their obligations. As the research aims at exploring whether the CSR obligations are being fulfilled, this work becomes relevant especially to policy practitioners.

Corporate Social Responsibility, Mobile Telephone Service providers, Sustainable Development, Stakeholder expectations, Corporate minimum legal requirements, Telecommunication.

5 6

Keywo d

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5 4

Rele

nce to De elop ent Stud e

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CHAPTER 1
1.0 INTR DUCTION 1.1

Corporate Social responsibility is a development concept that has come about as a result of zealous search for development alternative. The shift of economic power between different development agents, notably from the state to the private operators as development custodians has changed the focus of how development 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 investment and 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 of weak or non-existent societal or environmental fields and exploit the poor communities. Therefore, government needs support from donor communitie s and working both with civil societies and researchers to a meaningful CSR agenda (Newell P and A. Muro, 2006). 12

A@ 9 8

ck ound

Simon Caulkin, (2005) noted that, Business is the key to beating global poverty, but we are talking much more than handouts, (The observer, 13 March, 2005). In 2006, it was reported in The Economist Newspaper that, Philanthropy will have to shed amateurism that still pervades much of it and become a modern, efficient and global industry, (The economist, 25 February- Survey of wealth and philanthropy). All these authors seek the intervention of business companies as a development alternative especially in developing countries which are still trapped in the massive poverty where the majority of the population continues to survive on less than a dollar per day. In 1950, the Sears CEO considered that profit was 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 of economic power became obvious and recognised, different scholars, institutions and organisations were busy constructing what CSR entails: CSR is concerned with treating the stakeholders of the 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 both within a firm and outside. The wider aim of social responsibility is to create a higher standard of living, while preserving the profitability of the 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 interaction with their stakeholders on a voluntary basis (EC Green Paper, 2001). World Business Council for Sustainable Development defines it as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large( WBSCD, 1999)

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For UK government, CSR is the voluntary actions that business can take over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of the wider 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 and why 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 no effort has been made to assess the impact of philanthropic activities and other CSR initiatives on the dimensions of development. However some companies have contributed much in times of need 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 Kosovo refugee camps in Albania and Macedonia. In Uganda, the CSR agenda emerged in 1990s when the economy was 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) but also the economic breakdown that had been brought about by the political turmoil of the previous regimes (Kibikyo 2008). Not only did the former national enterprises comprise the private sector but the market registered 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 reason why the study was undertaken to

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see if corporate social responsibilities undertaken by companies in Uganda similarly have an impact on the society as the ones mentioned above In the related diverse scholarly work, many attempts have been made to assess CSR performance and Visser (2005) is one of those with a mark in the field. He developed a CSR Pyramid in the African context that 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 Uganda with special attention on the three companies which include Mobile Telecommunication Network (MTN), ZAIN-UGANDA and UGANDA TELECOM LIMITED. These are three most powerful mobile telephone companies that are operating in Uganda and have been in business for over a decade. 1.2 Proble State ent

CSR is an area that holds responsible the corporations to invest in communities in which they are operating. The question that is likely to come up here is; Is CSR a phenomenon that Uganda should be advocating for as a development alternative? Why is the state not responsible for such investment? Until mid 1980s, Ugandas economy was purely in hands of the state. Like many sub-Saharan Africa, there was a slow economic growth and the countrys budget almost entirely relied on external borrowing and the country particular had faced both economic and political turmoil due to ravaging wars. It was 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 companies was made and the subsequent sell of government Parastatal 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 growing at a fastest speed. There has been a double increase in domestic foreign investment from 2001 to 2008 where the figures short from US $ 150 million to US $ 368millions. While Uganda remains with is chance of foreign capital inflow, it remains embroiled in a string of challenges that are most likely to put it on halt as far as development is concerned. Weak 15

infrastructure hinders proper allocation of resources by the potential investors, uneducated workforce is likely to be taken advantage of and 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 poverty and Vulnerability assessment in sub-Saharan Africa, income inequality in Uganda remains high and the Health indicators are high with little progress for the last 10 years. Rural areas, where the majority live, still remain povertystricken 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 of all 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 imaginary answers feasible. Some researchers also argue that there is no policy framework for 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 that these laws are not always 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 discovering whether CSR in MTS companies meets stakeholder expectations.

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1.3 Rele ance and ju tification. CSR is a field that has, of recent, gained prominence where by development has been viewed possible if responsibilities can be redistributed from the state to other non-state actors. In this case the Corporations and other organisations that 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 developing world. Yet some companies especially the Telecommunication companies that have penetrated the African market have equally succeeded as those in the developed world. Though they are able to report on what they are doing, they are unable to report what changes they actually impact on the stakeholders. While I do appreciate their efforts to be socially responsible, I find it an area of interest to study what actually they do and whether what they do contributes to development and also meets the stakeholders expectations

1.4 Objective and re earch que tions

The main objective of this thesis is to analyse the corporate social responsibilities undertaken by the Mobile telephone serv ice companies in Uganda. The main research question that the study seeks to answer is: To what extent do mobile telephone service companies in Uganda fulfil corporate social responsibilities? In trying to find answers to the above questions, the following sub questions were of great guidance. (a) Who are the major stakeholders of CSR? (b) What activities do MTS companies provide? (c) How do companies and stakeholders view CSR? (d) Do they fulfil stakeholders expectations? 17

(e) Do they fulfil the legal requirements?

1.5 Research methods and limitations

This study is fundamentally qualitative in nature though few tables 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 of questionnaires to the PROs was because of the time factor that was anticipated to be a hindrance once interviews were to be used. For the rest of the respondents, interviews were conducted. A tridimensional data analysis is then used. This includes the reviewing of literature, primary data analysis and secondary data analysis, all concerning corporate social responsibility about the three MTS companies. Regarding the 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 at the back of this thesis. Concerning primary data, it was collected over the month of August 2009, specifically targeting data about CSR in Mobile Telephone Service companies. The companies under the study were 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 of market share, followed by ZAIN-Uganda and UTL becomes the third. Many sources were consulted in soliciting information regarding the secondary data. The major source was the Government of Uganda (GoU) and the Uganda communication commission reports. More so, international organisations 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 of the CSR activities, The newspapers business columns, and some magazines that report on corporate affairs in Uganda like the CEO magazine and the Super Taxpayer Magazine. In total, the sample size was 64 respondents. Three of these were PROs, nine were employees of the benefitting communities, and fifteen were employees of the three MTS companies, two corporate managers of ZAIN and UTL, three journalists, fifteen researchers and two government officials During the research process, limitations faced were; 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 research paper

The research paper is arranged into five chapters. Chapter 2 contains theories and literature about corporate social responsibility ranging from the international perspective to the local perspective. Chapter three discusses the companies and their CSR environment in relation to stakeholders. Chapter four discusses the CSR and stakeholders in practice, stressing what is done and stakeholder expectations. Chapter 5 contains the summary of the findings, few recommendation and the conclusion.

