GATS AND E-COMMERCE

Opportunities and Challenges facing Uganda in Realising the Full Potential of E-commerce under the GATS

FINAL REPORT

Submitted to

Uganda Programme for Trade Opportunities and Policy (UPTOP)

By NYANZI, KIBONEKA & MBABAZI ADVOCATES

Contact Mohmed Mbabazi P.O. Box 7699, Kampala, Uganda Plot 103, Buganda Road Tel: 041-348504/0772-462355 Fax: 251480 E-mail: nkmadvo@imul.com

Kampala- December 2006 TABLE OF CONTENTS TABLE OF CONTENTS......................................................................i EXECUTIVE SUMMARY....................................................................iv LIST OF ACRONYMS.........................................................................vi CHAPTER ONE................................................................................1 1.0 INTRODUCTION........................................................................1 1.1 Background...................................................................................1 1.2 Research Problem and Justification.............................................2 1.3 Objectives......................................................................................4 1.4 Methodology..................................................................................4 CHAPTER TWO...............................................................................7 2.0 OVERVIEW OF THE SERVICES SECTOR................................7 2.1 A Review of the Ugandan ICT Industry and E- Commerce..........7 2.2 National Policies Related to Trade in Services.............................8 2.2.1 National Policy on Services and Export Development7 Strategy......................................................................................8 2.2.2 Ugandas Services Export Development Strategy ....................8 2.2.3 The East African Community Development Strategy................9 2.3 Global Service Trends...................................................................11 2.4 The Ugandan Service Sector........................................................12 2.4.1 Tourism......................................................................................12 2.4.2 Education ..................................................................................14 2.4.3 Health ........................................................................................14 2.4.4 Information Communications Technology.................................15 2.5 Overview of Uganda Services by Mode........................................16 2.6 Services Trade in Uganda............................................................17 2.7 The Ugandan ICT Industry and E-Commerce .............................19 2.8 Ugandas Service Export Potential...............................................20 CHAPTER THREE...........................................................................22 3.0 ELECTRONIC COMMERCE (E-COMMERCE)...........................22 3.1 Definition of E-commerce..............................................................22 3.2 E-commerce and the WTO...........................................................22 3.3 Benefits of E-commerce................................................................26 3.4 Disadvantages of E-commerce.....................................................26 3.5 Importance of the ICT Sector and E-commerce ..........................27 3.6 State of the Sectors Development in Uganda .............................29 3.7 Classification of E-Commerce.......................................................29 3.8 Steps in E-commerce....................................................................32 3.9 Trading in E-Products...................................................................35 3.9.1 Physical Products.......................................................................35 3.9.2 Virtual Products..........................................................................36 3.9.3 Teleservices...............................................................................36 3.10 Developments in E-Commerce-Related Activities in Uganda....37

3.11 Developments on the on the International Scene.......................39 3.11.1 Electronic Bill Payments..........................................................39 3.11.2 Digital Signatures.....................................................................39 3.11.3 Online Banking.........................................................................40 3.12 Contribution of E-Commerce to Key Sectors..............................40 3.12.1 International Trade in Goods...................................................40 3.12.2 International Delivery of Services............................................41 3.13 E-Commerce and Services Delivery in Uganda.........................42 3.14 Creation of an E-Commerce Enabling Environment...................47 CHAPTER FOUR.............................................................................51 4.0 THE GENERAL AGREEMENT ON TRADE AND SERVICES (GATS).......................................................................................51 4.1 Definition of GATS........................................................................51 4.2 History and Nature of GATS.........................................................51 4.3 Services Covered y GATS............................................................52 4.4 GATS Modes of Supply.................................................................53 4.5 Components of the GATS.............................................................55 4.6 Services Schedule by Specific Commitments under the GATS...57 4.7 Analysis of Ugandas Schedule of Commitments for the Development of E-Commerce.......................................................59 4.7.1 Overview of Ugandas Schedule of Commitments....................59 4.7.2 Tourism and Travel Related Services........................................60 4.7.3 Telecommunications Services...................................................61 4.8 Inadequacies and Limitations of Existing GATS Commitments (Mode 1)........................................................................................71 4.9 Correlation Between GATS and E-Commerce.............................73 CHAPTER FIVE................................................................................76 5.0 LEGAL ASPECTS .....................................................................76 5.1 Key Legal Issues under GATS .....................................................76 5.2 Legal Concerns for Ugandas Service Sector under GATS..........77 5.3 Analysis of Laws and Regulations for the Development of E-commerce in Uganda................................................................79 5.3.1 Law on Financial Services.........................................................79 5.3.2 Regulation of Education Services..............................................81 5.3.3 Regulation of Distribution Services............................................82 5.4 Legal Framework for E-commerce................................................83 CHAPTER SIX..................................................................................93 6.0 VIABILITY OF E-COMMERCE UNDER GATS IN UGANDA......93 6.1 Key Issues ....................................................................................93 6.2 Implications of the GATS to the Ordinary People.........................93 6.3 Implications of the GATS for National Policy Priorities.................94 6.4 Opportunities for Uganda..............................................................95 6.5 Challenges for Complying with GATS..........................................98 6.5.1 General Challenges...................................................................98 6.5.2 Challenges Relating to Modes of Supply under E-commerce...98 6.5.3 Challenges Relating to the GATS General Objectives..............99 6.5.4 Physical Infrastructure................................................................100

6.5.5 Underdeveloped Services Sector..............................................101 6.5.6 Internet Security.........................................................................101 6.5.7 Lack of Skills and Capacity........................................................102 6.5.8 Shortage and Unreliability of Electricity ....................................102 6.5.9 Legal and Regulatory Framework..............................................102 6.5.10 Unemployment.........................................................................103 5.5.11 Government Barriers................................................................103 6.5.12 Loss of Tax Revenue...............................................................104 6.5.13 Financial Intermediaries...........................................................105 6.5.14 Logistics and Transport............................................................105 6.5.15 Commercial Barriers................................................................105 6.5.16 Social Barriers..........................................................................107 CHAPTER SEVEN ..........................................................................108 7.0 NEGOTIATIONS FOR TRADE IN SERVICES............................108 7.1 E-Commerce and the WTO Multilateral Trade Negotiations .......108 7.2 Accomplishments of the GATS Council .......................................109 7.3 Current Services Negotiations......................................................110 7.4 Ugandas Negotiating Position at Hong Kong...............................111 7.5 Strategies for GATS Negotiations.................................................113 CHAPTER EIGHT.............................................................................116 8.0 CONCLUSIONS AND RECOMMENDATIONS...........................116 8.1 Conclusions...................................................................................116 8.2 Recommendations........................................................................116 8.2.1 Building National Infrastructure..................................................116 8.2.2 Creation of Awareness about GATS and E-commerce.............117 8.2.3 Building National Infrastructure..................................................118 8.2.4 Improving Capacity of Private Firms .........................................118 8.2.5 Promotion of Computer and Internet Literacy............................118 8.2.6 Seeking Technical Assistance...................................................118 8.2.7 Improvement of the Financial Infrastructure..............................120 8.2.8 National Priorities during Negotiations.......................................120 8.2.9 Private Sector Participation in Policy Making............................120 8.2.10 Building of Regional Partnerships............................................121 8.2.11 Plurateral Negotiations.............................................................121 8.2.12 Use of Bottom-up Approaches.................................................121 8.2.13 Branding Uganda as an IT Exporter........................................122 8.2.14 Amendment of the Law............................................................122 8.2.15 Creation of an Internet Exchange Point (IXP)..........................123 REFERENCES....................................................................................124 APPENDICES.....................................................................................130

EXECUTIVE SUMMARY The services sector is one of the fastest growing areas of the Ugandan economy although it is still in its infancy. Growth in services trade is enhanced by growth in ICT. It is believed that liberalisation of trade in services will promote that growth. Ugandas commitment to the GATS is an effort toward further liberalisation and this is expected to spur the country on to the path of economic growth. This, however, requires an understanding of opportunities and challenges faced by the country in order to comply with the GATS and realise the full potential of development. It was against this background that this study was undertaken. The overall objective was to investigate the implications of Ugandas commitments to the GATS in the context of e-commerce. The justification for the research was that Uganda did not have a clear understanding of the viability and propriety of trade in services through e-commerce under GATS. The main research issues included: The implications or relevance of the current GATS commitments to Uganda. The correlation between GATS and e-commerce. The potential of e-commerce in Ugandas economic development. Services that can be traded electronically. Opportunities and challenges for realising the full potential of e-commerce under GATS. The appropriate action plan for Uganda. The study used secondary and primary data. The secondary data was obtained through extensive review of documents and the internet while the primary data was obtained through interviews held with different respondents through the use of openended questionnaires (Appendix 3). The collected data was qualitatively analysed and a descriptive approach was used to interpret the findings. The report is arranged in different chapters focusing on interrelated issues relevant to the research issues. Chapter One provides an introduction to the study. Chapter Two provides a policy background and an overview of the services sector in Uganda. It shows that the country does not have a single, comprehensive national services policy for all sectors but has individual sector policies, regulations and strategies. The key service sub-sectors relevant to this study include tourism, education, health and ICT. Chapter Three covers e-commerce and its significance in Ugandas international trade in services. It highlights the role of ICT as a crucial factor in the development of the economy. It also highlights the efforts Uganda has made towards laying a foundation for the development of e-commerce. Chapter Four examines the GATS, its Modes of supply and components, and provides an analysis of Ugandas Schedule of Specific Commitments. It also examines the inadequacies and limitations of existing GATS Commitments. The chapter also highlights the correlation between GATS and e-commerce. Chapter Five is an overview of the key legal issues relevant to e-commerce and the GATS. It highlights the legal framework for implementing the GATS under e-commerce. Chapter Six addresses the viability of e-commerce under GATS in the light of the key research issues. It examines the implications of GATS as well as the available opportunities and the challenges faced by Uganda in realising the full potential of e-commerce under GATS. Chapter Seven 5

provides highlights of the negotiation process for trade in services. These highlights provide a basis for understanding the continuing process of trade negotiations which are crucial for compliance with the GATS. Chapter Eight provides the conclusion and the recommendations. The study concludes that, in spite of the many challenges it faces, Uganda has a lot of potential to exploit the benefits of e-commerce and successfully comply with the GATS. The challenges can be overcome if there is commitment on the part of Government. It is evident that the private sector in Uganda has the potential to play its role if only the Government can play its role. It is possible, even under inferior IT conditions, to conduct profitable e-commerce if the environment is conducive.

LIST OF ACRONYMS
ADR AISI COMESA CTD ECS EDI EFT EU GATS GATT ICT IDRC IMF ISPs ITU MFN MTCS NITA NPSS NRI PEAP RCDF RCDF SMEs SNO SWOT TRIPS UBA UCC UEPB UIA UPTOP Alternative Dispute Resolution African Information Society Innitiative Common Market for Eastern and Southern Africa Committee on Trade and Development Electronic Clearing System Electronic Date Interchange Electronic Funds Transfer European Union General Agreement on Trade in Services General Agreement on Tarrifs & Trade Information Communications Technology International Development Research Centre International Monetary Fund Internet Service Providers International Telecommunications Union Most Favoured Nation Treatment Medium Term Competitive Strategy National Information Technology Authority National Payment Systems Secretariat Networked Readiness Index Poverty Eradication and Alleviation Programme Rural Communications Development Fund Rural Communications Development Programme Small and Medium Enterprises Second National Operator Strengths, weaknesses, opportunities & threats Trade Related Aspects of Intellectual Property Uganda Bankers Association Uganda Communications Commission Uganda Export Promotions Board Uganda Investment Authority Uganda Programme for Trade Opportunities and Policy

USEA UNICTRAL UNCST UNCTAD UNDP UTL UWA VOIP VSAT WTO

Uganda Services Exporters Association United Nations Commission on International Trade Law National Council of Science and Technology United Nations Conference on Trade and Development United Nations Development Programme Uganda Telecom Linited Uganda Wild life Authority Voice Over Internet Protocal Very Small Apeture Terminal World Trade Organisation

