Graduate School of Development 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
1
Disclaimer:
This document represents part of the author’s 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 available for circulation outside of the Institute.
Inquiries:
Postal address:
Institute of Social Studies
P.O. Box 29776
2502 LT The Hague
The Netherlands
Location:
Kortenaerkade 12
2518 AX The Hague
The Netherlands
Telephone:
+31 70 426 0460
Fax:
+31 70 426 0799
2
Dedication
To my parents John and Juliet, my brothers and sisters;
“Every day until my life withers”
3
Acknowledgement
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.
4
Contents
List of Tables
List of Figures
List of Acronyms
Abstract
Relevance to Development studies
Keywords
7
7
8
10
11
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Chapter 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
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12
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15
17
17
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Chapter 2
20
2.0
2.1
2.2
2.3
20
20
20
25
26
27
28
29
30
30
31
2.4
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
Chapter 3
32
3.0
3.1
3.2
3.3
3.4
32
32
32
33
33
33
34
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
3.4.3 Uganda Telecommunications Limited (UTL)
Chapter 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
Chapter 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
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58
List of Tables
Table 1 ZAIN Tax remittances to the Government
Table 2 MTN Tax remittances to the Government
Table 3 UTL Tax remittances to the Government
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41
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List of Figures
Figure 1 Africa's Corporate social Responsibility Pyramid
Figure 2 Analytical Framework
24
31
Appendices
A Questionnaire
63
7
List of Acronyms
ATU
African Telecommunication union
CEO
Chief Executive Officer
CSR
Corporate Social Responsibility
CSRR
Corporate Social Responsibility Rating
EU
European Union
GoU
Government of Uganda
ICT
Information and Communication Technology
IDB
International Development Bank
ILO
International Labour Organisation
ITU
International Telecommunication Union
MTN
Mobile Telecommunication Network
MTS
Mobile Telephone Network
PRO
Public Relations Officer
UCC
Uganda Communications Commission
UCRNN Uganda Child Rights NGO Network
UN
United Nations
URA
Uganda Revenue Authority
UTL
Uganda Telecommunication Network
WBCSD
World Business Council on Sustainable Development
MNE
Multinational Enterprises
OECD
Organisation for Economic Cooperation and Development
RCDF
Rural Communication Development Fund
MCDT
Micro Credit Development Trust
USAID
United States Agency for International Development
CEO
Chief Executive Officer
8
EU
European Union
PERD
Public Enterprise Reform and Divestiture
DRIC
Divesture and Reform Implementation Committee
MTS
Mobile Telephone Service
PRO
Public Relations Officer
UTL
Uganda Communications Limited
GoU
Government of Uganda
ILO
International Labour Organisation
UN
United Nations
IDB
International Development Bank
BCSR
Business Council for Social Responsibility
UCC
Uganda Communications Commission
UCT
Uganda Communications Tribunal
UPTC
Uganda Posts and Telecommunications Corporations
GSM
Global Systems for Mobile Communications
PDA
Personal Digital Assistant
SMS
Short messaging system
ICT
Information Communication Technology
NSSF
National Social Security Fund
BON
Build Our Nation
ZAC
ZAIN African Challenge
TTC
Text for Change
HFH
Habitat For Humanity
URCS Uganda Red Cross society
URA
Uganda Revenue Authority
PWHC PriceWaterhouseCoopers
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Abstract
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 semistructured 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), ZAIN and
Uganda Telecommunications Limited (UTL).
After analysing both the findings and the literature, this paper points out some
areas where MTS companies have done well in fulfilling 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.
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Relevance to Development Studies
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.
Keywords
Corporate Social Responsibility, Mobile Telephone Service providers,
Sustainable Development, Stakeholder expectations, Corporate minimum legal
requirements, Telecommunication.
11
CHAPTER 1
1.0 INTRODUCTION
1.1
Background
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 communities
and working both with civil societies and researchers to a meaningful CSR
agenda (Newell P and A. Muro, 2006).
12
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 Sear’s CEO considered that profit was “a by-product of success in
satisfying responsibly the legitimate needs and expectations of the
corporation’s primary stakeholder group” Hopkins (2007:114). He mentioned
this group in order of importance as Customers, employees, community and
stockholders.
As the state’s 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)
13
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
14
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 Problem Statement
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, Uganda’s economy was purely in hands of the state. Like
many sub-Saharan Africa, there was a slow economic growth and the country’s
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 Relevance and justification.
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 Objectives and research questions
The main objective of this thesis is to analyse the corporate social
responsibilities undertaken by the Mobile telephone service 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 subquestions 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?
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(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
18
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
THEORETICAL BACKGROUND
2.1
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
“I’m delighted that I’m able to personally select the winners of the Chairman’s
Awards from hundreds of applications from BT people involved in community
activities. I’m also proud of our long-term support for, and our people’s
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 company’s capital for investment. Since investment furthers
business performance, a relative CSR expenditure will drop the level 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 discretionary
(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 position 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 Africa’s 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 institutions 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;