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Chapter 2
2.0 2.1 THEORETICAL BACKGROUND Introduction

In the report published by British Telecom The sustainability review 2009, the author starts by the statement Our customers and our shareholders are at the
heart of everything we do. In the same report, Sir Michael Rake, the chairman

of BT ( 2007-2009) said Im delighted that Im able to personally select the winners of the Chairmans
Awards from hundreds of applications from BT people involved in community activities. Im also proud of our long-term support for, and our peoples commitment to, fundraising telethons and disaster appeals. Over the next year our new volunteering strategy will help even more of our people get involved in our community work, extending the benefits for BT and our charity partners.

Delivering his Corporate Social Responsibility Report 2008, Didier Bellens, the CEO Belgacom, the leading Belgian Telecommunication company noted; I believe that embedding CSR into our business strategy will enable us to
address some challenges of our society more successfully and will allow us to progress together on a more sustainable basis. Bellens CEO, Belgacom.

While for the France Telecom, their corporate social responsibility is summarised in three words, include, Preserve and Care All the massages above indicate that Telecommunication companies are vastly engaged in CSR activities and are highly treasured in bringing about sustainable development. 2.2 Conceptualising Corporate Social Responsibility

Hopkins (2003) noted that the concept of CSR was not prominent until the Great Depression of 1930s. 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 of Harvard law posed a question, For whom, are corporate managers trustees? (Hopkins 2003). With this question he was 20

engaged in a debate with Berle of Columbia 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 1970s when it sprang again into prominence. Scholars believe that it was exacerbated by the fall of Berlin wall which symbolised the downfall of communism. Since then, debates about what the managers should do have been accumulated vastly. 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 l evel of business performance that would otherwise benefit more and more people in the future. He maintained that businesses have no money to spend. Steiner (1974:84) could not buy the idea of Friedman and his colleagues when he advocates for a break with classical concept of profit as the sole purpose of business. He argued that though business remains fundamentally an 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) went further to try and conceptualise CSR as an obligation of business. 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 public welfare should be the major aim of business. Though Naor is concerned about what is socially desirable due to multiple stakeholders, he suggests that social desirability can be based on the majority consensus of all the public concerned (stakeholders). The economic argument of CSR remained an issue of contestation over the period of 1970s. Whereas Steiner talked of how public interest is directly proportional to the size of business, Edmunds (1977) interestingly suggested how the business can decentralize and avoid social responsibility. He noted 21

that social responsibility takes one-third of the total corporate executive commitment and since CSR involves foregone alternatives in form of time 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 new wave in CSR agenda emerged especially after the amalgamation of national economic units or governments into a global one in 1990s. Global Reporting Initiative convened in 1997 as an international multi-stakeholder effort that creates a common frame work for voluntary reporting of the economic, environmental and social impact of organisation 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 Compact was officially launched in 2000 in New York 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 July 2002, released a communication calling for public action to promote CSR (Commission of the European communities, 2002b:8). The same commission developed a framework of how better the CSR can be understood. In Africa, many countries have not moved on the same pace especially with those in the developed world. This has been attributed to bad governance and political turmoil which have affected many countries in the region. However CSR has started taking shape, more so in South-Africa where many companies have subscribed to CSR International organisations like Global Reporting Initiative (GRI) guidelines. Moreover, the country hosts Mervin King, a commission on ethical codes of conduct 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 development alternative that should be adopted. Hopkins (2008:14) was the first to link CSR with development, maintaining that CSR can really pave way for development. He further argues that, Clearly, governments will be the overall arbiter of de22

velopment through the public purse, but the failure, along with international partner UN, in many developing countries has provided an empty space that must be filled by another entity- the private sector and its champions, the larger corporations (Hopkins 2008:14) However, what is much needed is the clarity about who the stakeholders are, their expectations and the CSR engagement priorities. Some companies do put a substantial amount of money in communities but end up having no impact at all. Hopkins (2008) gives an example of Coca-Cola Company that built a 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 of its equipment it contained and was quickly used as a refugee shelter and now serves as a slum. This is because the company that built it had no prior thought about sustainability. Therefore, the society (stakeholders) has a stake in directing the CSR activities. Amidst the many definitional constructs of CSR, Visser, a renowned scholar in the field of CSR redesigned a Pyramid that had originally been formulated by Archie B. Carroll. Carroll had developed a four-part conceptualization, contemplating that business does not only have Economic and legal responsibilities as fundamental obligations to society but also Ethical and discr etionary (philanthropic) ones (Carroll 1979). In his interesting CSR pyramidal framework, Carroll had assumed the business obligations to society were fundamentally vital to society in a hierarchical order of importance which was Economic, legal, ethical and finally Philanthropic. Literally, Economic responsibility means doing what is required by the global capitalism, Legal responsibility means doing what is required by global stakeholders, ethical responsibility means doing what is expected by stakeholders and Philanthropic responsibility; doing what is desired by the stakeholders.(Carroll 2004). In redesigning the pyramid for Africa context, Visser (2005) put Economic responsibility as the first priority, followed by Philanthropic, then legal and lastly ethical. His reasons were that, in Africa business companies operate in an environment where socio-economic needs are so great that philanthropic activities are an expected norm. Legal infrastructure is poorly developed so there is no pressure on the companies and lastly CSR is still at an early age of 23

maturity in Africa. With high rate of poverty, Philanthropy takes a higher pos ition in Africa because business companies themselves cannot succeed in failing communities though, of course economics remains the vital part of any business entity. Whereas ethical codes are highly treasured in developed world especially Europe, they are not so much developed in Africa, the reason they take 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 development.

Ethical Legal Responsibilities Philanthropic Responsibilities Economic Responsibilities

Fig. 1 Africas Corporate Social Responsibility Pyramid Source; Wayne Visser, 2005 A closer look into what each responsibility category embraces is of a crucial concern to later examine its relevancy to the stakeholders. 24

Economic Responsibility is historically believed to be the most fundamental obligation of any business entity (Crane et al, 2008:62). The primary motive of an 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 of operating efficiency. Philanthropic Responsibilities entail charitable expectations of the society (Crane et al, 2008:65). Managers and their employees have the duty to participate in voluntary and charitable activities within their local communities. Firms should assist private and public educational instit utions as well as helping those projects that are involved in improving lives of the communities. Such projects include health, agriculture, infrastructure, water and sanitation, waste management and even environmental protection. The rationale is that, other than being an 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, complying with the laws and obligations. A law in this sense is a codification of what 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 how fairly or justly they are treated or how business companies respect or protect stakeholders moral rights (Crane et al, 2008:64).

2.3

Relevance of CSR to stakeholders. There is no doubt that corporations or business firms have stakeholders

(Crane et al 2008:143, Hopkins 2003:17). Stakeholders are related to the firm in different capacities. While some act as 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 et al 25

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 of activities that include economic, philanthropic, legal and ethical. For the interest of my research, four stakeholder categories have are considered.CSR in;
y y y y

Economic (Employee + Government category), Community partnerships, Government as a recipient of Legal CSR And consumer- related CSR engagements.

The first category combines two stakeholders as they are the most recipients of economic CSR from the corporations 2.3.1 Economic investments.

