MTN raid: How Cisco ditched Kampala for Nairobi

Kampala. At the fold of 2004, Cisco, a US networking giant with annual revenue of $48b, embarked on an expansion plan that sought to extend its reach into Sub-Saharan Africa.

For purposes of understanding this new desire, Africa had since the fold of the millennium been referenced as the “the next big thing”. Therefore, Cisco had to ride with the tide to identify new markets for its products.
In West Africa, the company had identified Nigeria for its large and partly affluent population, while it also sought to tap into French-speaking markets through Dakar, Senegal.

In southern Africa, the obvious choice was South Africa because of an affluent population while Zimbabwe, which would have rivalled Pretoria and Cape Town, was discounted on the account of political disturbances.
All-in-all, the tech giant had locations in different regions apart from East Africa, which would be determined after conducting a market analysis.

According to people familiar with the discussions, there were two departure points. Some investors had argued for Nairobi because of its access to the sea while others wanted Kampala, given the country’s young population, growth prospects and its central location to key markets in DR Congo, South Sudan, (then under Sudan), Rwanda and on a lesser account, Burundi.

However, the market analysis, which arrived six months later, discounted Uganda on the account of, among others, political violence, some of which was propagated by government agencies, political corruption, abuse of standing order (laws) and a hideous tax regime.
Indeed on December 10, 2007, Cisco opened its East African hub in Nairobi on Argwings Kodhek Road.
During the launch, the then Cisco regional sales manager, Shahab Meshki, underscored Nairobi as the right choice, where they would “share some of our best practices with [other] East African countries”.
Nairobi has since played host to a number of tech giants with companies such as IBM, Google and Nokia/Siemens, among others, establishing regional hubs there.

To put the Cisco narrative in perspective, you must cast a wider view to understand why the world’s largest networking company with a multibillion establishment in San Jose, California (in the centre of Silicon Valley), decided as it did.
The wanton abuse of standing order by those tusked to keep law and order, which, if viewed with hindsight, informs the argument of investor confidence that many stakeholders Daily Monitor spoke to for this article, have put forward.

On May 20, 2013, a horde of heavily armed men in army and police camouflage stormed Monitor Publications Limited (MPL) offices in Namuwongo to purportedly search for a letter that had been authored by renegade General David Sejusa.
The mean-looking security agents, who had no search warrant or court order, directed staff to leave the premises until further notice.
Simon Freeman, a British author, who had arrived at MPL three months earlier as Daily Monitor executive editor, could not believe what he was seeing exclaiming; “what the hell is going on?”

To him, this was unacceptable. However, to those who had been at MPL longer, it was nothing unusual as security agents had almost in similar fashion closed out staff of the company on two occasions for days or even weeks.
Such is the state of affairs and it has become normal that security agents, according to a top official at MTN, who asked not to be named to speak freely, “can raid MTN and kidnap staff without regard to the law”.
Security agents in civilian wear about two weeks ago, raided the MTN data centre in Mutundwe, south of Kampala, which the telecom said in a statement was out of order.

According to a top official at MTN, government, notwithstanding the alleged crimes it has against the telecom, must not be tempted into impulsive actions that have a larger implication on investor confidence.
“It is easy to raid MTN and go away with it. But what message are you sending to prospective investors? The minute the head of intelligence breaks the law and unapologetically boasts about it, that is the end of it [investor confidence]. That is how previous intelligence agencies such as State Research Bureau, NASA and criminal intelligence under [Gen] Kale Kaihura and Nixon [Agasirwe] used to do. Where did they leave the country?” the source said.

True, he added, government might have concerns with MTN operations “but why should it avoid the law if indeed it has serious concerns; some of which have been termed criminal”.
According to MTN, people (former staff) who they have previously taken to court on criminal charges are conniving with security agencies and have become “bounty hunters”.
“It is such people [former staff] working with [ISO and URA], who are ignorantly killing investor confidence to enrich themselves,” a source said.

Therefore, the actions against MTN and other companies that have suffered at the hands of security agencies must be put in perspective as years later point to Cisco’s concerns and its decision to establish its regional hub in Nairobi.
Security agents, who were later defended by the ISO director, Col Kaka Bagyenda, raided the MTN data centre and attempted to search the premises without a court order.
This, according to some officials at MTN, is mind boggling given that the “company has always cooperated with government every time we have been called upon”.

“URA and Financial Intelligence Authority investigate us every year. We have never stopped anyone from entering our premises. Why did they this time choose to raid our [data] centre?” an official at MTN wonders.
In a carefully drafted statement signed by Charles Mbire, the MTN chairman, said last week security agents had “kidnapped” contract staff and held then in “ungazetted places” before forcing them to surrender access to the MTN data centre.
To MTN, this was criminal which forced the telecom to file a case at police. However, according to the telecom, none of the intruders has been arrested and government has not given them any status update two weeks later.

Asked why security agents raided MTN without a court order, Col Bagyenda said he had issued a statement and would not comment further.
He referred Daily Monitor to Security minister, Gen Elly Tumwine, who by press time had not replied or our returned calls.
There have been claims, which were emphasised by Planning State Minister David Bahati last week, alleging that MTN and other telecoms were being investigated over tax fraud resulting from under declaration of call volumes.

ICT and Information Minister Frank Tumwebaze, at the weekend said MTN was aware it was being investigated over issues he did not disclose.
“I am sure MTN knows the details and I think they are cooperating. Otherwise, if they felt invaded they would have gone to court to claim their rights,” he said.
However, in an email exchange, MTN senior manager corporate affairs Justina Ntabgoba, told Daily Monitor nothing in that regard had been brought to their attention.
“We have not received any communication to this effect. We are a responsible corporate citizen and we have consistently been tax compliant,” she said.

Let security do it work

Without discounting the issue of scaring away investors due to disregard of existing laws, Frank Tumwebaze says, security agencies must do their work to protect and secure the country.
“There can’t be like painting a bad picture (sic) on the country,” he says.
A number of setups, including non-governmental organisations such as Action Aid, among others, have been raided and closed for weeks by security agencies.
However, Tumwebaze argues “investors can’t be scared [away] because security agencies are doing their work”.

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