CHAPTER ONE 1.0 INTODUCTION 1.1 Background Trade in services is currently one of the fastest growing business sectors in the world. Although services had not captured the attention of global business prior to the mid-1980s, their importance was becoming increasingly prominent. Trade in services was part of the issues discussed during the Uruguay Round and agreement to form the General Agreement of Trade in Services (GATS) was reached in 1994. The inclusion of services in the Uruguay Round negotiations reflected the growing recognition among developed and developing countries of the important role played by the service sector in the global and national economies. This was at a time when information technology was also growing at an unprecedented rate. At that time, the internet and e-commerce were not major factors in the services trade and negotiations but with the phenomenal growth of the internet and e-commerce since the entry into force of the GATS in 1995, many services are now easily traded electronically thus creating a great interest among WTO members to liberalise services on both cross-border and consumption abroad Modes of supply and internet infrastructure services. The ICT industry has therefore become the engine-oil for the growth and development of e-commerce. In Uganda the service sector is one of the sectors with the highest growth rates in the economy recorded at 6.2% in 1999/2000, compared to Agriculture at 1.6% (Ating Ego, 2003). The sector also contributed 42.1 % to the GDP in 2004/05 (UBOS, 2005). While the fast growth rates of the service sector in the developed world moved together with high growth rates in ICT, in Uganda the ICT industry is growing but still very young. There are efforts to propel ICT into faster growth through liberalization. At the same time, Uganda has made commitments under GATS in an effort to promote increased liberalisation in the service sector and promote economic growth. The trends in global business, especially under WTO, show that the development and sustainability of trade in services needs to be supported by equivalent development in the ICT sector. For example, in the E.U. in 2003 among the key service exports, ICT-related exports contributed one of the highest

percentages (33.8) compared to transport (28.4), travel (31.3) and insurance & finance (6.41) (UPTOP, Final Report on Sectoral and Analytical Studies to Guide Uganda in the EPA Negotiations-2005). The growth of the service sector in Uganda is, therefore, likely to be impacted in a fundamental manner by the growth of ICT and by e-commerce in particular. Uganda has to take care of this reality in its efforts to promote trade, particularly trade in services, for the development of its economy. There was need to investigate the viability and propriety of Ugandas commitment to the GATS in the context of e-commerce. It was against this background that this study was undertaken to analyse Ugandas commitments under GATS and assess the opportunities and challenges it is facing in order to benefit from the GATS. The findings of the study are presented as a diagnosis of Ugandas commitments under GATS, a comprehensive survey of ecommerce opportunities in Uganda and a comprehensive regulatory impact assessment of e-commerce policy and legislation in particular with regard to the GATS. The findings of the study are intended to inform policy decisions on the implementation of Ugandas commitments under GATS and render strategies for promoting sustainable investments in e-commerce in Uganda. It is also intended to cause increased attention to the promotion of foreign direct investment (FDI) in the economy. The findings are also intended to contribute to the development of strategies that will reduce the costs of ICT and e-commerce products for end-users. 1.2 Research Problem and Justification The Ugandan economy is going through a number of changes that have resulted in its services sector growing faster than in the past. This is attributed to a number of reasons: (i) There has been a rapid change in telecommunications and information technology that has given rise to a host of new services linked to this change such as mobile telephones, IT services, e-learning, on-line banking (e.g. that offered by Nile Bank) and others. (For example, at Nile Bank, one can apply and be allowed to have an Access Code, User Name and a Password. This allows the customer to access the Banks secure site (https) and makes it possible for him/her to draw or transfer money from ones account within Uganda while seated at home or office using a computer). As a result, there has been wider and easier accessibility to a wide range of services. This, however, calls for appropriate and increased regulation. 10

(ii) The trend towards privatisation has resulted in the dismantling of the large monopolies and state-owned corporations such as communications, posts, energy and banks, giving rise to a host of new services companies. (iii) The direct consequence of the changes in the economy over the past few years has caused a need for increased growth in logistical support services such as telecommunications, financial services and transport as well as business services such as legal advice and consulting. As a result of the highlighted changes, services have become an important link in the economy. For example, the number of telephone lines in use increased from 7,200 in 1996 to 169,820 in 1999 (2001 Statistical Abstract, Uganda Bureau of Statistics) while the number of tourists to Uganda increased from 149,817 in 1995 to 197,837 in 1997 (Baseline Survey of the Services Sector in Uganda, May June 2002, Uganda Services Exporters Association, 2002). Given the growing importance of the services sector, Uganda made commitments to the GATS as one way of strategically positioning itself to benefit from the global developments. Up to this time, however, Uganda did not have a clear understanding of the viability and propriety of its commitments in the context of e-commerce. The relevance of Ugandas economy to the commitments and how to implement them needed to be understood. The adequacy and sufficiency of these commitments in spurring liberalisation and the correlation between GATS and e-commerce needed to be established. The potential of e-commerce in national economic development and the extent of liberalising trade in e-services needed to be identified. There is need for rules to ensure that trade in services develops in an orderly and predictable manner within the context of an appropriate legal framework in order for Uganda to benefit from the global developments in the services sector. Services liberalisation and regulation requires a different approach from that used in regulating the trade in goods. In the services sector, the barriers to trade do not take the form of customs tariffs or rules, but are derived from the group of rules limiting access to the market by foreign suppliers of services. This, therefore, was one of the major reasons why Uganda had to make commitments under GATS, a Multilateral Agreement whose main aim is to eliminate discrimination among WTO member countries. As a developing country, Uganda regards the GATS as a tool which it can

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use to attract foreign investment, know-how as well as technology transfer. On the other hand, foreign investors from developed countries regard GATS as a tool which allows them to extend their operations by investing in Uganda and GATS provides a framework for the stable and predictable development of this trend in services. It was against this background that this study was undertaken. 1.3 Objectives The overall objective of the study was to investigate the implications of Ugandas commitments under GATS to the development and optimal utilisation of ICT and ecommerce. The specific objective was to undertake a comprehensive study of opportunities and challenges facing Uganda in realising the full potential of ecommerce in the context of services liberalisation under GATS. The highlighted objectives were achieved by carrying out a number of activities. Primary and secondary data was collected and analysed to evaluate Ugandas current commitments to the GATS. A survey of the Ugandan service sector was carried out and a due-diligence / legal audit of the service industry legal framework was also done. In addition, an assessment of opportunities in e-commerce and Ugandas readiness to benefit from those opportunities was made. A review of initiatives for service liberalisation in Uganda was also done. Finally, an impact assessment of the regulatory framework was carried out and recommendations for policy and legislation were made. 1.4 Methodology The study adopted a descriptive approach in collecting and analyzing data. A questionnaire with open-ended questions was developed and used to collect primary data from selected respondents (Annex). The respondents were selected from a sample of different categories of stakeholders. Physical observations and focus group discussions were also used. Secondary data was obtained through the review of relevant literature. The collected data was qualitatively analysed and the analysis generated the information that was used to draw conclusions. The study sought information on various issues related to the research problem including the ICT sector in Uganda (infrastructure, access, adequacy); e-commerce 12

and the nature and accessibility of e-services; GATS and Ugandas obligations under the GATS; policy framework for e-commerce as well as legal and institutional framework. The focus of the study was on assessing the viability of e-commerce under GATS and this was done through addressing various issues related to the overall study subject. The main sources of information were the internet and other publications; the media; Ministries of Tourism, Trade & Industry; Ministry of ICT; Ministry of Works & Transport; Ministry of Foreign Affairs; Uganda Bureau of Statistics; Uganda Communications Commission; Internet service providers; private exporters & importers involved in on-line businesses; financial institutions and tour company operators. In order to critically analyse the challenges and opportunities presented by GATS to effective regulation and development of e-commerce, a comprehensive tool kit that constituted the methodology was developed. The Tool kit was constituted by a set of guiding questions (see Appendix 2) aimed at getting information on the critical issues that the study had to address. The GATS is a complex web of rights, obligations, exemptions/exceptions and specific commitments. Its opportunities and obligations cannot be fully understood without a comprehensive analysis of all relevant legal documents including the text of the GATS itself; the MFN exemptions taken pursuant to the Annex on Article II Exemptions and listed in WTO Members Schedules; the specific commitments on market access, national treatment, and additional commitments inscribed in Members Schedules; the Annexes to GATS, Ministerial Decisions and Declarations and subsequent Protocols that have been entered into with respect to certain service sectors. This Toolkit was based on recent best practices in the assessment of GATS, e-readiness and best regulatory practices. It constituted a collection of theoretical and practical approaches toward the development of e-commerce. The Tools were utilised at different levels of the research project and in a variety of combinations according to peculiar research needs and context. The purpose of the Toolkit was to inter alia: Analyse and evaluate Ugandas current GAT commitments To make an assessment and evaluation of the opportunities and challenges of engaging in e-commerce in Uganda;

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Analyse and assess the services industry in the context of services liberalisation under the GATS discipline: Analyse and assess the synergies between the service industry and the ICT sector To assess Ugandas e-commerce readiness, accessibility and nature of eservices. To impart knowledge to the public and create awareness of the GATS discipline and service liberalisation To analyse and assess the legal and regulatory framework of the services industry To analyse and assess the regulatory framework governing the ICT sector in Uganda and the manner in which it has continued to develop; Assessment of the ICT sector in Uganda and its capacity and readiness to optimally utilise e-commerce; Assessment of stakeholder institutions; and Assessment of enforcement of the different obligations.

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CHAPTER TWO OVERVIEW OF THE SERVICES SECTOR 2.1 A Review of one Example of the Constituents of the Services Sector - the Ugandan ICT Industry and E-Commerce Although the ICT industry in Uganda is still in its infancy, it is experiencing a relatively high growth rate because of its increasing significance to the growth and development of the economy, particularly the service industry. The Government of Uganda has formulated and adopted the National ICT policy symbolising Ugandas commitment to the continued growth and development of a viable ICT industry. A new ministry has been established to oversee the development of ICT. There are also initiatives under an agreement with the USAID to develop an ICT roadmap/national ICT master plan to support e-government and e-business in Uganda as an immediate goal, to be followed by e-education and e-health. The Government has also set up the National Information Technology Authority (NITA) to help in coordinating the implementation of both the National ICT Policy and the Master ICT Plan. The Rural Communications Development Policy (RCDP) was adopted and a fund established to facilitate universal access for all, to basic communication services within reasonable distance to all people in Uganda. Uganda also liberalized telecommunications services as part of its Schedule of Specific Commitments under GATS. There is, therefore, an enormous potential to engage in e-commerce and ultimately expand the services trade in Uganda. The effective development of the ICT sector will spur growth, efficiency and productivity in the service industry throughout the country. Nonetheless, the existing policies and regulatory framework are not adequate for continued growth of both the service industry and the ICT sector to propel and transform Uganda into a knowledge-based economy capable of competing in the global information economy with particular reference to e-commerce. This was, therefore, the reason for undertaking this comprehensive study of the opportunities and challenges for Uganda in realising the full potential of e-commerce in the context of services liberalisation under GATS.

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2.2 National Policies Related to Trade in Services 2.2.1 National Policy on Services and Export Development Strategy The government of Uganda does not have a comprehensive national services policy covering all the services sectors. The Government has only put in place sector policies, legal framework, regulations and strategies for regulating, harnessing and promoting the potential of the services industry. It has individual policies and regulations for individual sectors (Werth, et al 2006). In the area of tourism there has been the Uganda Integrated Tourism Master Plan (ITPM) developed for the period 19992-2002. A sequel to this is the National Tourism Policy, which directs actions to ensure that tourism development is socially, culturally and environmentally acceptable and a vehicle for poverty alleviation. In the area of ICT, there is a National ICT Policy propped up by other developmental initiatives in the sector undertaken by different ministries, other government offices (Ministry of ICT, Uganda Communications Commission, UIA and the Uganda ICT Outsourcing Services Association. Also, the Ministry of Gender, Labour and Social Development is implementing a Government approved programme of Externalization of Labour, which aims at formalizing labour exports under the National Employment Policy. (UEPB 2005:12). In order for Uganda to realise the full potential of e-commerce under GATS, there has to be a comprehensive policy on services. The sector, therefore, needs to be boosted by a comprehensive National Government policy on services covering all services sectors. This would enable ready access to information pertaining to all the services sector regulations and policy in a single document and allow for the full realisation of the potential that e-commerce promises under GATS. 2.2.2 Ugandas Services Export Development Strategy The Uganda Service Sector Export Strategy developed through a consultative process involving relevant Government Ministries and agencies, the private sector/business community with the support of the International Trade Centre (ITC)/UNCTAD/WTO steers the implementation of initiatives and efforts aimed at enhancing the services sector for export readiness. The strategy lends support to the 16

operationalisation of the Poverty Eradication Action Plan (PEAP), the Medium Term Competitive Strategy (MTCS). It targets five (5) priority sub-sectors derived from the 2002 baseline survey namely higher education, migrant labour, health service expertise and management of communicable diseases, niche tourism and information communication technologies (ICT). Some of its key specific objectives are to: Increase the visibility and profile of Ugandas service industry in the export sector Establish reliable databases of service exporters of Uganda including Ugandans in the diaspora. Advocate for pro-active policies that will encourage the growth of the sector for exports Strengthen market research and dissemination on market opportunities in the Service sector Advocate for pro-active policies that will encourage the growth of the sector for exports Strengthen market research and dissemination on market opportunities in the Service sector Develop the capacity of individuals and SMEs to take full advantage of the commercial opportunities in the sector Adopt and implement aggressive promotional and marketing programmes to expose operatives to the market. Facilitate strategic alliances and networks among service exporters in Uganda and link them to global networks Tap into knowledge based human capital for growth and development.