The supremacy of economic CSR activities makes it considerably unique compared to other social responsibilities a business firm has (i.e., philanthropic, legal and ethical). While these others may focus their attention only on stakeholders 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 have argued that a single motive cannot sustain the existence of a corporation. There are other groups (stakeholders) who affect or get affected by the business (Freeman 1984, Hopkins 2003:13). Clarkson (1995:112), for instance, argues that "the economic and social purpose of the corporation is to create and distribute wealth and value to all its primary stakeholder groups, without favouring one group at the expense of others. Though it is not legally mandatory that a high-profit maximising firm should plough back a reasonable investment in philanthropic activities, it is in the current global system where economic power and strength has shifted from state to private sector. The era of capitalism has drastically reduced the influence of state and this is further deepening due to the expansion of the multinational companies. Whilst, there is not standard for that and the fact that many companies claim being socially responsible, a level of profit should correspond with the level of CSR. In the 26

economic turbulent crisis that is going on, big companies have been rescued from collapse in the famous bail out system. If the government can do that, why not a company that has taken over the role of government 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 that will increase productivity and contain costs that best suits the output per share. In the process, employees sometimes find themselves on the demeaning end; with low salaries, exploitation in terms of working hours and even with no any other benefits 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 of fairness, it does not mean that the word loses meaning when it comes to economic employee treatment by the company. Indeed, all employees may not receive the same amount of salary but the disparity that exists between the highest and the lowest determines how fairly the 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 at what 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 get their pay and benefits, safety and health, rights at work of global labour standards and fair/ ethical treatments. Employees as individuals need organisational justice that will make them feel part of the firm. CSR and justice share a fundamental ethical assumption of normative treatment (Folge, Cropananzo, & Goldman, 2005).whereas the Organisational justice entails norms regarding the treatment of individuals within the firm, CSR entails norms regarding the treatment of individuals within, groups of individuals and environments external to the organisation. Therefore CSR as a justice done to the employees will not be seen by the individuals within but also wi ll be judged 27

by the environment (Individuals outside the organisation). It is therefore clear that, whereas the individuals inside (employees) may not know how fairly they are being treated; an outsider may very well know the injustice being inflicted on them. The reason as why corporate social responsibility becomes relevant in that the firm goes beyond its immediate narrow monetary interest and considers who the company is, what is of value besides money and to whom it has responsibility. 2.3.3 Community

Globalization has brought greater complexities, limited resources and interdependence. Communities and business are increasingly entering into partnerships, recognising that shareholders and societal values are intrinsically linked (Loza, 2004). In Most cases businesses engage in community partnerships with a view of helping communities financially. However not all 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 et al, 2008:273). In reality the 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 of all their social activities ( Crane et al, 2008:275). Of course this is a risky venture on part of the 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 CSR will have provided data and the sort of track record that increase the level of trust of all the stakeholders in its activities. The costs of breaking this trust are high. Other than that, companies should provide CSR activities to communities which have minimal access to state or private sector provisions especially in rural areas. Examples of these provisions include banking, public transport and even support to marginalised group (Tracey et al 2005). Definitely these put a difference to other lives of people living in these communities especially when there is no hope of provision in the near future. However, though these 28

community partnerships may exist, the question is, are they addressing what they should be addressing in their corporate social agendas? Are they addressing the community/society expectations? Our business depends very considerably on the health of the community. If that
health is adversely affected by deprivation, crime, vandalism, racial tension, innercity decay, homeless or pollution, so, too, is our business health. Our opportunities are reduced, our problems increase, our costs rise. So rather than moaning about these problems, it makes good business sense for BT to work with others and get involved with addressing them (Hopkins 2003:63).

Indeed, any responsible business would bear these daily problems that affect the societies within which it is operating in. Dominic Cadbury, the chairman of Cadbury-Schweppes, said;
companies across UK are increasingly recognising the importance of business engagement with the community. Companies have a wealth of expertise and skills. They also have powerful products and brands. Together through partnerships with the wider community, they can create and deliver real benefits (Hopkins 2003:63).

2.3.4

Customers

The term Customer in most cases is applied to refer to the end-user of a service of a product. Haynes (1997:16) notes that Customers is a generic term referring to anybody who receives a service or product from some other person or a group of people. In this research we mean external customers as the stakeholders within the Mobile telephone companies who use services or products offered by these companies. Hopkins writes, the statement that customer is a king or queen has never been truer than today (Hopkins 2003). In the massive development of CSR ideology, 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 29

and profitability, have been thought of by many companies (Thompson 2004, Knox 2001 and Gronroos (1996). Therefore more CSR activities have targeted the customers as a major stakeholder especially to the growing businesses. However, in developing world, these CSR activities may not necessary reflect the Customer needs, priorities or expectations thus have less impact or none at all especially on development. I take the impact to be there only if these needs that CSR activities are addressing can satisfactorily be addressed according to what the customer expects. In terms of mobile telephone service in Uganda, we talk of fairness in terms of product price available to customers, the way the handling of customer complaints are being attended to 2.3.5 Stakeholder Expectations

Expectations are perspectives that a customer, a community member a government official or any other person who 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 effectively delivered services to their expectations and where it has fallen short. The feedback arising out of this survey helps the company to improve on its weaknesses and strengthen its performance. More so by analysing the company profile and their public statements, conclusions can be made about what these companies are expected to deliver 2.3.6 Analytical Framework

The following framework narrates and analyses the CSR services in which the three companies of MTN, ZAIN-UGANDA and UTL are engaged. It explores the stakeholders and their relationship with the firms under categories mentioned in Vissers CSR Pyramid

30

Figure 2: The Analytical Framework Company

Economic Investments Long term Short term Profits Employees Salaries Bonuses Working hours Tax Percentage share To government

Philanthropic Community Partnerships: Road-building Hospitals Schools Orphanages Public Safety

Legal Government/c orporate CSR Policies: Adherence to UCC, UCT Guidelines which include; Quality standards of service Universal access to the network

Ethical Fair prices Occupational safety Trainings Equal treatment of staff Fair dismissal

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 framework to explore whether MTS companies meet the expectations of the stakeholders. Employees, Communities, government and clients have been key stakeholders in the analytical framework.

