Key economic sectors starved of digital uptake

Thursday September 23 2021

Internet has become a key ingredient in the operation of business. File Photo.

By Ismail Musa Ladu

The cost of procuring proper digital gadgets, including that involved in laying of enabling infrastructure continues to constrain digital uptake, depriving particularly the rural communities the much needed access to service delivery which has in many ways remained wanting.   

According to a new report titled: Making Digital Work in Uganda - Applying a Market Systems Development Approach to Build Inclusive Digital Economies, lack of infrastructure (power and connectivity), digital literacy and availability of financial resources are the main factors of low usage of digital solutions in the education sector.

However, there are new and flexible innovations using green energy, offline capabilities and strategic partnerships to give underserved communities access to digital services. That however, must be harnessed, something that is also in line with UNCDF strategy of ‘leaving no one behind in the digital era’.

The study supported by government of Sweden demonstrates how digital tools are the most suited facilities in unlocking the abundant opportunities present in the country’s key economic sectors, including agriculture, health, education and ICT sector itself.

Already the government sees ICT as a strong contributor to its Vision 2040 – which will see the country transition into a “Modern and Prosperous Country.” In the National Development Plan (NDP III), ICT is identified as a fulcrum of development, an accelerator, amplifier and augmenter of change.

Although ICT access and usage in Uganda has been growing over the past seven years, according to the UNCDF report released recently, the country is outpaced by regional peers, particularly Kenya and Rwanda.


On the supply side, the report notes that there is a need for adequate digital infrastructure, with wide- and deep-reaching distribution channels and networks to the last mile—final consumer. And in terms of go-to market, it is key for providers to understand the existing value chains, for example agriculture and trade value chains, through which to engage the market.

On the demand side, the report notes that it is key for the supply side to have a very good understanding of the needs and desires of the various market segments, and endeavour to educate them on the uptake of digital services.

For that to happen, the report says that the digital sector will requires infrastructure for connectivity, and electricity to power digital devices.

Pros and cons 

The challenge here is that there is still little incentive for the private sector to extend infrastructure to rural areas. Infrastructure is the barrier to access to digital devices (phones, computers, tablets, etc.) for the last mile—final consumer. This is both a result of low purchasing power and the unavailability of such devices at the last mile. 

“Once people have acquired devices, the next hurdle that needs to be addressed is the ability to use the devices to access various services. This is not just an issue of low literacy levels but also of willingness – where they might not see the value of learning about new services or they may lack the opportunity to learn,” reads part of the report. 

Further: “The inadequacy of access points such as mobile money agents for digital services at the last mile is also a big barrier to adoption. Then comes the issue of pricing, whereby the fees for using digital services are regarded as high compared with business as usual— using cash.”

For the supply side, the pricing is largely to make sure the suppliers can break even on the huge investments needed to connect the last mile. There is also the issue of lack of relevant use cases for last-mile users. Indeed, rural communities require a customized value proposition – as opposed to exporting services from urban to rural.

Such customised digital services addressing the particular needs of underserved communities are still scarce, and the local innovation industry is still at a nascent stage and therefore unable to adequately serve this purpose in the near term.

“So, the challenges are a mix of supply-side and demand-side constraints that need to be addressed concurrently to be able to move the needle on digital adoption and usage for the last-mile population,” reads part of the report.

Agriculture, health, education 

The agriculture sector dynamics, going by the report, rely solely on a value chain approach that is divided into structured and loose value chain. Aspects such as access to markets, inputs and advocacy are collectively done throughout the entire structured value chain. A loose value chain has several actors each struggling to make their own ends meet, often colliding in the market.

However, the report shows rejuvenation and strengthening of value chain actors such as producer organizations, cooperatives and farmers groups is being scaled up across Uganda as an avenue to streamline farming activity in the hard-to-reach areas.

The report also discloses health and education as the major out-of-pocket outflows for a rural agriculture-dependent household.

When it comes to health, the report indicates that digital solutions are playing a crucial role in serving rural basic health care to communities. 

However, the report also discloses that digital health deployment is constrained by challenges such as poor coordination of mushrooming pilot projects, fractured and weak health systems, lack of awareness and knowledge about digital health, poor infrastructure (e.g. unstable power supply, poor connectivity), and lack of interoperability of the numerous digital health systems.

Teachers make up approximately 68 percent of the public service of Uganda. The education service commission handles most of its activities of recruiting, confirming, promoting and disciplining of personnel manually. These activities are labour-intensive and paper-based. A lot of data is scattered in several manual files, leading to delays in information processing and dissemination to the relevant individuals who need the information.

“Analysing data is therefore difficult. Sometimes, data and information are misplaced or lost. The situation is made worse by the huge volumes of applications received and lack of sufficient storage space within the commission,” reads part of the UNCDF inception study.


Uganda’s digital economy has thus far been mainly driven by the mobile telecommunications sector. The mobile sector currently has an estimated 28.4 million subscribers (67 percent of the population).

Mobile is also driving Internet penetration, with 9.8 million mobile Internet subscribers compared with 0.7 million fixed-line Internet connections. Mobile money – a subsector of the telecoms sector – has grown significantly and is now a major player in the financial services sector with current active mobile money users estimated at 15.5 million.

Over the last five years, mobile money has been the major driver of financial inclusion with 56 percent of the financially included population using mobile money against the 11 percent who own a bank account, according to the survey.

[email protected]