2.2.3 The East African Community Development Strategy In many developing countries service firms face substantial regulatory barriers in neighbouring and regional markets. These can impede their ability to establish offices in export markets of interest, inhibit their ability to reach foreign clients and constrain their growth. In recognition of the vital role that the services sector plays in the economic growth and the need for regional cooperation and development, the

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Treaty for the establishment of the East African Community has placed emphasis on co-operation in services. Articles 89 to 101 of the Treaty identify the areas of co-operation in infrastructure and services to include transport (e.g. road, rail, maritime and air transport) and communication (e.g. postal services and Telecommunication); energy; and other transport supportive services. Other areas of co-operation comprise education and training (Article 102); tourism (Article 115); financial services (Articles 85 & 86) and health (Article 118). Partner States are still at the initial stages of developing the necessary regulatory framework for their services. These shall continue to be developed in context of reforms. (EAC development strategy 2005) As stated in the East African Community Development Strategy of 2005, the EAC members will take the following steps to promote trade in services: Select services where competitiveness could be built up at the Community level and undertake liberalization programmes at the regional level prior to possible liberalization at multilateral level. Partner States in undertaking liberalization at regional level will harmonise policy, improve infrastructure, empower the private sector and de-bureaucratize custom procedures at the points of entry and exit. Achieve a better coordination among Partner States and strengthen their commitment to working towards the liberalization of trade in services. Develop economic and policy audit on services sectors at the regional level. Develop mutual recognition of qualifications at the regional level to facilitate the movement of professionals. General immigration legislation, labour market regulations and entry quotas and pre-employment requirements shall be appropriately regulated in order for them to be accommodative. Uganda (and the other Partner States) will develop a framework in which legal, professional and other barriers to trade in the following professional business and related services are removed; Accounting and auditing, Management and consultancy, Building and Construction, Engineering, Architectural, Surveying, Medical, Educational, Legal, E-Commerce, etc. Under the GATS, the framework will further promote trade in these services by ensuring market access and national treatment under the GATS in all the four Modes

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of supply of services, namely cross-border trade, movement of natural persons, establishment of commercial presence and consumption abroad. 2.3 Global Services Trends There has been significant growth in services (such as financial services, transport and shipping services) and many other business services (such as consulting, legal advice, surveillance, etc.) in recent decades as a direct consequence of the rapid economic growth and dynamic trade expansion. In the wake of these changes, the services sector has today become a key link in the strengthening and development of countries economies. Services are not only important in their own right but also because they are an input into the effective trade of all commodities. Quality education and social services such as health, finance, logistics, marketing and telecommunications services make agricultural and manufacturing producers as well as service firms more productive and competitive internationally. Global exports of commercial services and their respective share to total exports increased tremendously between 1980 and 2001. Over this period, the growth of services trade surpassed the trade in goods during the 1990s (The World Bank, 2000). Growth rates have averaged over 14 percent since 1995 (Samiee, 1999). In 1998, the world market for services was estimated at more than USD 3 trillion and it was projected to reach slightly over 50 percent of global trade by 2020 (OECD and WTO, 1999). In 2003 services contributed over 60 percent of global GDP, accounting for 25 percent of recorded world trade. Currently the services sector is increasing its share of GDP in nearly every country in the world. This is particularly true in emerging economies like China, India, Brazil, South Africa, Egypt and Thailand. According to UNCTAD estimates, over 50 per cent of FDI flows were directed to services sectors by 2000, while the corresponding proportion for manufacturing sectors was 42 per cent (UNCTAD, 2003). Between 1980 and 2000, low and middle-income economies increased their service production by almost 25 per cent. The share of services in value addition economic activity ranged from around 38 per cent in low-income countries to more than 65 per cent in high-income countries (The World Bank, 2000). Developed countries mainly Europe, North America, Australia and increasingly Asia have a bigger share of the 19

global trade in services which reflects the fact that demand for services tends to be income elastic: as people become wealthier they spend relatively more on services mostly tourism, education and health (Riddle, 1986). While the bulk of this trade accrues to developed countries, developing countries have been consistently consolidating themselves as services exporters. In the last decade, exports of services from the developing countries increased by USD 200 billion from USD 147 billion in 1990 to USD 347 billion by 1999. Export of services comprised the top five sources of foreign exchange for 90 developing countries worldwide and by 2003 developing countries accounted for 67 percent of services export markets worldwide (International Trade Centre, et al. 2004). According to UEPB 2005, trade in services for developing countries covers over 40% of their total exports. In the next 5 years, this is expected to rise to 70% (ITC, 2005). There has been tremendous growth in transport services both in value and volume for increased merchandise trade. Tourism stagnated in developed economies and increased significantly in developing economies such as East Asia in 2003. The trend in global outsourcing is shifting in favour of developing countries and is likely to increase employment, attract foreign direct investment and promote technology transfer as well as innovations. China and India are taking a large share of this backoffice operation. India alone accounted for 50% of global IT outsourcing in 2003/4, rendering US$12billion in revenues and foreign reserves. In Africa, countries such as South Africa, Ghana and Kenya have made inroads into this developing phenomenon. Within the EAC, the services sector has seen tremendous growth in the last decade, with its share of GDP standing at over 60 percent in Kenya, 42.1 percent in Uganda and growing very fast in Tanzania with 41.3 percent. 2.4 The Ugandan Service Sector 2.4.1 Tourism According to official records, the tourism and travel services sub-sector has been one of the fastest growing in Uganda, growing at an annual rate of 21 percent from 1992 to 2000 (Bank of Uganda, 2003). Although the trend remains positive, political instability in the Great Lakes region from 1998 to 2001 harmed the image of Uganda 20

and made some tourist attractions inaccessible. A Ministry of Tourism, Trade and Industry report of 20031 indicates that the country received a total of at least US$ 265.35 million as tourist expenditure excluding all expenditures made abroad. The report reveals that tourism contributed about 4.0% to the countrys GDP and 29.1% to foreign exchange earnings (excluding all donor financing and remittances of externalized manpower). While the sector remains highly dependent on international visitor arrivals with very limited growth in domestic tourism, it continues to benefit from the governments recognition and promotion. In 2000, for instance, the tourism industrys share of total planned investment in Uganda was 30 percent. Investments in tourism have been directed to expanding capacity to meet the growing tourist influx. Between 1998 and 2000, the sector had 26 investment projects. These included hotels, lodges, tented camps, service apartments, tour operators, casinos, cinemas, restaurants, and white water rafting companies with total planned investment of more than US$ 460 million. Categorising the tourism and travel services sub-sector in Uganda according to the GATS classification shows that it has four broad categories of services: Hotel and accommodation services, Tour and travel operators, International conferences, and Auxiliary services.

The size of the industry is small by international standards, dominated by the accommodation services sub-sector in terms of numbers of operating firms, their capitalization and overall service capacity. In 1993, the Ministry of Tourism, Wildlife and Antiquities (restructured in 1998 into the Ministry of Tourism, Trade and Industry), with technical assistance from UNDP and the World Tourism Organization, produced a 10-year Integrated Tourism Master Plan with a view to providing a framework to guide the development of tourism for the period 1999-2002. The current 2003 National Tourism Policy directs actions to
1

Consolidated Low and High Expenditure Motivation Survey 2003

21

ensure that tourism development is socially, culturally and environmentally acceptable. As a vehicle for poverty alleviation it aims to ensure that tourism becomes a vehicle for poverty reduction in the future to the extent possible within the resource base and market limitations. Education Education is one of the key service sub-sectors in Uganda and the government attaches great importance to the improvement of education services. Education plays a vital role in promoting sustainable development through improving the populations various skills as well as raising awareness on various issues of national importance including improving general standards of living. The Ugandan education system follows a 7-4-2-3 pattern: seven years of primary education, followed by four years of lower secondary or Ordinary level, two years of upper secondary or Advanced level, and a further three to five years of tertiary education. The introduction of Universal Primary Education (UPE) has caused primary enrolment to increase from 6.6 million in 2000 to 7.3 million in 2003 (Poverty Eradication Action Plan, 2004/5-2007/8). Secondary education includes higher secondary schooling, technical and all technical and vocational training below the university level. Trends in secondary school enrolment show an increase from 513,931 in 2000 to 683,609 in 2003 (Poverty Eradication Action Plan, 2004/52007/8). The government policy of liberalization has caused the number of private educational institutions to rise, accounting for more than half of the total enrolments. Liberalization has led to an increase in the number of foreign students from the East African region. Health The health care sector is among the most rapidly growing sectors in the world economy. The globalization of health services is reflected in the growing crossborder delivery of health services, through movement of personnel and consumers (by electronic and other means), and in an increasing number of joint ventures and collaborative arrangements. The mission of the health sector is the attainment of a

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good standard of health for all people living in Uganda in order to promote a healthy and productive life. In the 1960s and early 1970s Uganda had one of the best health systems in SubSaharan Africa. Makerere University Medical School was one of the outstanding medical schools in the world producing hundreds of Doctors a year. However political instability in the country, and massive drain brain and export of trained medical personnel to foreign countries with better remuneration and working conditions negatively affected the delivery of health care services in Uganda. Since 1996, the Government has made substantial achievements in strengthening the health service sector. In 2000, the Health Sector Strategic Plan (HSSP 1) for the period 2000/1-2004/5 was developed and launched in the framework of the Vision 2025, the Poverty Eradication Action Plan and the National Health Policy. The Health Sector Strategic Plan (HSSP 2) for the period 2005/6-2009/10 has been developed by the sector stakeholders to guide sector programmes and activities for the next 5year medium term (UEPB 2006). Today Uganda has a number of world-class health service centers of excellence, which are involved in various research studies at national and international levels. These include the Joint Clinical Research Centre (at the forefront of HIV/AIDS research), Uganda Virus Research Institute and the Uganda Cancer Institute where Burketts Lymphoma was discovered. Information Communication Technologies The ICT sub-sector in Uganda includes all private sector companies involved in the delivery of services and goods for information and communication technology. These include computer hardware, computer software, development of software and offshelf applications software, information systems integration, consulting, provision of auxiliary services (e.g. preventive and remedial maintenance), telecommunication services and infrastructure development. The ICT sub-sector is crucial in the development of a vibrant services export economy since it is the backbone and plays a supplementary role in the delivery of services using the ICT infrastructure/platform. The ICT industry in Uganda is still in its infancy, although it is experiencing a relatively high growth rate in the COMESA region. There are about 36 investment projects proposed in the ICT sector licensed to a tune of US $16.5 million, expected to create about 1,027 skilled jobs for Ugandans. Ugandas laudable 23

telecommunications liberalization efforts and subsequent licensing of two national operators and mobile network service providers has contributed to the 2,142% growth from 1986 to 2004. Most of the increase has taken place during the past five years. Overview of Ugandas Services by Mode According to the General Agreement on Trade in Services (GATS) of the WTO, trade in services falls under four Modes of supply: cross border trade, consumption abroad, commercial presence and movement of natural persons. An analysis of Ugandas services trade shows that cross-border supply of services is the least developed and utilised mode of trade, considering that the Mode requires use of advanced technology as part of its delivery mechanism (Werth, et al, 2006). Owing to the ICT challenges the country faces, this Mode has only been marginally utilised, largely in the financial services. From the data available, Uganda is a net importer under this supply Mode. Service inflows in Uganda are broadly from transportation sector and grew at an annual rate of 18 percent for the period 1993 to 2000 from USD 11.79 million in 1993 to USD 18.51 million in 2000. Air transport brought in the biggest service inflow to Uganda, contributing over 50 percent of the service inflow annually2. For the period 1995-1999 air transport inflows had a growth rate of 11 per cent annually from USD 9.09 million in 1993 to USD 16.8 million in 1999. This growth reduced by 6 percent to USD 10.92 million in 2000. On the other hand, the road and railway transport inflows grew at annual growth rate of 16 percent in the period 19932000 from USD 1.20 million in 1993 to USD 3.38 million in 2000 for road and from USD 1.5 million in 1993 to USD 4.22 million in 2000 for rail. Despite the impressive performance in this area, service outflows have continued to exceed the inflows. Service outflows comprise both identified and estimated service outflows, which together accounted for over 50 percent of the outflow. Overall total service outflows under Mode 1 grew at annual rate of over 20 percent from USD 169.8 million in 1993 to USD 469.5 million in 2000. Service outflows under this Mode
2