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CHAPTER 3
3. 0
3.1

DEVELOPMENT OF TELECOMMUNICATION

Introduction

This chapter avails the status of MTS companies in Uganda from the time privatisation of telecommunication industry was introduced in country and the existing regulatory and policy framework. It includes the profiles of the companies under study and also talks about CSR statements that form part of their business strategies.
3.2

Mobile Telephone services in Uganda

In Uganda, Telephone services were offered by a state-owned monopoly provider, the Uganda Posts and Telecommunications Corporation, until 1993 when the first private company was issued a license to operate as a second network provider. Celtel (now ZAIN) was the first to get a license but started its operations in 1995. The company concentrated much in urban areas like Kampala, Mbarara, Masaka, Arua and 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 rapidly and even in rural areas than did the Celtel. The third private company was created in 1998 when UPTC was 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 Uganda though they are no t as strong as the first three. They include Warid Telecom, Hits Telecom and Orange Telecom. Ugandas mobile telephony is a fast growing sector with Ten million mobile subscribers which is one-third of the total population (UCC 2008). The mobile telephony to population coverage is almost 100% 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 regulatory Framework for MTS providers

An effective regulatory system is one that is ruled by a clear legislative mandate to assure that service is provided through a competitive market to as many people as possible at prices that fairly reflect the cost of services (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) and was about to issue licence to more two companies, MTN and UTL. UCC was created purposely to monitor communication activities, establish tariff systems 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 compulsory amount of 1% which is set aside to cater for the rural development communications. This is in line with the equitable distribution of resources 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 they are aggrieved by anything arising from the communications act or from the influence of government power tha t may sometimes incline to favouritism of some operators. So far government has not interfered with any matter concerning the MTS operators without the invitation of UCT (Shirley et al 2002)
3.4 3.4.1

Company profiles and their CSR Mission Statements. ZAIN UGANDA

ZAIN Uganda (formerly Celtel) is an MTS provider in the country principally engaged in providing Voice and data telecommunication services. It is one of the subsidiaries under the umbrella of ZAIN Group which operates in the Middle East and in seventeen African countries. Licensed in 1993, it was the first private MTS provider to operate in Uganda. With its headquarters in Kampala, it launched its services in 1995 starting with the districts of Kampala and Mpigi. By 2001, 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 33

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 Uganda which got a 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 they are, 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 stiff competition after new entrants in the market which led to financial backdrop but of recent performance has improved. The Net Income was $ 224 million for the year 2008 compared to $126 m in 2007 (78% increase). Since it started its operations, ZAIN has engaged in various CSR activities. These activities are part of ZAIN group corporate strategies. The CSR mission statement is;
y

To guide and streamline the companys business processes in a socially and environmentally responsible way

To produce a positive impact on society and the stakeholders, now and in the future

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 of the 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% of the whole country. In addition to the three initial services, MTN 34

now offers 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 cent with 3 million customer base. Like ZAIN, MTN has been engaged in CSR from the time it became operational in the country. In 2007, after ten years in business, it had already spent 1.87b Uganda shillings (approx. $1.1m). In the same year, the company launched MTN Foundation, an initiative created solely to handle CSR activities throughout the country. The initial capital that was donated by MTN to the foundation was 600m Uganda shillings ($352,941). The Mission statement for MTN Foundation is Improving the quality of life through caring partnerships. The Foundation has been engaged in many CSR partnerships having philanthropic focus on Education (Including Science and Technology), Music, Arts and Culture, Health and HIV/AIDS, Environment, Community development and also the low cost housing through strategic partnership with Habitat for Humanit 3.4.1 Uganda Telecommunications Limited ( UTL)

Uganda Telecommunications Limited (UTL) was the third MTS provider to be issued a licence. It was established in 1998 after unbundling UPTC that was owned by the state and a monopoly provider of Telecommunication services . Two companies were formed; Uganda Posts Limited (UPL) and UTL. UPL remained government-owned but UTL was later privatised in June 2000 and 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% of its shares to the Libyan company, the Greencom and remained with only 31% at the disposal of public offering. Still it holds the third position in terms of market share with 8%. The initial major mobile telephone services that the company provided were both data and voice 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) 35

including mobile phones. The company is one of the success stories of Ugandas privatisation reforms (Byaruhanga 2004). From the economic dilapidated company (UPTC) of 1970s 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. Today the company boasts of countrywide network coverage. Uganda Telecommunications Limited is guided by a 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. Key to this journey is the relationships we have developed with the society we serve. This is why at Uganda Telecom corporate social responsibility has become an integral part of what we do; in our challenges, achievements and the vision for the future. We recognise the impact we as a corporation have had on the environment and in the communities we serve, and fully accept 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 Corporate website

Conclusion Interestingly, the three companies have all allocated 1% of their profits as an investment to CSR. But they have taken different priorities in the committing it. While MTN has chosen sports as the key CSR activity, 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 development and empowering the disadvantages children. In the next chapter, these activities have been looked into in detail. All this said, the major challenge lies in measuring the impact that these companies engage in.

36

Chapter 4

4.0

STAKEHOLDERS AND PRACTICE OF CSR BY MTS COMPANIES

4.1

Introduction

In this chapter, the study focuses on the descriptive analysis of who the stakeholders of CSR 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 how they commit their respective CSR activities. 4.2 Key Stakeholders

Today businesses are focussing on society and external environments as a result of a numerous stakeholder groups coming up (Steadman et al, 1995). Yet many definitions of who the stakeholder is are still contested. But few scholars have given so far impressing statements of what a stakeholder means. Freeman (1984:46) noted that a stakeholder as any group or individual who can affect or is affected by the achievement of the organization's objectives. To Phillip (2003); a stakeholder is any individual or group of individuals that is the legitimate object of managerial 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 government and the contactors or Suppliers. Literally, all these can affect or be affected by the operations of the business around them. Though to some, stakeholder is known by the power he has over business (Phillip 2003), in the developing world, this may not necessarily legitimise who a stakeholder is. In countries like Uganda where 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 37

communities they are working in. Specifically in major beneficiaries of CSR in Uganda are the communities, the employees and even government through the fulfilment of legal requirements and partnership 4.3 CSR in Practice

The data explored here presents the CSR that have been implemented by the MTS companies in their respective categories. That is, Economic, Philanthropic, legal and Ethical responsibilities. 4.3.1 Economic Responsibility

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 of paying tax to government. During the study, the researcher looked at three 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 government were explored. This helped the researcher to discover how transparent the companies are. Rural Communication Development Fund (RCDF) As a policy requirement to provide equal access of communication countrywide, Rural Communication Develo pment 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 se ems to still far from success. Power is a big challenge. The project is at stand still Richard, Arua District 38

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 that was launched in 2004 in Uganda. The partnership gave birth to a project named Village phones. The partnership is an online micro credit project where Grameen Foundation USA, MTN and Five other local financial Institutions entered into a deal to give loans to communities so that they buy the village phones. These phones are specifically made to operate in areas where the network is difficult to 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 apply for loans through these micro credit institutions and buy the phones at subsidised price. The calling ra tes are also subsidised and cheaper too. They are bought and 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 USAID Report 2008;
y

The project surpassed five-year goal of 5,000 new cell phone businesses, establishing 6,700 new businesses in Uganda in just three years, growing at a rate of 150 new businesses per month.

On average, Village Phone Operators sell five times more airtime than that used by a typical urban customer using a personal mobile phone.

Village Phone Operators have been able to educate their children, access Private healthcare, and grow their businesses. Some have expanded into other businesses which help to create more jobs in their communities.

Farmers use the village phone to receive market information to better negotiate 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 investment these companies make as core business ventures are very hard to obtain due to the competitive nature of their 39

business. Asked what total amount of money MTN spent on CSR initiatives in the year 2007/8, the senior manager could not reveal; I have to withhold some of the information you require because it reveals
exactly how much profits MTN makes. Such kind of information is not for public consumption Tom, Commercial legal and Litigation officer.