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 it’s 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 will 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 Visser’s CSR Pyramid
30
Figure 2: The Analytical Framework
Company
Economic
Philanthropic
Investments
Long term
Short term
Profits
Employees
Salaries
Bonuses
Working hours
Legal
Government/c
orporate CSR
Policies:
Adherence to
UCC, UCT
Guidelines
which include;
Quality
standards of
service
Universal access
to the network
Community
Partnerships:
Road-building
Hospitals
Schools
Orphanages
Public Safety
Tax
Percentage share
To government
2.4
Ethical
Fair prices
Occupational
safety
Trainings
Equal treatment
of staff
Fair dismissal
Conclusion
To sum up, Visser‘s 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.
31
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 not as strong as the first
three. They include Warid Telecom, Hits Telecom and Orange Telecom.
Uganda’s 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.
32
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 that
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
Company profiles and their CSR Mission Statements.
3.4.1
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;

To guide and streamline the company’s 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. It’s 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 “y’ello” (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 multinational companies jointly called “Ucom Limited”. These companies were
Germany’s Detecon, Egypt’s 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
Uganda’s 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 people’s 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. It’s 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 Development Fund was established in
1997. Each company commits 1% of its revenues to the fund, in partnership
with World Bank and the communities. This was initiated by the Uganda
Communications Commission. From 2003 to 2008, MTC companies had
contributed US$ 6million and the World Bank had accumulated US $ 10
Million towards the project. The fund was founded to provide districts with
internet, ICT training centres, Web portals and the public payphones. Whereas
the projects have been running since, the project seems to still far from
success.
“Power is a big challenge. The project is at stand still” Richard, Arua District
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 rates 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;

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
VAT
PAYE
118,583
CORP.TAX
WHT
EXCISE
TOTAL
494,781
-
545,825
1,159,190
-
480,216
155,826
1,043,112
1,679,153
80,832
633,930
78,535
1,750,946
25,608,287
1,633,489
937,850
402,873
3,037,877
6,012,089
2,849,442
2,931,144
139,110
7,837,574
13,757,270
5,945,826
1,991,510
2,007,900
10,330,209
20,275,445
4,701,710
1,287,969
1,291,825
5,670,332
15,329,882
87,574,400
4,076,069
30,215,875
2003
2004
2005
2006
2007
2008
2009
12,951,836
TOTAL
Source: Uganda Revenue Authority
40
81,443,270
Table 2 showing MTN tax remittances to government (US Dollars)
Period
VAT
PAYE
CORP.TAX
WHT
EXCISE
TOTAL
2003
11,869,026
1,684,657
7,808,667
3,665,342
7,872,263
32,899,957
1,994,890
12,437,060
4,713,342
9,710,356
44,060,852
2,336,858
20,024,200
6,900 ,108
12,250,790
57,962,198
7,322,985
14,816,477
65,860,362
22,550,495
880,846
2004
15,205,202
2005
16,450,240
2006
19,635,584
2,438,843
21,646,477
26,504,061
4,664,715
24,997,276
2007
9,546,954
2008
18,226,52
4,553,995
13,531,871
2,276,212
23,098,405
61,345,868
10,270,693
3,818,013
4,894,187
21,226,141
18,516,096
39,621,602
101,757,458
21,491,971
105,339,738
55,651,084
96,577,132
302,631,685
2009
Total
Source: Uganda Revenue Authority
Table 3 showing UTL tax remittances to government (US Dollars)
Period
VAT
PAYE
CORP. TAX
WHT
EXCISE
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
8,878,748
25,655,705
74,134,889
95,227
Source: Uganda Revenue Authority
41
TOTAL
From 2003 to 2009, ZAIN Uganda was not paying corporate tax to the
government. Corporate tax, according to Uganda Revenue Authority, is
ordinarily a company’s income tax. It is 30% of the profits made by the
company and is paid only if the company makes profits. Responding to the
researcher’s 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 company’s 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 company’s 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
don’t 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 don’t get the bonuses they deserve.
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. It’s 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 can’t MTN do the same?”
Talking of community support, UTL as a number three player in the country’s 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 company’s CSR campaign. In 2005, the company signed
a memorandum of understanding with Kulika to sponsor 56 students on undergraduate 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 can’t 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 don’t 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 don’t 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 don’t 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
Research findings
5.2.1
Company’s 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 it’s 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 $10billion. The researcher wondered how the
companies would keep paying 1% of the revenue to UCC and fail to pay the
corporate tax. More over excise duty and Value- added-tax go hand in hand
with corporate tax.
55
However, Literature indicates that the rural communication development
projects so far have registered some success. Almost all town in Uganda are
now connected to internet, internet cafes have been built and many telecentres all over the country. And the fund is still in progress with the
companies, along with the help of grants and loans from the world bank and
Canada
Another area of success under CSR is the philanthropic responsibilities.
Many stakeholders expressed satisfaction with the way these companies are
responding to the community needs. The most notable projects were the
Kulika Partnership with UTL, MTN Partnership with Habitat for Humanity
and the zealous engagement of ZAIN in educational responsibilities under
“Build Our Nation” Programme. According to Mugisha, Kulika Charitable
Trust employee, the partnership between the organisation and UTL became
are landmark in achieving the organisational objectives. There were able to
sponsor 56 students with full tuition fees from the US$ 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
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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
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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.
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Sites Visited CSR agenda’ International
http://www.mtn.com/Brand/SponsorshipCSR/CSR.aspx
http://www.zain.com/muse/obj/lang.default/portal.view/content/Corpora
te%20Social%20Responsibility
http://www.utl.co.ug/utl.php?i=34
http://kulika.org/news.html
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www.newvsion.co.ug
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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?
64
(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 company’s
business?
(i) Any reasons why your company price rates are fair?
(j) How do you handle customer complaints?
65