Bank of Uganda 2003

24

continued to exceed the inflows and the gap between the two was growing wider given that the outflows continued growing at a much faster rate than the inflows. This trend is explained by Ugandas landlockedness which means that for international access it has to continue spending lots of money on road, air and rail service imports which constitute the largest portion of service imports under Mode 1. In addition, by not having an airline of its own, Uganda continues to import substantial air transport services from other countries, especially the COMESA, EAC and the EU. In the Mode 2 category (consumption abroad), tourism and travel is the best example for Uganda of services exports. While Uganda is a net importer of services, tourism and travel has recorded the biggest recorded source of service inflows for the country contributing over 60% over the period 1999-2004. This implies that there should be more efforts aimed at developing the sub-sector further by capitalising on the positive attributes that tourism in Uganda offers. Services under the Mode 3 (commercial presence) category have not played any significant role in the economy. Most Ugandan companies have not been able to establish their physical presence in foreign markets and offer services there. There is need to support players in this sub-sector to improve their capacity and enable them to competitively take part in establishing physical bases in foreign markets particularly in areas where Uganda has a competitive advantage. Under Mode 4 (presence of natural persons) the most outstanding example are the inflows from Ugandan unskilled workers (kyeyo) abroad (e.g. in UK, USA and Japan). Kyeyo remittances to Uganda have made significant contributions to household incomes. The disadvantage, however, is that kyeyo service exports are not yet part of the formal services trade in the global market. There is no policy yet that caters for this service to make it part and parcel of the services traded in the global market. Services Trade in Uganda Ugandas services sector has followed the global trend and is becoming a key engine of growth for the economy. It is now acknowledged as a potential alternative source of foreign exchange for the economy. Services, in particular, have been the 25

largest contributor to growth over the 1990/91-2003/04 period accounting for 3% of the 6.2% GDP growth during that period. They surpassed agriculture as the dominant productive sector in the economy (Table 1). Much of the growth in the services sector has been directed to domestic demand rather than exports. Table 1: Sector Contributions to Economic Growth for Uganda
Sector Shares of GDP (in %) Average 1990/911990/91 2003/04 2003/04 52.8% 38.5% 44.5% 12.7% 19.4% 16.8% 5.9% 8.1% 7.0% 0.9% 1.4% 1.2% 0.3% 0.7% 0.6% 5.6% 9.2% 8.1% 34.6% 42.0% 38.7% Contribution to Growth 1990/912000/01 2000/012003/04 1990/912003/04 1.6% 1.6% 0.6% 0.1% 0.1% 0.8% 3.0% 6.2% Average growth per annum 3.7% 9.7% 8.7% 10.4% 13.5% 10.4% 7.8% 6.2%

Agriculture 1.7% 1.5% Industry 1.7% 1.3% Construction 0.6% 0.8% Gas, electricity, water 0.1% 0.1% Mining and quarrying 0.1% 0.0% Manufacturing 0.9% 0.4% Services, etc 3.0% 2.8% Total GDP 6.4% 5.7% Source: Adapted from World Bank calculations based on Uganda Bureau of Statistics.

The services sector accounts for over 70% of formal employment contributing greatly to employment and personal income. Over a three-year period, 90 percent of the new jobs advertised in Ugandas leading daily newspapers were in the services sector (UPTOP 2006). Uganda is a net importer of services, with imports of services exceeding the export of services for the period 1999-2004. The balance of payment services account (Table 2) shows the export performance of the services sector over the five-year period against the total service imports for the same period. All the sub-sectors registered a positive growth, with the overall sector growing at over 78 percent from USD 203.34 million in 1999 to USD 331.35 million in 2003/4. Tourism and travel was the biggest recorded source of service inflows for Uganda (like many other developing countries) contributing over 60% of the service inflows annually. The table indicates that computer and information services (which are very significant in E-commerce) are still in infancy.

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Table 2: Uganda Services Account (USD Millions) 1999 2004

Source of inflow 1999/00 Tourism and Travel 156.48 Transportation 29.28 Communication 9.14 Construction 0 Insurance 0 Financial 0 Computer & Information 0 Royalties and License 0 Other Business Services 0 Personal, Cultural & Recreational 0 Government 8.45 Total Inflows (Credit) 203.34 Services Net -241.01 Source: Adapted from Bank of Uganda 2000/01 165.8 33.71 10.16 0 0.93 0 0 0 0 0 8.45 219.04 -229.54 2001/02 168.96 36.14 9.69 0 1.76 0 0 0 0 0 8.45 225.53 -316.13 2002/03 171.98 38.67 13.38 0 0.82 7.71 2.88 1.38 12.53 0 9.04 258.39 -268.03 2003/04 200.84 47.1 17.01 0 1.34 22.83 5.69 5.87 19.16 0 11.51 331.35 -226.67

2.7 The Ugandan ICT Industry and E-Commerce The ICT industry in Uganda is still in its infancy, although it is experiencing a relatively high growth rate in the COMESA region. The ICT sector is increasingly becoming critical to the Ugandan economy. Uganda has gone a long way in liberalizing telecommunications services and telecommunications is part of the Schedule of Specific Commitments that Uganda has signed under GATS. In addition and more importantly, the Government of Uganda formulated and adopted the National ICT policy symbolising Ugandas commitment to the continued growth and development of a viable ICT industry. A whole ministry has been established to oversee the development of ICT. There are also initiatives under an agreement with the USAID to develop an ICT roadmap/national ICT master plan to support e-government and e-business in Uganda as an immediate goal, to be followed by e-education and e-health. The Government has also set up the National Information Technology Authority (NITA) to help in coordinating the implementation of both the National ICT Policy and the Master ICT Plan. The Rural Communications Development Policy (RCDP) was adopted and a fund established to facilitate universal access to basic communication services within reasonable distance to all people in Uganda.

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There is, therefore, an enormous potential to engage in e-commerce and ultimately expand the services trade in Uganda. The effective development of the ICT sector will spur growth, efficiency and productivity in the service industry throughout the country. Nonetheless, the existing policies and regulatory framework are not considered adequate enough for continued growth of both the service industry and the ICT sector to propel and transform Uganda into a knowledge-based economy capable of competing in the global information economy. This was, therefore, the reason for undertaking a comprehensive study of the opportunities and challenges facing Uganda in realising the full potential of e-commerce in the context of services liberalisation under GATS. Ugandas Services Export Potential Global service markets are growing and they offer opportunities in business outsourcing, professional and tourism services. This is due to technological innovation such as faster, cheaper telecommunications and lower-cost travel, which makes it easier to market and to reach new customers. A baseline survey was conducted in 2002 by the Private Sector Foundation Uganda in collaboration with the Uganda Services Exporters Association (USEA) and USAID with an aim of establishing a reliable and comprehensive database on Ugandas services sector. It sought to identify the type, quality and standards of the services being offered, the regional and global competitiveness, and tradability of such services. The survey identified five specific service sub-sectors with export potential that could generate a competitive advantage if systematically supported and promoted. Key of these were the health service expertise particularly related to AIDS and management of communicable diseases; niche tourism; higher education based on the English language; ICTs for outsourcing and kyeyo emigrant labour. According the Uganda Services Export Strategy 2004, the education sector has potential as a regional education centre of excellence but the ongoing educational reforms have largely been inward looking and have undermined the export potential of this sector. In the health sector, Uganda is a success story in the management and control of the HIV/AIDS pandemic and has a commendable record in the management of communicable diseases. The enormous expertise developed by 28

Uganda could easily be packaged and exported as a Model for HIV/AIDS and communicable disease-prone and -plagued countries. Ugandas private ICT subsector has made attempts to join the global ICT outsourcing services industry. Despite limited support from the Government it is reported that Ugandas ICT exports reached an all time high of US$ 43 million during the fiscal year 2004/5 and several non-exporting companies are recorded as having a good potential to export ICTbased services in the next 5 to 10 years. The massive potential in these and other service sectors could be harnessed and developed for the export market. These highlights indicate that Uganda has real potential for developing services export. In order to realise the potential, a number of strategic initiatives need to be undertaken but care must be exercised to have the priorities right. One of the key priorities is the development of the physical infrastructure. There is need for deliberate effort by Government to take the lead in supporting the establishment of infrastructure particularly in the area of ICT. The Private sector may not take the lead because private investors are primarily driven by profit and often would be unwilling to wait if the profit comes in the long term. Investing in the ICT infrastructure should be Government priority because it has direct benefits not only for the private sector but also for the Government by way of widening the tax base. The Government has better capacity than the private sector to access finances for investing in ICT. The other priority area that may facilitate the realisation of the services export potential is the development of capacity for private firms. Given the poverty levels in Uganda, it would not be prudent for the Government to expect private firms to develop their own capacity in the global market against the competitive power of stronger businesses from rich countries. Probably more importantly, Uganda needs to focus its policy more towards long-term and universal benefits for the whole country rather than short-term and specific categories of the population. There has been an increasing gap between the poor and the rich and this has made it difficult for the country to develop services export trade. Appropriate policies are a pre-requisite for whatever efforts the country will make in developing the potential of services export. For a start, the highlighted measures would provide the minimum inputs for the country to move towards realising the full potential of the services sector in Uganda.

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CHAPTER THREE 3.0 ELECTRONIC COMMERCE (E-COMMERCE) 3.1 Definition of E-Commerce The working definition of e-commerce in WTO is the production, distribution, marketing, sale or delivery of goods by electronic means (WTO, WT/COM/MID/W/38, March 1998). It can also be looked at as a means of enabling and supporting the exchange of information, goods and services between companies and their customers electronically; or commerce that is free of any paper-based documents and where computer, telecommunication and internet technologies are used to transact goods, advertise their products and offer services to a global market (Kiggundu, 2002). These definitions show that e-commerce may be interpreted more broadly than just trade via computer networks to include trade conducted over telephones or fax. E-commerce is, however, more prominently seen in internet and the World Wide Web because it allows more flexible use than any other form. 3.2 E-Commerce and the WTO There are a number of ways in which the WTO has addressed e-commerce. One is through the Work Programme on Electronic Commerce, which began in 1998. The other is through negotiations under the Doha Development Agenda, which began in 2002. The third is through the Information Technology Agreement (ITA), which came into force in 1998. The work programme is largely an exploratory process through which WTO Members examine questions about the application of WTO agreements to e-commerce. The Doha negotiations provide a vehicle for making new commitments and drafting new obligations to facilitate e-commerce and IT trade. The ITA is a plurilateral3 agreement through which the participants commit themselves to eliminate tariffs on a defined list of IT products.

A plurilateral agreement is signed by less than all WTO Members, but the benefits of the agreement are extended to all WTO Members.