Taxes paid to government. It is obvious that government provides incentive structures, inducements and other benefits to operating firms within 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 behalf of the state, the functions of government shift to the firms. But because firms will 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 government from 2003 to 2009 Table 1 showing ZAIN tax remittances to government (US Dollars)
PERIOD 2003 118,583 2004 2005 80,832 2006 1,633,489 2007 2,849,442 2008 5,945,826 2009 4,701,710 TOTAL 15,329,882 87,574,400 4,076,069 30,215,875 81,443,270 1,287,969 1,291,825 5,670,332 12,951,836 1,991,510 2,007,900 10,330,209 20,275,445 2,931,144 139,110 7,837,574 13,757,270 937,850 402,873 3,037,877 6,012,089 633,930 78,535 1,750,946 25,608,287 480,216 155,826 1,043,112 1,679,153 494,781 545,825 1,159,190 VAT PAYE CORP.TAX WHT EXCISE TOTAL

Source: Uganda Revenue Authority

40

Table 2 showing MTN tax remittances to government (US Dollars)

Period 2003 2004 15,205,202 2005 16,450,240 2006 19,635,584 2007 26,504,061 2008 18,226,52 2009 10,270,693 Total 101,757,458 3,818,013 21,491,971 4,894,187 105,339,738 21,226,141 55,651,084 18,516,096 96,577,132 39,621,602 302,631,685 4,553,995 13,531,871 2,276,212 23,098,405 61,345,868 4,664,715 24,997,276 9,546,954 22,550,495 880,846 2,438,843 21,646,477 7,322,985 14,816,477 65,860,362 2,336,858 20,024,200 6,900 ,108 12,250,790 57,962,198 1,994,890 12,437,060 4,713,342 9,710,356 44,060,852 VAT 11,869,026 PAYE 1,684,657 CORP.TAX 7,808,667 WHT 3,665,342 EXCISE 7,872,263 TOTAL 32,899,957

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

41

From 2003 to 2009, ZAIN Uganda was 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

Employee welfare (salaries, bonus and working hours) Telecommunication industry in Uganda is believed to be one of the most profitable in the country. It employees a great number of personnel, more so the newly graduated employees. However, it remains hard for the MTS companies to reveal how many 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 it was 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 of salaries 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 researcher was interested in understanding whether what the employees get is what they actually expect. Three senior managers were interviewed, one from each company. In addition, five employees were randomly interviewed from each company to have their views of what they expect from the company. Again, Justina, the CSR manager, ZAIN, was asked about what she thought about the companys remuneration; As I told you, we consider employee information confidential because of the
nature of our business. However on my part am happy with my salary though no one is ever satisfied with what she/ she gets.

42

She said that she believed the company pays well its employees and those who are not satisfied are so because of human nature of always wanting more. Mark, the corporate affairs manager UTL said; As a competing firm, we strive to get the best personnel. We have to offer
attractive salaries in order to get the personnel from other sectors. Am sure our staff is happy with what we give them.

After failing to catch up with Public relations officer, MTN, one senior manager allowed the researcher to interview him. He also said that MTN is a leading MTS company and truly cares about its employees. he said most of the employees are happy with what they get, him inclusive. Of course is a leading telecommunication company. We are paid well. 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 staff and apart from the salaries, the executives and the senior managers are given travel allowances, a company car and the contribution to the retirement fund. 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 employees who were 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 last three years since 2007. She attributed this to the recent financial setbacks that the company suffered. UTL does not differ from the two companies. Employees interviewed conformed that the salaries they get meet their expectations and they are satisfied with it. However they all agreed that for those who work during night shift dont get the bonuses they des erve. 43

It is really hectic, we work for long hours. The company should think of adjusting
on our payments. Denis; UTL employee, Customer Department

4.3.2

Philanthropic Responsibilities

These are charitable and voluntary activities that a corporation or a company engage in to improve the lives of communities within which it operates. These are actually what the government ought to be doing. They comprise of a range of activities such as health, education, environment, culture and all those where the company does not expect back an 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 begin with, ZAIN has engaged in many events since its operations begun in 1995. However, its stake in CSR came to prominence when two CSR programmes were launched in 2006; Build Our Nation (BON) programme and ZAIN Africa challenge. ZAIN believes that education is the lacking ingredient to foster development in Uganda. Justine, the CSR manager ZAIN posed a question to the researcher; What would Uganda be if we all knew what to do, that is why we in
Education?

Both programmes were launched to foster the development of education in Uganda especially in response to the second Millennium Development Goal which advocates for universal primary education. Through Build Our Nation programme, ZAIN has partnered with the Ministry of Education and sports to help Primary schools through donation of text books. Since 2006, 28,000 text 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 of the year and the winners get text books worth US $ each. So far, text books in circulation are 360Million Uganda shillings (Approx.US $211,764)

44

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 University won US $30,000 in institutional grants. Makerere University, Mukono University and Mbarara University of Science and Technology have so far won US $ 5,000 each. In 2008, ZAIN Uganda partnered with Text for Change (TTC) an HIV/AIDS awareness programme to advocate for free testing and 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 of clients was tested and this was a successful mobile phone based platform for increasing awareness in health services. Other CSR notable philanthropic activities already accomplished by ZAIN were the donations to Jinja Women In Need, an organisation for internally displaced women in camps that included clothes, Utensils and other items for needy communities. MTN has also had its Philanthropic contributions in many areas. The four projects that have benefited are Habitat for Humanity (HFH) Uganda, Mama Bag Kit Project, U-Connect and 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 that was to be responsible for all the CSR activities it was to engage in. The allocated fund to run the Foundation is 1% of the profit after tax. This does not mean that before 2004, the company had no prior engagements in CSR. Habitat for Humanity (HFH) Uganda is probably the most historical beneficiary of MTN Uganda Partnership agenda. HFH is an International organisation 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 especially widows, orphans and those affected with HIV/AIDS. The 45

partnership was 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 of the 227 houses so far contributed by company is US $199, 314. Mama Bag Kit Project is another beneficiary, a project that was initiated by Uganda Red Cross Society (URCS) to help the expectant mothers in the warravaged northern Uganda. MTN Uganda entered into partnership with URCS in 2004 and pledged to support the project through 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 got from the Marathon are all donated as charity to the Mama bag Kit Project operating in the northern Districts of Uganda. For the previous five years an amount worth US $ 74,470 has already been donated to the project from the annual Marathon proceeds. In 2006, MTN partnered with Ministry of Education and Sports to connect internet facilities to Primary schools through a project called U-Connect. The initial schools that were connected were 9 and so far over 40 schools have benefitted. In addition, many workshops have been organised to impart teachers with computer schools and more than 1000 teachers have participated and the programme is still running. In March 2008, MTN donated US $117,647 to Malaria Consortium. Malaria Consortium works with the Ministry of Health to prevent Malaria, TB and other neglected tropical diseases in Uganda. The organisation is involved in raising awareness through information education programme and communication and behavioural change programmes. Not only does the consortium work within with the National Malaria control Policy guidelines but also gears towards achieving the Millennium Development Goals. The Company donation to Gulu Primary School of US$ 138, 235 is another contribution that deserve mention. This was given in May 2009 to renovate the dilapidated structures of the school. It houses more that 1000 pupils and is located in Gulu district northern Uganda. MTN, being a sports fanatic, more and more funds have been put in sports like Proline Soccer academy, the sponsoring of sports teams, Music awards and 46

many other sports activities. However, some of the respondents encountered during research wondered why a big company like MTN would keep dashing money in sports, something considered leisure in Uganda. According to Robert, Monitor Newspaper employee,
MTN should emulate what new companies are doing now. Heritage Oil Company has already constructed a road and school in Hoima district and yet it is no bigger ..Why cant MTN do the same?

