Electricity, water firms struggle to connect rising urban population

Tuesday April 12 2016

Luwum, one the most congested streets of Kampala. A lot of youth are migrating to the urban areas in search of jobs and a better life. PHOTO | MORGAN MBABAZI

Luwum, one the most congested streets of Kampala. A lot of youth are migrating to the urban areas in search of jobs and a better life. PHOTO | MORGAN MBABAZI 

By BERNARD BUSUULWA

High population growth in urban centres in Uganda between 2002 and 2014 has put pressure on providers of electricity, water and telecom services even as costs of land put off local investors.

According to the 2014 Census Report, Uganda’s population stood at 34,634,650 in August 2014, of which 3,249,609 were in the municipalities.

Kampala City’s population rose by 27 per cent from 1,189,142 people in 2002 to 1,507,114 people in 2014, a trend mirrored in other urban centres. This growth is attributed to massive rural-urban migration by the youth, driven by the search for jobs and more comfortable lifestyles. The consequences of this phenomenon are yet to be fully digested by local businesses, investors and policy implementation agencies.

Nansana Municipality is rated the largest urban centre outside the capital city, with a population of 365,857 people, followed by Kira and Makindye-Ssabagabo municipalities with 317,428 and 282,664 people respectively, the report shows.

These municipalities are in Wakiso district, the largest administrative unit in Uganda, with 1,997,418 people.

The total population recorded in Mbarara Municipality grew by more than 100 per cent from 69,363 people in 2002 to 195,160 people in 2014, while Mukono Municipality’s population rose from 46,506 residents in 2002 to 162,744 residents in 2014. 

The total population of Lira Municipality grew by 23 per cent from 80,879 people in 2002 to 99,511 people in 2014, while Mbale Municipality saw its population rise by 30 per cent from 71,130 people to 92,863 people in the same period.

With this rise have come challenges for different sectors. Telecommunication firms have had to increase investments in new capacity sites — a type of network infrastructure that helps telecom operators improve signal quality in busy user locations — but many consumers still suffer problems of poor network quality, dominated by frequent dropped calls.

“The share of capacity sites has increased to 40 per cent of all new network sites rolled out by industry players in recent years. Looking at mobile money transfer services, we are focused on expanding our footprint in urban areas because they offer higher revenues than rural areas,” said a senior manager at MTN Uganda who requested anonymity.

Huge urban population growth is also likely to influence advertising by telcos, with some choosing radio over television as fierce competition for new voice, data and mobile money users rages.

“Future advertising campaigns will also be anchored by leading radio stations operating in urban areas while makeshift but popular radio transmission services provided by individuals will be relied on to steer advertising campaigns in rural areas,” the MTN official added.

Telcos are ranked high on the local advertisers’ list, what with annual budgets estimated at billions of shillings for billboards, radio and TV adverts, newspaper space and sponsorship of entertainment events. Airtel spends over $1.28 million while MTN over $1.78 million in advertising, excluding what is covered by agencies.

Strong urban population growth has equally exerted pressure on utility companies. While Umeme Ltd spent $86 million on capital expenditure in 2015 compared with $79 million budgeted for 2016 to increase new connections, minimise loadshedding and cut power losses, the National Water and Sewerage Corporation remains bogged down by substantial fee arrears accumulated by government agencies — weakening its ability to raise the funds needed to expand its distribution network.

Some local investors are disgruntled about low quality labour offered by rural-urban migration trends and scarcity of good infrastructure in many rural areas.

“The rapid population growth in urban centres is mainly driven by rural-urban migration and excessive centralisation of goods and services within Kampala City. But the quality of labour offered by this migration cycle is mainly suited to the transport trade and petty jobs and does not fulfill our manpower needs,” said Deo Kayemba, chief executive of East African Roofing Systems Ltd.

“Poor infrastructure has discouraged us from setting up new plants in upcountry locations while the rising cost of land in urban centres has proved a headache to those planning new investment ventures. The price of land, for instance, has shot up to Ush1 billion ($293,306) in some parts of Wakiso district,” added Mr Kayemba.

The urban population boom could also present enforcement challenges for the taxman. Whereas the Uganda Revenue Authority has stepped up efforts at penetration of the informal sector — a relatively low contributor to tax revenues, fast growing human activity in urban centres has not been matched by growth in service centres. Limited government funding for tax administration poses a headache for the tax agency in times of rising collection targets.

“We certainly need to expand our coverage across the country in order to reach out to more taxpayers in high population areas but inadequate resources have frustrated rollout of several new offices needed in many areas. So far, we have established offices in 33 political districts out of 112 districts and intend to open four new outlets in the central region,” noted Daniel Omara, manager for strategy development at URA.

By end of 2015, URA operated 70 branches countrywide.