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In terms of the multilateral trading system approach, e-commerce issues were conceived as a substance generated by an interface with existing WTO agreements such as GATT, GATS and TRIPs. At the second session of the Ministerial Conference held in May 1998 in Geneva, Ministers adopted the Declaration on Global Electronic Commerce4 directing the General Council to establish a comprehensive work programme to Council for Trade in Services and examine all trade-related issues relevant to global electronic commerce. It was assigned the oversight to ensure that all relevant elements and cross-cutting issues are examined from a broad perspective and that any conflicts of jurisdiction are resolved.5 The WTO was requested to examine the treatment of e-commerce in the context of the GATS legal framework, including the issues of the scope and Modes of supply (Art.I), MFN (Art. II), transparency (Art. III), developing countries' participation (Art. IV), domestic regulation standards, and recognition (Art.VI and VII), competition (Art. VIII, IX), protection of privacy (Art. XIV), market access commitments (Art. XVI), national treatment (Art. XVII), as well as customs duties and classification issues. The Council for Trade in Goods was directed to examine the issues relating to market access, valuation, rules of origin, import licensing procedures, standardization, and classification issues. Of particular interest is the issue of trade facilitation which is also an integral part of e-commerce development. The Council for Trade-related Aspects of Intellectual Property Rights (TRIPs) was instructed to undertake an examination of the intellectual property related issues arising in conjunction with e-commerce, which might include protection and enforcement of copyright and related rights, trademarks, new technologies and access to technology. Finally, the Committee for Trade and Development will examine and report on the development implications of e-commerce, exploring the economic, financial and development requirements of these countries, such issues as implication for small- and medium-sized enterprises (SMEs), infrastructure, transfer of technology, the movement of natural persons, and financial implications.

Declaration on global electronic commerce adopted on 20th May 1998 WT/MIN(98)/DEC/2. it was recognised that global electronic commerce is growing and creating new opportunities for trade. 5 WTO, Work Programme on E-Commerce, Submission by the United States (WT/GC/16, 12 February 1999)

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The abrupt termination of the World Trade Organization ministerial conference in Seattle left in limbo several electronic commerce initiatives, including the continued duty-free treatment of e-commerce transactions and a package of further tariff reductions on hundreds of information technology items6. At the Fourth Ministerial Conference in Doha in 2001, ministers agreed to continue the work programme as well as to extend the moratorium on customs duties. They instructed the General Council,7 to report on further progress to the Fifth Ministerial in Cancn, in 2003. 8 After the Doha Ministerial Declaration, the General Council agreed to hold dedicated discussions on cross-cutting issues, i.e. issues whose potential relevance may cut across different agreements of the multilateral system. The issues discussed included: classification of the content of certain electronic transmissions; development-related issues; fiscal implications of e-commerce; relationship (and possible substitution effects) between e-commerce and traditional forms of commerce; imposition of customs duties on electronic transmissions; competition; jurisdiction and applicable law/other legal issues. The examination of these issues is still unfinished.9 In order to determine which WTO Agreement is applicable to e-commerce, the definition of e-commerce will have to be addressed. There is no universal definition of electronic commerce because the Internet marketplace and its participants are so numerous and their intricate relationships are evolving so rapidly. 10 Different definitions of ecommerce have come up but more or less the same in material. For example it has also been defined as doing business electronically through an electronic medium where electronic data is interchanged between parties through information intermediaries on an information technology network. 11 An electronic transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, governments, and other public or private
6

C. O. Verill, Jr & T. C. Brightbill, WTO Ministerial Ends in Disarray, without Agreement on E-Commerce Issues Found at; http://www.wrf.com/publication.cfm?publication_id=8005 last accessed on 3rd June 2006 7 Paragraph 34 Doha Declaration 8 Electronic Commerce Briefing note, found at http://www.wto.org/English/tratop_e/ecom_e/ecom_briefnote_e.htm. last accessed on 5th June 2006 9 ibid 10 For more elaborate discussion of definitions see www.oecd.org/dsti/ sti/it/ec/act/SACHER.HTM and Box 1.1, page 28-29 in The Economic and Social Impact of Electronic Commerce, OECD, 1999.
11

Ecommerce report of Uganda Law Reform Commission Publication Pg. 1

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organisations, conducted over computer-mediated networks. The goods and services are ordered over those networks, but the payment and the ultimate delivery of the good or service may be conducted on or off-line.12 and logs onto internet; advertising services when the website contains promotional information; distribution services when one orders for a product and financial services when that product is paid for using the internet. Whatever definition is adopted it should always be remembered that e-commerce involves cross cutting issues as to whether it involves goods or services. The discussion continues to revolve around whether e-commerce should be considered as trade in goods or in services, or a combination of the two.13 By defining it as trade in goods, the WTO applies the rules under the General Agreement on Tariffs and Trade, which automatically lowers all tariffs and barriers to trade to zero. If e-commerce is defined as trade in services, then the rules of the General Agreement on Trade in Services apply, and countries only have to lower tariffs when they elect to liberalize their e-commerce sector.14 E-commerce also applies under TRIPS Agreement where there is the importance of protecting copyrights and related rights, trademarks and domain names for the future development of e-commerce. Much of the trade on the Internet and other electronic communications networks involve selling or licensing of information, cultural products and technology protected by intellectual property. This involves commercial transactions involving books, CDs, music, movies, pictures, graphics, computer art and software and these have become most popular items sold over Internet; all are It is comprised of computer services when a customer sits down at a computer or other access device

12

Annex 4. The OECD Definitions of Internet and E-Commerce Transactions found at: http://www.oecd.org/dataoecd/34/16/2771174.pdf last accessed on; 10th June 2006 13 WTO, "Third Dedicated Discussion on Electronic Commerce under the Auspices of the General Council on 25 October 2002," Geneva: World Trade Organization. [online: web] URL: http://docsonline.wto.org/GEN_viewerwindow.asp?D:/DDFDOCUMENTS/T/WT/GC/W486.DOC.HTM. 14 C.O. Verrill, Jr. E-Commerce and the WTO Seattle Ministerial November 29, 1999. http://www.wrf.com/publications/publication.asp?id

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covered under the TRIPS agreement binding for all WTO Members 15. Ecommerce cuts across a number of WTO agreements the GATT, GATS and TRIPS In the trade in services, unlike trade in goods, there are no tariffs or fiscal duties applicable when service products or suppliers enter the territory of another country. Protection to a domestic service industry is given through domestic regulations. A country wishing to liberalize has, therefore, to decide which measures to keep in place and which to modify or remove to bring them in conformity with GATS rules. The measures on which such decisions have to be made are those affecting the entry of a service producer or service supplier into its market, and those affecting the post-establishment activity of service suppliers. Most aspects of e-commerce are cross- cutting among other WTO Agreements, but GATS covers the major part of it. This is the reason it is addressed under GATS in this study. 3.3 Benefits of E-commerce The importance e-commerce plays in Modern business cannot be underestimated. It is further reflected in the benefits it offers and these include the following: It saves time in that a buyer need not run all over the town or from country to It reduces costs for comparative shopping. One can shop when he/she feels like it, not just the traditional way of It makes it possible for a buyer or seller to access a greater number of sellers country looking for items to buy.

spending hours in stores. or buyers at low cost. It makes it possible for businesses to reach a larger market place. It reduces overhead costs for businesses.

3.4 Disadvantages of E-commerce Just as there are a number of benefits, there are disadvantages that both consumers and businesses need to be aware of. Even though e-commerce has been around for years, buyers and sellers are still wary of the whole aspect of relying on a computer

15

YOUSAF HAROON MUJAHID, Assistant professor ( Management) National Post-Graduate Institute of Telecommunications and Informatics, E-commerce & WTO Digitalizing Trade Liberalization found at http://www.pide.org.pk/pdf/psde%2018AGM/E-Commerce%20&%20WTO.pdf, last accessed on 5th June 2005

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to purchase or sale their goods. Some of the disadvantages associated with ecommerce include the following: It is associated with fraud risks and these are increasing

The use of e-commerce increases specific costs, such as shipping and handling costs (for those dealing in merchandise) It does not allow the buyer to see or touch the merchandise before buying since the transactions are done on-line. It is hard to return unwanted goods. One operating on-line misses business opportunities of those who are not on

line. 3.5 Importance of the ICT Sector and E-commerce The ICT sector is crucial in the development of a vibrant services export economy since it plays a backbone for the development of e-commerce and a key role in the delivery of services using the ICT infrastructure as a platform. E-Commerce is becoming an essential part of modern economic and business transactions. In Uganda, a number dot.com companies have emerged over the past few years and more are coming up. Computers, software, telecommunications equipment and other information technology products provide the physical infrastructure for ecommerce. Uganda lacks indigenous manufacturing capability and therefore needs to import these products. Thus, it has an interest in how the WTO applies the rulesbased trading system to the ICT products. Although these are products that do not fall under GATS per se, it is important to note the key role they play in the growth and development of ecommerce in Uganda. They are products covered by the ITA16 listed in Attachments A and B of the Agreements and include semi-conductors, semiconductors manufacturing and testing equipment, computers (such as processing units, key boards, printers, scanners and hard disc drives), flat panel displays, computer network equipment, computer software, telecommunications products (such as telephone sets, radio broadcasting and television transmission and reception apparatus, pagers, video phones, fax machines, switching apparatus and

16

The ITA is a Plulilateral Agreement that is undertaken on an MFN basis, whereby, only signatories to the Agreement are obliged to eliminate their tariffs on the covered ICT products but they do so for not only all ITA participants but also all other WTO members whether or not they have signed the ITA.

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modems), and scientific instruments. Uganda is not an ITA participant but can at least benefit from the tariff cuts since the Agreement is undertaken on an MFN basis. Telecommunications services (basic and value added) and computer services (such as online information or database retrieval) which in Uganda is part of the ICT subsector provide the infrastructure for the internet and intranets through which ecommerce is conducted and are themselves a significant and rising share of crossborder trade in services.17 The GATS is the WTO instrument governing trade in telecommunications services and computer and related services. In the WTOs work Programme on e-commerce, an issue was raised as to whether internet access services should be classified as basic or value-added telecommunications services. The distinction is important because it determines how internet access services are affected by the Reference paper and the Annex on Telecommunications. The Reference Paper applies to internet access services or other internet related services only if they are basic telecommunications services. If internet access services are classified as basic telecommunications services, a member who has adopted the reference paper would have to maintain appropriate measures to ensure that internet access providers do not act in an anti-competitive manner. Members concluded in the WTO work Programme on commerce that the Annex on Telecommunications applies to access to and use of internet network when it is defined in a members regulatory system as a public telecommunications transport service or network. This is an important aspect for Uganda to note, so as to determine how to define internet access services in its domestic legislations in a manner that benefits the country through the development of e-commerce. The ICT Sub-sector in Uganda includes all private sector companies involved in the delivery of services and goods (where applicable) for information and communication technology. These include computer hardware, computer software development of software and off-shelf applications software, information systems integration, consulting, provision of auxiliary services e.g. preventive and remedial maintenance, training, and telecommunication services and infrastructure development. The importance of e-commerce becomes clear when it is realised that if businesses in Uganda do not become e-commerce competitive they will be left out as large
17

WTO, E-commerce and Information Technologies; A report for the UN ICT Task Force.

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multinational buyers and sellers eventually insist that their trading partners operate via an internet business-to-business portal. This has already started happening as revealed through an interview with Cayman, a data processing company based in Uganda, which experienced difficulties with its partner company in Canada over the use of Voice Over Internet Protocol (VOIP) because there was no law in Uganda to allow its use, and there was monopoly over VOIP by UTL and MTN.

3.6 State of the Sectors Development in Uganda The ICT industry in Uganda is still in its infancy, although it is experiencing a relatively high growth rate within in the COMESA region. There are about 36 medium to large-scale investment projects proposed in the ICT sector licensed to a tune of US $16.5 million, with potential to create about 1,027 skilled jobs for Ugandans. Ugandas laudable telecommunications liberalization efforts and subsequent licensing of two national operators and mobile network service providers has contributed to the 2142% growth from 1986. Most of the increase has taken place during the past five years. Latest data obtained from the Uganda Communications Commission puts the number of PCs per 1000 inhabitants at about 147, up from 24 in 2001. It should be noted that a few local companies have been doing successful ICT-based export activities. The most notable is Crystal Clear Software. Crystal Clear Software Ltd has an in-house custom software product for Micro-Finance Institutions called Loan Performer which they export and support in over 30 countries in Africa. This software can even be purchased online from Crystal Clears website. Crystal Clear Software is Ugandas very good role model on e-commerce export trading and ICT entrepreneurship. 3.7 Classification of E-commerce In order to appreciate how Uganda can benefit from e-commerce, it is important to show the different classifications of e-commerce, their functions and where the competitive advantages lie. E-commerce may be categorised as follows:

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Business-to-Business (B2B) This refers to transactions between business conducted electronically over the various forms of internet and private networks 18. Transactions take place between businesses and the respective supply chain members. This includes on-linewholesaling in which businesses sell goods and services to other business on the web (e.g. when a bank orders stationery from a stationery supplies). This facilitates the transactions in that it eases the communication processes such as invoicing, tracking of the order and payment. All these can be performed on line between the 2 parties. This process, however, may become complex if the transactions are of an international nature and they involve a number of container loads or ship loads. This will involve greater risks that require more parties to be involved (such as customs departments, verification bodies and financial institutions). However, where the parties involved have already developed mutual trust with third parties, B2B internet portals can reduce the number of parties involved. In 2005, the global B2B market was estimated to be US$7-US$10 trillion. Currently with the growing trend of businesses, especially in the manufacturing sector, Uganda offers significant opportunities in e-commerce. Electronic B2B will reduce cost of production since physical presence of importers in distant markets like Dubai will be reduced and consequently Ugandas regional and global competitiveness will be enhanced since inter and intra trade within Uganda, and abroad will be facilitated. Business to Consumer (B2C) This involves the retail transactions of products and services from businesses and individual shoppers or customers. Under this classification, businesses create electronic storefronts that offer information, goods and services to a global market. Businesses here operate in an environment where, respective of whether it is a local or international order, the client orders and pays by credit card. The system then generates an invoice and someone in the backroom processes the order. There are only a few parties in the chain and therefore a relatively simple paperless transaction.