Talking of community support, UTL as a number three player in the countrys mobile telephony cannot be undermined. Asked about what they do with the community, Mark, the corporate affairs manager replied;
that is why we exit. We exist because we want the community to develop.

On the company websites there are so many interventions that the company undertakes within the community though not all can be considered philanthropic. The partnership between UTL and Kulika Charitable Fund remains a distinct feature in the companys CSR campaign. In 2005, the company signed a memorandum of understanding with Kulika to sponsor 56 students on u ndergraduate level. Students were to choose local universities of their choices. That very year, a pact of US $441,176 was paid to Kulika to 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 games worth US$147,058 and the top winner got US$ 5, 880 prizes plus the trophy. Other contestants also got other prizes both in cash and items. A Dormitory for Tooro Babies Home worth US $15, 000 was constructed in 2006 and the dormitory was handed over to Bishop Egidio, Kasese Diocese, in 2007. The company provides 50% of the monthly internet subscription fee for Sanyu Babies Home, an orphanage that is based in Kampala. However, Barbra, the Home Administrator feels the company can still do more than just providing internet.
A gift is always a gift but there are a multitude of activities. There are over 2 Million known orphans in Uganda and the company can help them a great deal. Feeding these kids here is very costly. The company can help feed or sponsor one or two of them. Barbra.

47

Like MTN, UTL has sponsored so many events ranging from music, sports and cultural galas and from the literature the company believe s to be imparting positive changes to the communities. However, one correspondent was not convinced of the positive change it makes to society. All these things are marketing strategies. When will a poor man in the village
attend music concert in Serena or Hotel Africana? They would make an impact if they considered constructing roads and schools in the villages

4.3.4 Legal Responsibilities

Legal Responsibilities are basically adhering to what the law requires. A legalcompliant firm provides welfare to the society within the limits of regulations from the rightful authorities (Marrewijk, 2003). Companies are bound to morally respond to policy rules and regulations that govern them. In Uganda, MTS companies are regulated by the Uganda Communications Commission regulations and the Uganda communications Act Cap 106 laws of Uganda. Legal responsibilities involve a lot of issues ranging from licence requirements, companies interrelationships, and more so the equitable distribution of the services and the quality of services offered. While the researcher looked at these in general, two key responsibilities were specifically taken into account.
Universal access to the communication network The quality of the service offered

Universal access to the communication network Under the universal access to the network, the researcher considered the strategies followed by the three companies to provide more equitable services, especially so to the underserved who are commonly found in the rural areas. However, it is important to note that much of the facts given here were got by analysing government policy papers and reports especially those produced by the UCC as a regulatory body. The key policy tool that was studied is the Rural Communications Development. This was a five-year programme which UCC instituted in 2001with a view of ensuring access of communication services to all sub-counties in the country. A Rural communications Development Fund was established through which this goal would be achieved. Each MTS company mandatorily pays a yearly contribution of 1% of 48

its revenue to the fund along with other donations and grants from the government and development partners. Established in 2003 and guided by the RCDF Policy 2001 to run for a period of 5 years, the fund has already been declared a success (The observer, 10/21/2009). The researcher took interest in knowing whether these companies have all the time paid the 1% levied on their revenues; Since its compulsory, there is no way they can fail to pay. They give in their
contribution every financial year Patrick, Commissioner, UCC

This shows the compliance of meeting the legal obligation of resourcing the fund by the MTS companies. The Quality Standards of the services In Uganda, the standards required by the law for the mobile telephony are stipulated in the statutory instruments of Telecommunications regulations ns 2005. A list of guidelines under objective three lays down all that is required by the regulator, the UCC, for a licence to be issued. The statutory instruments are attached in the appendices. The perception of quality in MTS companies in Uganda had differing views. Different people the researcher asked had different opinions. Some praised the companies for offering better services why others were not happy with the way they work. Some complained of lack of customer care, jamming of the network and fake mobile phones on the market. The researcher interviewed fifteen people; five clients for each company. Those of MTN Company hailed the firm for having good customer care as their complaints are always met immediately. However they complained of network jamming though not on a regular basis. I cant imagine a company like MTN to have a network problem. These people
get a lot of money from us but their network sometimes is a mess. I cannot access it on my office desk. I had to buy ZAIN card for this reason though it is expensive to maintain Lydia, MTN client.

Those of UTL were bothered by how sometimes they buy top -up cards and it takes more than an hour to receive their credit on phones and also jamming of the customer care lines. UTL would be the best company if they cared much about customers One 49

client responded.

Commenting on the quality of phones, most of them agreed that phones from outlets of the three companies are always good. The general problem is that their batteries dont last long. If you buy from their official outlets, their phones are good but if you buy from
other deals who are just business people you risk your money. Sometimes they sell you second hand phones that have been repaired. They dont last long Agaba,

MTN client and a business man. In General, legal requirements in Uganda include such things as guidelines to issuance of licences, Tariff and accounting regulations, interconnection regulations and the fair competition. For example in 2008, UCC produced a report evaluating the performance of ZAIN from 2003 to 2007 and the report shows that, other than slow expansion of the network coverage by ZAIN, due to financial challenges, other requirements were fulfilled by the company. In addition to that ZAIN still fulfils the duty of paying 1% of its revenue to the Rural Communication Development Fund.
4.3.4 Ethical Responsibilities

Though some literature suggest some ethical misbehaviours by telephone companies in Uganda, the clients, researchers and the employees the researcher talked to, averagely seems to have few complaints about the companies for their ethical compliances. However, in 2008 the UCC warned the telephone companies against fake promotions, selling low quality phones, poor coverage and high tarrifs;
We have noticed incomplete information disclosure, poor service delivery, arbi trary disconnection of lines and delays in phone repairs by telecommunication service providers Kizito, UCC consumer Affairs specialist

Under ethical obligations, the researcher was concerned of fair prices, occupational safety, trainings, equal treatment of staff and fair dismissal. About the prices, five clients from each company agreed that calling their own network is cheaper compared to calling a person on another network. However most of them had three network cards, one for each company. 50

Whenever they want to call a different network the switch the cards. By the time of the research, UCC, the governing body was considering introducing a flat rate where calls between different networks will have the same flat rates. According to newspapers, MTN and ZAIN were refusing this move by UCC as it would reduce their revenues. They have bigger market shares that UTL and other new companies. The more customers the company has the more revenue from calls made, especially from different networks. To UTL, it was not bothered since the proposed rate was the same as what they were already charging. All the employees from the three companies responded that they work in favourable environment and were assured of their occupational safety. Whereas few MTN staff complained about favouritism at workplace and even during recruitment process, the Public relations officer dismissed the allegation. She said that vacancies are advertised and interviews called for. The company recruits on merit and there is no kind of unequal treatment of the staff. She attributed this to individual opinions of some of the staff. When contacted, one respondent had this to say;
I dont think MTN segregates staff. I do believe telecom companies employee on technical know-how basis. It is a technical company and needs technical people and I think they have a recruitment agency Katamba, CSR researcher and Assistant lecturer, Makerere University Business school.

UTL and ZAIN employees said they are treated equally. One ZAIN employee argued that ufair treatment can come up if there is a personal misunderstanding with a supervisor but cannot affect the whole staff. All the three companies have terms of contract they follow when it comes to contract termination. Normally the terminated workers are informed in advance and get termination benefits. In may 2009, ZAIN Uganda announced that 27 employees were to lose their Jobs. This was according to the ZAIN Group decision taken as a move to down size the company employee expenditure. However, the affected employees were to get their terminal benefits. According to the press statement that was released by ZAIN Uganda;
In line with this, 27 Zain Uganda staff will be laid off with suitable retirement

51

packages and counselling services to ensure they progressively adapt to their next phases of life,

Conclusion While most of the CSR activities are practiced by the MTN companies in Uganda, it still remains somehow a new and undeveloped concept. As most of the CSR activities are promotional events like sports which mostly do not put any positive impact on the stakeholders other than the shareholders themselves, the researcher observed that companies are trying to gain popularity in the name of CSR. It is also noticed that many stakeholders do not know their rights. The researcher observed that employees can rarely criticise the companies they work for. This could be due to the level of unemployment and even poverty in the country

52

CHAPTER 5
5.0 FINDINGS AND CONCLUSION In this last chapter, the researcher tries to discuss the main key issues raised in the research and the CSR contributions that have been so far been initiated by the MTS companies in Uganda. Then findings are discussed and the finally part is the conclusion. 5.1 Key Issues raised in the Research.

Central to this research was the phenomenon of whether the MTS companies in Uganda meet the stakeholder expectations of the CSR activities. Though CSR remains a field of contestation both in definition and scope, most Literature generally puts it that CSR activities are fulfilled through Economic, philanthropic, Legal and ethical obligations (Visser, 2005). In areas like developing world where private sector is not yet developed, CSR are hardly implemented and stakeholders rights are infringed on. Indeed, CSR in Uganda remains relatively a new area that has not been either fully practiced or systematically researched on. Nevertheless, the MTS companies in the country have been implementing some of the programmes in this field though it is still far from maturity. Given the vast literature surrounding CSR, it is imperative to know how these companies view it, analyse how they implement it and then the stakeholders views. A correlation of the two either reveals a missing gap or a level of satisfaction among the stakeholders. It is also important to know whether the MTS companies in the country fulfil the legal requirements. 5.2 5.2.1 Research findings Companys perception of CSR

A study about the perceptions, approaches and the needs of the companies that was carried out in Uganda revealed that managers, who are the corporate chiefs are aware of what CSR is but often have vague or conflicting ideas of what it actually involves (Katamba, 2008). The same study revealed how company managers defined CSR;
When companies consider the interest of the society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders,

53

communities and other stakeholders as well as the environment. It is giving back to society and cementing the bond of the company to society through demonstrating the caring heart of the company (Katamba , 2008).

In her own words, Justina, ZAIN CSR manager defined it as; This is the way a company invests in the communities where it operates. This
helps to support sustainable development of these communities

She added that activities mainly aimed at being supportied are those in the education sector. According to MTN Group website, CSR is spending towards developmental priorities like education, health and HIV/AIDS awareness programmes, rural development and entrepreneurial development. MTN Uganda also believes in sports. The company is a fanatic to sports and managers believe that through sports talents are developed. Moreover its a double-facets CSR since some of the proceeds from sports are donated as charity The researcher interviewed the Public relation officer, UTL to understand what more, other than the CSR statements, how the company perceives the CSR; As much as we work for business achievements, we also treasure the
communities around us. To me CSR means the way businesses can interact with the communities to have an overall desirable impact on the society and this is what our company has always tried to achieve Mark PRO Uganda Telecom Limited.

5.2.2

Expectation fulfilment.

The stakeholders, of course, expect satisfaction from the services offered by the MTS companies. As already noted government expect the companies to legally abide to the requirements. As of the case with Uganda, licenses to operate were issue to these companies so as to operate in an efficient manner that will conform to their economic responsibilities of paying taxes, invest in the communities or the economy and also respect the stakeholders especially the their internal clients who are the employees. While the research revealed that most of the employees were happy because of the satisfactory 54

remunerations paid by these companies, it also showed that some of these companies were not efficient in some ways especially when fulfilling government requirements. For the period of seven years that the research tried to explore, it was found that UTL and ZAIN have not been paying corporate tax to the government. Corporate tax is paid when a firm makes profits. According to the tax laws in Uganda, all business companies are supposed to meet this requirement of paying 30% of their revenues to the government. The researcher was concerned why the corporate tax is not paid. According the Julius, the URA official, the companies were not making profits since there was no any other legal statement exempting these companies from paying tax. However, according to one respondent who work as researcher and a banker at the same time; Company revenues are not necessarily calculated in disposable incomes or liquid
cash. It can be in non-cash form like assets. When it is non- cash, the value of an asset can be spread over the years which the asset is projected to last so as to come up with approximated company profits Silvanus, a Banker.

Economic responsibilities being on the top agenda of the CSR, the researcher was much concerned about it and there are so many questions that came to his mind. First of all, if the laws of the land required the companies to operate efficiently and pay taxes to the government, then the two companies would not have been allowed to operate for the period of seven years. Secondly, the companies could have taken the advantage of the incompetence of the government body in charge of taxation and then avoids paying. Thirdly, corruption that is at the helm of governments especially in the developing countries could have played a bigger role and taxes been channelled to the invisible hands. According to UCC reports, each company is supposed to pay a yearly contribution to the rural development fund and so far from 2003, the companies had already paid US $10billion. The researcher wondered how the companies would keep paying 1% of the revenue to UCC and fail to pay the corporate tax. More over excise duty and Value- added-tax go hand in hand with corporate tax.

55

However, Literature indicates that the rural communication development projects so far have registered some success. Almost all town in Uganda are now connected to internet, internet cafes have been built and many tele centres all over the country. And the fund is still in progress with the companies, along with the help of grants and loans from the world bank and Canada Another area of success under CSR is the philanthropic responsibilities. Many stakeholders expressed satisfaction with the way these companies are responding to the community needs. The most notable projects were the Kulika Partnership with UTL, MTN Partnership with Habitat for Humanity and the zealous engagement of ZAIN in educational responsibilities under Build Our Nation Programme. According to Mugisha, Kulika Charitable Trust employee, the partnership between the organisation and UTL became are landmark in achieving the organisational objectives. There were able to sponsor 56 students with full tuition fees from the US$ 441,176 paid by the UTL. According to the MTN-Habitat for Humanity Partnership summary report, 227 houses have so far been built and this has improved the living conditions to the beneficiaries in the communities. Many of the beneficiaries of ZAIN CSR, the donation of text books to primary schools expressed gratitude to this contribution. ZAIN is doing a great contribution. We hope that these books we received
improved the performance of our pupils that has been already noted Jonathan; the headmaster; Army Boarding Primary School.