18

Turban page 217

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In Uganda, this form of ecommerce is nearly not exploited at all because the national local market for physical goods and services is much more restricted and confined essentially to Kampala and other urban centres. Therefore, strategies to exploit this potential of business could provide a big opportunity for Uganda to develop ecommerce. Business-to-Government (B2G) Here businesses create electronic storefronts that offer information, goods and services to government. This has not effectively been embraced in Uganda and is still in its infancy in most countries. It involves an electronic form of interaction between government and the business or the community. Examples of B2G ecommerce transactions that can be conducted on-line include the submission of tax declarations on-line, paying tax, making application for and paying for licences, passports, or even voting on line. Government-owned institutions such as Customs Office can provide electronic means of paying customs costs and clearing of goods. Uganda has installed the UNCTAD ASYCUDA Customs Management S which is designed to allow businesses and agents to submit Customs declarations electronically. The government of Uganda could take the opportunity of setting up on-line tendering portals as an incentive to attract enterprises to use e-commerce. Multi-Level Marketing (MLM) This is where products or services are marketed through associate partners or referral partners (with multiple head up-line distributing further to numerous downlines and the down lines dividing to another number of down-lines). The described classification encompasses many kinds of business activities that are being conducted electronically, and conveys the notion that electronic commerce is much more comprehensive than simply the purchasing goods and services electronically. Electronic transactions are not limited to purchases of goods and services, but extend to a wider spectrum beginning with information gathering and exchange, progressing to negotiation and decision to purchase, finally to completion of transaction and after sales support. In fact, at present, much of electronic commerce activity is concentrated in information gathering and exchange used to support purchase decisions. As electronic commerce grows, the importance of sales 39

transacted on-line is expected to increase. For clarity it is important to note that ecommerce transactions and instruments include the following: Subscription for online and Internet access. Subscription to information services / software sales Consumers retail sales e.g. computer equipment (Internet based shopping mall) travel services / airline tickets audio /video recordings, books on-line, auctions. Business-to-business wholesale and retail services and sales Advertising and marketing services Financial services and transactions e.g. EFT, ATM/credit cards, online brokerage, direct investment and stock trading and online banking and bill payment. Government services and information systems for automatic access to website, filing documents, obtaining application, licence application and permits, taxes (payment) and participating in the political process. Other/Ancillary function contributing to business/commercial activities comprising of elements of traditional business practices combined with the use of telecommunication e.g. email (virtual medium), file transfer. 3.8 Steps in E-commerce There are various steps in the growth of e-commerce and depending on the level of development of a country, the majority of the people in that country will engage in what is appropriate for them. Some may not even know that they are engaged in ecommerce due to lack of knowledge of the technical term but in principle it will be part of e-commerce. The steps model illustrated in Figure 1 helps to create more understanding about the different types of e-commerce business applications in practice and the different types of assistance that may be required. Fig. 1: The E-commerce Steps Model

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(a) Step 1: Simple Messaging A mobile phone has a service called the short messaging services (sms). One can send an sms to ones middleman, customers or even relatives either informing them that ones produce is ready for collection, thanking them for being loyal to you or informing them of new happenings within your business at very low cost. This is of greatest immediate potential because; it is cheap to use, covers a wide range of potential customers in one go Gives a personal touch to your client.

(b) Step 2: E-mail Messaging In this case one sends or receives e-mails from a computer terminal either located in your business premises or via an intermediary like an Internet caf. Emailing requires a computer with Internet access. The easiest way to use e-mail is to go to an Internet Caf in ones locality and ask for help. This is important in that: It provides the cheapest, quickest and most reliable way to exchange business information with those customers, suppliers, etc. who are also connected to e-mail. It allows a variety of information to be sent not just messages but documents, photographs, drawings, or any other computer data file. Messages can easily be recorded, to keep a record of correspondence. Messages can easily be organised, e.g. by building up an address book. Messages can be protected from outside view. Messages can easily be sent to multiple recipients.

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Services can be accessed by the entrepreneur while away from ones work station.

(c) Step 3: Web Publishing In its simplest form this consists of a 3-4 page website giving a basic company profile, some information about products and services, and contact information physical and postal address, telephone and fax, and e-mail contact. conventional catalogue that can be easily updated. (d) Step 4: Web Interacting Web interaction will allow customers more scope to browse through images, descriptions and specifications relating to your products and services. It may allow them to submit e-mail enquiry forms, to order online, to use online services or to use a shopping cart facility and order confirmation that can be paid for and fulfilled offline. Web interaction can facilitate more effective customer service and to answer customer queries. It will also be possible to use the Internet to research information. (e) Step 5: Web transacting This is having a full e-commerce capability that covers the whole transaction process from the placing of an order to online payment for goods and services via secure networks. (f) Step 6: Web integrating E-commerce may also take on a wider role within ones business linking business processes electronically often termed e-Business. This provides an electronic platform that links the front office (e.g., customer-facing processes such as sales and marketing) to the back office (e.g., internal processes such as accounts, inventory control, purchasing and human resources). EBusiness, therefore, links internal systems (both front and back office) with external networks (customers, suppliers and collaborators) via the Internet. This stage often describes a business as becoming fully e-enabled. In a more advanced form it may include an online catalogue an online version of a

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Each of the above steps to e-commerce can be owned and controlled directly by the enterprise or can be accessed via an intermediary through the following ways; The enterprise owns, develops and uses an e-Commerce application. The enterprise owns and uses e-Commerce applications, but lets others develop them. The enterprise uses e-commerce applications only, but lets others own and develop them. From the definition, one ought to have the following in order to engage in ecommerce and transact electronically: i) Wire network This can be of co-axial wires, optic fibre or cable. ii) Wireless network This can be satellite or cellular. On these networks one can operate internet. Internet has resulted in conveyance of modes where voice, data and pictures can be delivered simultaneously e.g. video conferencing. This can best be illustrated by the E-Sub-County model as hereunder: Online shopping Online payments E-health E-learning

In the context of services as categorized in the GATS, we can identify the following services as capable of being implemented on the e-commerce infrastructure: Distribution services Financial services Medical services Education services

3.9 Trading in E-Products

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3.9.1 Physical Products When trading in goods using e-commerce, a business eventually reverts to physical order processing. One of the benefits of e-commerce is that it speeds up the communication and sales cycle leaving the buyer with the impression that delivery of the goods will also be faster. If the backrooms order processing has not been designed to deal with the new business model, problems will arise and the buyer will feel nothing has been gained by buying online. A logistics problem has arisen in B2C and B2B e-commerce where orders are more regular, orders are smaller, and the numbers of customers is growing, and are more widely located around the world. Logistics services providers are still grappling to deal with the new demands of etailing (the equivalent of retailing). For international orders, the delivery process can become complicated with customs requirements at both ends.

Virtual Products Trading in virtual products is well suited to e-commerce business. Here the transaction is completed online; from enquiry, order, payments and delivery all can be achieved online and at ago, sometimes in a few seconds, businesses selling these products are able to benefit from e-commerce regardless of their location. It is possible for a music artist based in Uganda to record his songs in a home digital audio studio, store the songs on a file on his server and sell the songs over the Internet using MP3 technology to buyers in the USA, provided he has access to sufficient bandwidth. Payment is usually made by credit card or bank transfer. Other virtual products include software, e-magazines, travel B2C portals and online sale of information. Tele-services a) Offline teleservices Offline teleservices offer talented individuals living in LDCs, who may have skills in digital publishing, translation, software development, website design etc and opportunity to do work for companies based in developed countries. For example, a company Z in Europe requires translation of a document. The document is sent by email to the contracted skilled person, who may be situated in any country anywhere

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in the world, provided they have Internet connectivity. Once the work is completed the person sends it back to the company by email. Such services are known as offline, since the work is done offline. Only when the work is completed does the person go online to send it back to the customer. b) On-line teleservices On-line teleservices can be divided into interactive and non-interactive services. Interactive on-line services involve real time involvement by the contracted party. Examples of these types of services include call centres handling, airline reservations, telemarketing and after-sales support. Low-cost Internet telephony now allows corporations based in developed countries to outsource call centre work to low labour-cost countries, provided the call centre, for example, situated in Uganda, has reliable high bandwidth connections. Online non-interactive services would include Internet radio stations, or Internet sports sites, which provide downloadable but recent news on sports events. 3.10 Developments in E-Commerce and Related Activities in Uganda

There is a new Telecommunications Policy that has been made and is pending cabinet approval. It aims at creating a technology-neutral licensing regime based on infrastructure licenses and service licenses. The policy proposes a continuation of restricted infrastructural licensing where the numbers are limited until 2010 when the market is expected to open up fully. On the other hand the service licenses will be fully open to allow service providers to offer any telecom services using the facilities of infrastructure providers. The new policy also seeks to promote universal access through provision of broadband access to educational institutions, health units and local administrative offices. In addition, the policy envisages providing high capacity national infrastructure linking all Districts. Due to the delay in the approval process, the Ministry of Works, Housing and Communications issued the Uganda Communications (Pronouncement of Telecommunications Policy Guideline, 2006) on 11th May 2006. The interim Policy Guidelines empowers the Uganda Communications Commission (UCC) to issue licenses that are in line with the new policy. This allows any company interested in

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investing in the specified areas to apply to the UCC thereby ending the monopoly of the existing national operators (MTN and UTL) in the specified areas. Before the telecommunications sector in Uganda was liberalised in 1998, few enterprises and organisations had access to local Internet Service Providers (ISPs). After the sector was liberalised, private companies were allowed to establish ISPs. Following that liberalisation, 3 companies were allowed to register, namely MTN, CELTEL and UTL. The liberalisation of the telecommunications sector has led to substantial growth in the growth of internet and telephone networks. Internet subscribers in Uganda are estimated at 1.5 million currently (The New Vision, May 26, 2006). The number of service providers has grown from 1 fixed operator, 1 mobile operator and 2 ISPs in 1996 to 2 fixed operators, 3 mobile operators and 17 ISPs in 2006. Telephone penetration has grown from a mere 0.26 lines per 100 persons in 1998 to 6.5 lines per 100 persons in 2006. Of this, the biggest growth has been witnessed in the mobile cellular telephones. In terms of coverage, telecommunication services are now available in 56 Districts of Uganda. Extension to the rest of the Districts which have been recently created is being considered. The technology used has also been improved from the obsolete analogue technology originally used to a fully digital network used today. In 2001, the Rural Communications Development Programme was initiated to provide communication services to the rural areas. Under that initiative, the following projects have been implemented: Provision of Internet Points of Presence in 52 Districts Establishment of 50 Internet cafes Establishment of information portals for all Districts as well as a national portal (www.ugandaweb.net) Provision of up to 316 public pay phones across the country

There is a plan by Government to implement the World Bank sponsored ERT Project in 154 sub-counties in Uganda by mid-2008.