The school was a beneficiary of 200 text books in 2008 by ZAIN Uganda. Sanyu Babies Home was also grateful for the contribution that UTL makes by providing a 50% subsidised internet connection but the administrator of this orphanage still appealed to the company to render more hand to rescue the increasing number of orphans in the country by either sponsoring or feeding them. Legally, the three MTS companies have been complaint with the UCC procedures and regulations and procedures. However, the research revealed one case where two companies were not legally responsive to the requirement 56

of UCC, that is, harmony between the firms. UTL and MTN at one time failed to agree on the interconnection fee rates and the case was settled by the courts of laws. Literature shows that the regulatory body is in advanced stages of introducing a uniform network tariff and this is aimed at bringing stability in the market. Related to the reactions above was what was ethically expected from the three companies. Press releases, Newspapers and other related literature indicate that so far the MTS companies are among the best corporations to work with. According to research done by PricewaterhouseCoopers(PWC), MTN Uganda was consecutively voted the most respected company in Uganda in 2007 and 2008 respectively and has won gold awards as best employer of the year in 2008 and 2009 respectively. Some of the stakeholders however do not concur with this approbation of the companies. Most of the clients who were interviewed blamed the companies for not being efficient when it comes to accessing network. Asked what challenges she faces as a UTL client, one responded reacted; Network is not easy to access when you are upcountry especially for
UTL Lydia a client to both MTN and UTL

She also blamed the companies to be charging highly the call rates which are unfair to the clients. She said that it is only cheap if you call the same network as yours. From the research, it was seen that, the internal clients of these companies, who are the employees seem to enjoy their rights to the satisfaction of their expectations. Most of those who were interviewed admitted that they had no complaints over their occupational safety. As per the company policies, they all have staff trainings on their programmes. But not all the staff receives the onjob trainings. There are two kinds of staffs. There are those who are directly employed and those who are indirectly employed. The direct ones work in company offices and are on payroll but the other indirect ones work in shops and kiosks and other outlets where airtime and other companies related products are sold. Some of the ones who are directly employed told the

57

researcher that they get the trainings depending on the needs that the company comes with. By the time of the research, UTL had restructured the internal departments, which resulted in the creation of more responsibilities to employees. Though there was no immediate adjustment on the remuneration to match with the increased responsibility, still some of them were happy. Three of them who had been affected by the reshuffle confirmed to the researcher that they were indeed delighted by the changes. One went ahead to say; They have given us additional work but no salary increment. But am happy
because am I will be sharing the office with my bosses. And this is how UTL does with promotions. You will never realise that you are being promoted until you see yourself up. Denis, UTL sales Department.

One lady who is ZAIN employer and works as a receptionist said that, for the 6 years she had so far worked with the company, she had never encountered any mistreatment or any kind of threat at work. She hailed the company for its favourable employee policies. 5.4 Conclusion The main objective of the study was corporate social responsibilities in mobile telephone service companies in Uganda which was defined in many ways but converging on one theme concerning the treatment of stakeholders of the firm in economic, legal, ethical and more so in a philanthropically responsible manner. This research was guided by studies already done on the field of CSR, particularly the CSR in the African context (Visser, 2005). Other notable ones include those done by Hopkins (2007), Newell (2006), Simon Cauklin (2005), and Johnson (1958). All these studies have put focussed on the relationships that businesses have been or should have with the stakeholders where corporations need to be more ethically responsible to their stakeholders. Sparkes and Cowton (2004) argue that in increasingly grand institutional investments there should be strong connections between businesses and stakeholders through corporate social responsibility. With the same trend of business expansion and the growth of private sector in Uganda, the research 58

was interested in exploring whether MTS companies satisfy stakeholder expectations. This research revealed clearly that, though in a an environment where CSR has not yet developed, there are a number of significant contributions that so far have been made to the society by the MTS companies especially through philanthropy. There have been areas where the mobile telephone companies have really invested a lot of donations to society especially by helping the communities. The sponsoring of children in schools and the partnerships in providing low cost houses to communities has been proved to satisfy the stakeholders expectations. The employee policies by the companies have made them the most admirable and desirable in the country attracting better personnel especially from the highly skilled segment of the population. The legal responsibilities have been met under the guidance of UCC. However, as seen already, there are loop holes dangling in which make it unclear as to whether some of these companies really pay taxes to government. If they do so, then they still owe the public the duty to declare their taxes and even profits in a transparent manner that will eliminate any form of suspicion. The key recommendations, in respect to the promotion of CSR are; Firstly, there is no clear government CSR strategy to coordinate with the MTS companies and identify the priority areas where CSR is badly needed so as to align the activities with the development goals especially when it comes to national poverty reduction strategies. Government should provide an enabling environment like rural infrastructure in terms of roads and electricity so as they can act as an incentive to some community investments by these companies. In some areas roads are cut from the main centres by either rugged terrain or water channels and there are no government efforts to bridge these gaps. These companies have had hectic time in constructing temporary roads to areas where they are putting masks. This construction takes resources that would probably be used for community investments. Secondly, monitoring mechanisms should be developed to see whether CSR contributions are having a sustainable impact within the society. This should be done by both the government and the companies themselves. Apart from the 59

legal requirements, the government lacks any other mechanisms on which it can base the monitoring and evaluation of the CSR activities. To some point government have been a stumbling block to the smooth performance of the companies in the country, reducing their capacities to operate. Power fluctuations, lack of infrastructure and inefficient investment policies have always affected the business in big time, yet the government should be the one to provide an enabling environment by setting better policies- taxation policies, investment priority area identification, road construction and even adverting for the companies. However, the reverse seems to be true. The government has to provide the enabling environment to increase the performance capacity of these companies.

60

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Appendix
CORPORATE SOCIAL RESPONSIBILITY OF MOBILE TELEPHONE SERVICE PROVIDERS IN UGANDA Questionnaire Name Company Position . Questions (answer questions applicable to your position) 1 (a) How do you comprehend corporate social responsibility

(b) What are the corporate social responsibilities that your company undertake? (c) Who are the beneficiaries of the corporate social activities that your Company undertake? Give examples. (d) What are the reasons behind your corporate social activities?

(e) Do you assess any impacts of your corporate social activities? If yes how sustainable are the impacts? 2. (a) what are the legal requirements that your company fulfils?

(b) What are the investments that your company have engaged in?

(c) How is the employee salary structure?

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(d) Any bonuses to the employees separate from their salaries?

(e) If any how are they paid?

(f) What are the hours an employee is supposed to work? (g) What percentage share of profits do you pay to government as Tax? (h) What does government do to help promote your companys business? (i) Any reasons why your company price rates are fair? (j) How do you handle customer complaints?

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