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These developments have created more employment opportunities for the population either directly with the service provider, or in other activities related to the industry such as operation of phone kiosks, internet cafes or provision of various services to the major telecom, postal and courier companies. Over 5,000 people are directly employed in the telecommunications companies while about 130,000 people are indirectly employed in the sector. Other developments that have taken place in Uganda include projects intended to improve connectivity for Uganda. These include the underground optic fibre that has been installed in some parts of Kampala and may be extended to other major town centres. There are also a growing number of pay phones that have been established in almost all towns of Uganda and others in village trading centres. These have helped to provide telephone access to rural populations in a manner that was unknown prior to the liberalisation of telecommunications in Uganda. While the telecommunications sector has made substantial growth, internet access is still out of reach for the big majority of the population. Apart from mobile telephone networks, internet is only accessible in big towns and yet the majority of the Ugandan population live in rural areas. Internet installation as well as servicing and maintenance costs are still high. On the side of mobile telephones, the calling rates have remained unacceptably high. The rates for mobile phones range between Shs 420 Shs 600 per minute depending on the option used. 3.11 Developments on the International Scene

Electronic Bill Payment (EBP) This is a system of paying ones household bills over the internet. The system works in such a way that the consumer subscribes to an EBP provider, deposits funds with the EBP (or the consumer allows the EBP access to his/her bank account). As the consumers receive their bills in the mail, they in turn e-mail the bills to their EBP provider with the date when they want the invoices paid.

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Electronic bill (EBP) pay is essentially paying your household bills over the internet. In most cases, it works like this. The consumer subscribes to an EBP provider, deposits funds (or you allow them access to your bank account) with them and as the consumer receives their bills in the mail, they in turn email them to their EBP provider with the date that they want the invoices paid.

Digital Signatures These are the latest from the e-commerce world. The system allows consumers to sign legal documents in different places without being physically there. Prospective buyers are allowed to sign binding contracts without their physical presence. In the developed world these are legally binding and they hold the same weight in court as the signatory were actually present in person. Digital signatures are the latest from the e-commerce world. This allows consumers to sign legal documents across the country without being physically there. This latest trend has really taken off in the housing market. Allowing prospective buyers to sign closing contracts with out taking time off is wonderful. Consumers love this idea. These contracts are legally binding and hold the same weight in court as if you were there in person.

On-line Banking This allows consumers to check their balances, pay bills, purchase certificates of deposits and apply for loans all from the consumers home. Online banking is the banking industry to compete with on another and with the electronic bill pay providers. This is a wonderful service that the banking industry has offered. The new developments highlighted here are an indication of the possible opportunities that Ugandan businesses can benefit from. 3.12 Contribution of E-Commerce to Key Sectors 3.12.1 International Trade in Goods

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Residents of Uganda may order for goods on line and, upon payment, the goods are delivered at a warehouse or collecting centre. In order to streamline the payment system, the traders may operate a credit card system affiliated to banks abroad. The resident traders open up foreign bank accounts which issue credit cards to the account holders. The account holders transfer money by TT to their foreign bank accounts to keep their accounts in credit. The residents use their credit cards to effect payment on line for commodities purchased or services consumed. International Delivery of Services Residents can purchase or sell services on line. Examples of services that can be sold or purchased on line include telecommunication, education, health, information, insurance and news services. The system works as follows: a) Telecommunication This uses the services of other operators and providers of telecommunication services. The service providers and operators can have voice and data gateways for the provision of internet, server hosting and VOIP services. It would also require suppliers of computer and telecommunications equipment (that may be sold on hire purchase). It would also require repair and maintenance services. However, residents can also access communication services from internet cafes, electronic kiosks and data or call centres. b) Health Services Here patients in Uganda receive medical treatment on line from the doctors living abroad e.g. in the UK. An e- clinic or dispensary may be set up in an area which does not have access to professional doctors where paramedics are stationed and they physically attend to the patients. Diagnosis, prescriptions and other medical assessments are done on line by video conferencing. c) Education Tertiary institutions and other post secondary institutions can receive training for their students on line. Learning materials are prepared together with all training and testing materials are received online from a foreign trainer based in a foreign country. Teleconferencing can also be used to receive video instructions. The 49

student can do examinations and send back to the foreign tutor online. The marking can be done and the student receives the marks back on line, one can thus receive a certificate without ever having to travel abroad or without the tutor ever coming to Uganda.

d) Financial Services Ugandans can open and operate bank accounts without having to physically go to their bankers. A customer can receive bank statement transfer money or make deposits to the account on line. e) News and information services Ugandans can receive news and information on line through subscription to news and information service providers. This would particularly be helpful in serving remote areas where news papers cannot reach or where the news papers are too expensive for the residents The reality of e-commerce for Uganda is both a fact and a vision: fact in that international trade and business is moving in this direction and vision because Ugandas strategies in this new arena should match its aspirations for development. Uganda needs to understand, assess, assimilate and use this technology to its benefit, while protecting its basic interests, promoting and encouraging economic development and growth as well as guarding against the possible shortcomings. 3.12 E-Commerce and Services Delivery in Uganda The rapid development of telecommunications and information technology has given rise to a whole host of new services linked to this development and technology making services more widely and more quickly accessible. Services have acquired a new role in the application, adoption and transfer of technology while at same time, advances in technology particularly information and communication technologies have provided new conduits for trade in services.

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Ecommerce in services or electronically enabled services trade can be defied as the use of the internet and other electronic means in the purchase, delivery, supply and consumption of Services trade internationally. For purposes of electronic commerce, we can think of service sectors as falling into at least four non overlapping categories: (i) The service sectors which help in the development of the infrastructure for electronic commerce, notably telecommunications and computer and computer related services; (ii) The service sectors where the services can actually be delivered electronically, which include for example business, entertainment and financial services; (iii) (iv) The service sectors which are complementary to all commerce, including electronic commerce such as postal, courier and transport services; The service sectors which would benefit from electronic flows more generally, i.e., through lower search costs, faster data transmission, electronic processing of administrative forms etc. Examples of services that can be traded under e-commerce are outlined as follows:

E- Tourism Moving away from the traditional definition of a form of booking or scheduling or paying for vacations online (Anyumba,G 2000; Scottish Parliament, 2002) e-tourism can be defined, alternatively, as the use of new information communication technologies to provide on line access to holistic cultural resources and experiences and associated souvenir products or cultural artefacts. E-tourism provides countries and tourism related businesses and services providers the technical means to organize, promote and sell their own tourist attractions and local crafts online, starting with online reservation and followed by online ordering (and payment and delivery) of local craft products and tour packages.

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The level of IT use in the sector is very high with an indication that 84 percent of all tour and travel firms own both the Internet and e-mail facilities19. Ten percent own only e-mail facilities and 6 percent only Internet facilities with 74 percent using the Internet and 77 percent using e-mail heavily. Only 10 percent do not use the Internet and only 3 percent do not use e-mail. This high level of ownership and usage indicates some export preparedness among Ugandan tour and travel firms. Although internet facilities are used for hotels, tour and travel agencies, the use of e-commerce for export of cultural and wildlife tourism is limited. The internet offers an ideal platform for unique products and unique marketing strategies. For example video and sound recording systems and technologies can be used to capture (record) traditional music and video documentaries for sale via Internet to culture enthusiasts. The Uganda Wildlife Authority (UWA) can create virtual gorilla safaris that can be sold to the Internet to encourage foreign tourists to come and visit Ugandas eco-tourism sites.

E-Health (Tele-medicine) The globalization of health services is reflected in the growing cross-border delivery of health services, through movement of personnel and consumers (by electronic and other means), and in an increasing number of joint ventures and collaborative arrangements between hospitals and medical institutions around the world. Crossborder delivery of health services includes shipment of laboratory samples, diagnosis, and clinical consultation via traditional mail channels, as well as the electronic delivery of health services, such as diagnosis, second opinions, and consultations. There are basically two types of tele-medicine technology applications, the forwarding of digital images from one location to another for diagnosis purposes and video-conferencing used in real time consultation with a patient in one country and a medical specialist in another. Tele-diagnostic, surveillance and consultation services are provided by American hospitals to hospitals in Central America and the Eastern Mediterranean, and Indian
19

Communication Commission, 2000

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physicians provide tele-pathology services to hospitals in Bangladesh and Nepal. Tele-diagnosis services are also provided by hospitals in Chinas coastal provinces to patients in Macao, Taiwan, and some south-east Asian countries (UNCTAD 1997). In Uganda, there is only one tele-medicine centre installed by International Telecommunication Union (ITU) at Mulago Hospital. The facility is connected to only two links: Mengo and Nakaseke leaving the rest of the country with no connectivity. Acceleration of tele-medicine in Uganda would reduce on the number of patients flying abroad for specialist care and provide the local communities with more affordable specialist care. E-Learning (E- education) E-learning, is a field of education that focuses on the use of ICT technology and the internet to effectively deliver education to students who are not physically "on site" to receive their education. Instead, teachers and students may communicate asynchronously (at times of their own choosing) by exchanging printed or electronic media, or through technology that allows them to communicate in real time (synchronously). Examples include the following:

Correspondence conducted through regular mail Internet conducted either synchronously or asynchronously Tele-course/Broadcast where content is delivered via radio or television CD-ROM where the student interacts with computer content stored on a CDROM Pocket PC/Mobile Learning where the student accesses course content stored on a mobile device or through a wireless server

A growing percentage of students prefer doing their courses via the Internet or long distance means. Capacity for providing education through this Mode requires three elements. These are: having or access to an electronic library and study materials that students can access, adequate computing and Internet facilities, staff who are highly ICT literate and a strong tradition of research and publication among academic staff

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In many parts of the world, information technology holds promise for reaching populations that could not be served by traditional education institutions. In Uganda there are few institutions that have adequate financial resources to subscribe to international electronic libraries. Neither do they have electronic libraries of their own. While computing facilities are being developed, capacity is still at a relatively low level. Locally developed study materials and curriculum remain limited and not readily accessible electronically. However given the massive demand for Uganda education in the east African customs union and the COMESA region the provision of e-learning courses at major universities and tertiary institutions could tap into a wealth of opportunities for the export of Ugandas higher education. ICT and E-commerce Ugandas Networked Readiness Index (NRI)20 ranking has increased from 80 to 77 in 2004/2005 out of 104 countries, with a score of -0.63. This is an assessment of the state of networked (ICT) readiness measuring the degree of preparation of a nation to participate in and benefit from global ICT developments. Whereas the increase in index ranking is good, there is still a lot to be done to maintain global competitiveness for foreign direct investments (FDI) in ICTs for high volume services exports. It should be noted that a few local companies have been doing successful ICT-based export activities. The most notable such company is Crystal Clear Software. Crystal Clear Software Ltd23 have an in-house custom software product for Micro-Finance Institutions called Loan Performer which they export and support in over 30 countries in Africa. This software can even be purchased online from Crystal Clears website. Crystal Clear Software is Ugandas a very good role Model on ecommerce export trading and ICT entrepreneurship. E-finance The dynamics of e-finance in emerging economies, while not dissimilar, are clearly not identical to those of e-finance in the developed countries. It appears that e20

Global IT Report, World Economic Forum, 2004-2005

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finance in developing countries is driven by Internet banking, e-payments, and etrade finance. A narrow definition of e-finance is: financial services delivered online through Internet fixed and wireless networks to enterprises and where appropriate, the areas such as the offline use of electronic devices for payment transactions.21 The financial sector in Uganda has invested substantially in ICT applications, with banks expanding their network connectivity including ATMs and satellite linkages. An electronic payment system is still not in place to support authorization and clearance of credit and debit card payments a significant inhibitor of e-commerce. Creation of an E-Commerce Enabling Environment The ability of Ugandan firms to realize the e-commerce potential will depend largely on the creation of awareness of existing e-services export potential, proper mainstreaming of services and e-commerce into national export strategies, proactive cultivation of business opportunities linking various service sectors with the ICT industry and the creation of the right enabling environment which is an immense challenge on its own. The concept and requirements of an e-commerce enabling environment can be illustrated by taking a scenario of where Uganda would like to penetrate the services market of a more developed trade partner A. In such a case, the strategy and policy perspectives that Uganda can follow may be analysed at three levels:22 Business community level National level International level

Business community level It has been said that 80% of the of the growth in e commerce will stem from business to business transactions and as such it is important to create an enabling environment for businesses and more importantly to ensure that these SMEs are actually able to use e-commerce as a means of trade. Uganda would have to initiate strategies such as:
21 22

UNCTAD 2004 PADE 134 Electronic commerce issues for the South. South Centre 1999

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E-awareness campaigns publicizing the benefits of e-commerce Training and capacity building in IT and e-commerce both for businesses and through the formal institutions of learning. Private and public services need to be mobilized around basic IT training.

Marketing development and market identification skills for businesses. Developing E-Commerce readiness (solutions) for small businesses.

National level At the national level in promoting E-commerce, there must also be national policy strategies that provide an enabling environment for the engagement of e-commerce. These include: ICT Infrastructure Nationally, the government would have to put in place ICT infrastructure as well as the administrative framework for its management. ICT development is the starting point of the road to e-commerce success and the growth of e-commerce has been linked closely with the development and diffusion of new information technologies and of telecommunications infrastructure suitable for the reliable exchange of data at a reasonable cost, appropriate bandwidth and fully competitive access. The effective development of the ICT sector will spur growth, efficiency and productivity in the service industry throughout the country. Uganda must attract investment both local and FDI in ICT and related infrastructure such as ISPs, VOIPS, website server hosts, etc. Because the internet is an open communications system facing little technological constraint on its expansion, it creates a borderless environment for communications. Wherever the necessary communications hardware and software are in place, information can flow from one location to another along a seamless web, without regard for distance and jurisdiction. A conducive legal framework It will be necessary to have a conducive legal framework covering the use of digital signatures electronic contracts, liability and internet privacy. This will enhance and support the use of ecommerce and will lead to the growth of business to business, business to consumer and business to government e-service transactions as there will be a sense of legal confidence by investors, consumers and business owners

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alike. The absence of legal certainty has suppressed potential growth in e-business. It will also be necessary to harmonize laws regionally and internationally and to adopt best practices.

Efficient Transport and Delivery Systems The strategies will also require national transport and delivery systems for a fast and efficient air freight, express couriers, electronic customs clearance procedures, warehousing and distribution systems that are e-commerce friendly. Conducive Financial Services The development of any meaningful eCommerce activities cannot occur in an environment that does not enable customers to pay on-line. The financial sector must also be developed to enable electronic financial transactions, financial systems for E-payments, electronic banking and credit card access. International Level With the necessary domestic and national infrastructure and experience, Uganda will have the strength and expertise to engage in e-services trade internationally. At this level the major issues of concern would be compliance with international standards and technology issues and, more importantly, the trade rules and commitments under the GATS. Since Uganda is a small economy that cannot substantially influence standards and technology issues, it will benefit from the GATS as the latter plays a vital role in ensuring that the country actively participates in e-services trade. Internationally, trade in services is covered by the WTO under the GATS. It is important to note, however, that in order for an enabling environment to be conducive to the development of an e-business export sector, there must also be policy coherence not only at the WTO but also in the bilateral agreements and regional trading arrangements. In addition, the ability to successfully engage in

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electronic commerce is heavily dependant on several factors, but the most important of them are the physical infrastructure (telecommunication network), financial and legal framework, a business and trade environment conducive to e-commerce regimes, and specific scheduled commitments that promote cross border trade in services under the GATS. Preconditions for e-commerce development in Uganda are illustrated in Figure 3.

Figure 3: Illustration of Preconditions for E- Commerce Development in Uganda Potential Trade Flow Exports & Imports
UGANDA Wants to penetrate foreign Country A through E-Commerce

Trade in E-services

Country A Key Player in Electronic services trade

Development of e-commerce environment Legal and policy structure Financial environment Transportation & delivery systems Entrepreneurship & skills Socio-cultural aspects

ADVANTAGES Lower transaction costs Shorter supply chain Competitive access to

Already Developed E-commerce Enabling Environment Liberalised Mode 1 under GATS Strong ICT base & ecommerce sector

Development of E services Training and information dissemination on ICT use Market and services

CHALLENGES E commerce related Commitments and rules under the GATS E-services trade compatible Legal and

Development of ICT Infrastructure Cheap and readily accessible Telecom, bandwidth and Internet access Establishment of ISP server hosts VOIPS etc Foreign Direct Invest in telecom and ICT Infrastructure

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CHAPTER FOUR 4.0 THE GENNERAL AGREEMENT ON TRADE IN SERVICES (GATS) 4.1 Definition of GATS The General Agreement on Trade in Services (GATS) is a collection of legally binding multilateral rules designed to regulate international trade in services and gradually liberalise trade in services with a view to promoting the economic growth of all trading partners. It was brought into force on 1st January 1995 after a process of protracted multilateral trade negotiations that had their origins in the Uruguay Round that had started in 1987. It includes a general framework, eight sectoral annexes, schedules of specific commitments pledged by each member and lists of exemptions granted to the members under the most favoured nation (MFN) clause. The preamble to the Agreement establishes a link between economic growth and a strong services sector. Regulation and liberalisation under GATS are not ends in themselves, but are aimed at promoting the economic growth of all trading partners. 4.2 History and Nature of the GATS The General Agreement on Trade in Services (GATS) came into force on January 1, 1995, as part of the Final Act embodying the results of the Uruguay Round of multilateral trade negotiations. The Uruguay Round broadened the scope of multilateral trade negotiations to include services for the first time in the history of trade negotiations. This was due to pressure from the service sector lobby in developed countries to liberalize services trade and investment. The inclusion of services in the Uruguay Round negotiations also reflected the growing recognition among developed and developing countries of the service sectors important role in

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the global and national economies. A group on negotiations for Services, separate from the Group on Negotiations for Goods, was also established to carry out discussions on services. The aim was to establish a multilateral framework that would promote orderly and transparent trade and investment liberalization in services (Chanda, 2002). By the end of the Uruguay round in 1993 the member Governments had failed to agree on a package of market opening commitments. Extended negotiations in 1995 resulted in an interim agreement. The outcome of these negotiations was the General Agreement on Trade in Services (GATS) which came into force on January 1 1995 with a set of binding rules and disciplines to govern services trade. The agreement is the first multilateral effort to establish rules governing trade in services (including financial services) and to provide a framework for multilateral negotiations (Andlug and Roy, 2005). Because the very notion of including the services sector in a trade agreement was so controversial, GATS is structured as a bottom up agreement applying only to service sectors. Countries specifically agree to open up to competition with foreign services suppliers. 4.3 Services Covered by GATS Services covered by GATS include business services; computer and related services; research and development services; real estate services; communication services postal services; construction and related engineering services distribution services such as commission agents services; wholesale trade services; retailing services; franchising; educational services include; primary education services; secondary education services; higher education services; adult education; environmental services sewage services like; refuse disposal services; sanitation and similar services; financial services including; all insurance and insurance-related services; banking and other financial services; health related and social services hospital services such as; human health services social services; tourism and travel related services hotels and restaurants (incl. catering); travel agencies and tour operators services; tourist guides services; recreational, cultural and sporting services entertainment services; news agency services; libraries, archives, museums 60

and other cultural services; sporting and other recreational services;

transport

services maritime transport services; internal waterways services transport; air transport services; space transport; rail transport services; road transport services; pipeline transport; services auxiliary to all Modes of transport; transport services not included elsewhere23. However, the W/120 (which is the official document used by members in making schedules of specific commitments) divides the service sectors into twelve subsectors. These are: Business services Communication services Construction and related engineering services Distribution services Education services Environmental services Financial services Health related and social services Tourism and travel related services Recreational, cultural and sporting services Transport services Other services not included else where

4.4 GATS Modes of Supply One characteristic of the movement of services is that they can be supplied in different ways, which explains why the provisions of GATS cover the four Modes of supply defined by the Agreement as follows: Mode 1: Cross-border delivery of services, where the trade takes place from the territory of one WTO member into the territory of another (only the service crosses the border, e.g. e-mail)
23

Source: Uruguay Round Multilateral Trade Negotiations, Group of Negotiations on Services, Note by the Secretariat, Services Sectoral Classification List, MTN.GNS/W/120 (10 July 1991), attached to GATS Council-Committee on Specific Commitments, Note by the Secretariat, Draft Revision of the Guidelines for Scheduling Specific Commitments, S/CSC/W/30 (23 Mar. 2001) at pp. 34-40 [GATS Scheduling Guidelines], adopted by GATS Council, Decision of 23 March 2001 on the Guidelines for the Scheduling of Specific Commitments Under the GATS, S/L/91 (29 Mar. 2001).

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Mode 2:

Consumption abroad, where a service is consumed in the territory of one WTO member by a national of any other WTO member (e.g. tourism)

Mode 3:

Commercial presence, where a service supplier of one WTO member crosses the border to establish and provide a service in the territory of any other WTO member, i.e. establishment of a branch or whollyowned subsidiary (e.g. DHL, Standard Chartered Bank).

Mode 4:

Movement of natural persons, where a service supplier of one WTO member stays temporarily in the territory of another WTO member to supply a service (e.g. Ugandan kyeyos).

The Modes of supply are illustrated in Table 3. Table 3: The GATS Modes of Supply
Mode Mode 1 Cross-border Supply Supplier Presence Service supplier not present within the territory of the Member making the commitment to liberalize trade in a specific service within the territory. Same as Mode 1 Consumer Presence Service consumer delivered to of the Member making the commitment, from the territory of another Member. Example A Ugandan software developer with a physical presence in Uganda works for a client based in Canada.

Mode 2 Consumption Abroad

Service delivered to the consumer outside the territory of the Member making the commitment, in the territory of another Member. Service delivered to a consumer within the territory of the Member making the commitment, through the commercial presence of the supplier.

A Kenyan tourist coming and tracking gorillas in Uganda

Mode 3 Commercial Presence

Service supplier present within the territory of the Member making the commitment to liberalize trade in a specific service. Same as Mode 3.

A Ugandan software company opens a branch/affiliated company in Europe to cater for the European market.

Mode 4 Presence of Natural Persons

Service delivered to the consumer within the territory of the Member making the commitment, with supplier present as a natural person.

A Ugandan kyeyo worker in Kenya.

Source: Adapted from GATS Art. I: 2; GATS Scheduling Guidelines, S/CSC/W/30 at p. 9.

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Of all these Modes of supply, the ones most relevant to e-commerce are Modes 1 and 2 because of the increasing number of services that can trade electronically without having to establish a physical presence abroad. The GATS establishes binding rules covering the treatment of foreign services and service suppliers and government regulation of services. It includes two kinds of rules; Firstly, The General Obligations (such as MFN, Transparency) and apply to all service sectors. Secondly, The Specific Commitments (such as market access and national treatment) on selected service sectors made by members through negotiations and recorded in the national schedules and form an integral part of the GATS.24 The GATS' contribution to world services trade rests on two main pillars: (a) ensuring increased transparency and predictability of relevant rules and regulations, and (b) promoting progressive liberalization through successive rounds of negotiations. Within the framework of the Agreement, the latter concept is tantamount to improving market access and extending national treatment to foreign services and service suppliers across an increasing range of sectors. (Riddle 2003) The GATS applies to measures by Members affecting trade in services. This is any measure by a Member, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form25 and this includes measures taken by central, regional or local governments and authorities or non-governmental bodies exercising powers delegated by a government or authority 26 affecting means with regard to the purchase, payment or use of a service.27 4.5 Components of the GATS GATS is structured as a bottom up or positive list Agreement applying only to service sectors. Countries specifically agree to open up to competition with foreign services suppliers and it has four basic pillars:

24

GATS Scheduling Guidelines, S/CSC/W/30 at P.3 193 GATS Art. XXXVIII(a). 26 194 GATS Art. I:3(a). 27 195 GATS Art. XXVIII(c).
25

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A framework agreement which lays out the general rules and obligations for trade and investment in services; Sectoral annexes on specific service sectors (such as financial services, air transport services, maritime transport services and telecommunications services)

A schedule of specific commitments pledged by each WTO member and Lists of exemptions granted to the members under the most favoured nation (MFN) clause. Much as MFN treatment is a general obligation that applies to all measures affecting trade in services, it was agreed that particular measures inconsistent with the MFN obligation can be maintained in principle for not more than ten years and subject to review after not more than five years. Such measures must have been specified in a list of MFN Exemptions submitted by the end of the Uruguay Round of Multilateral Trade Negotiations or by the conclusion of extended negotiations on certain sectors for which the delayed submission of related exceptions was expressly authorized. Subsequently, requests for exemptions from Article II (MFN) can only be granted under the waiver procedures of the Marrakech Agreement. Uganda has not listed any Article II MFN Exemptions so far.

GATS Protocols There are additional agreements called protocols, that are attached to GATS. These deal with the results of subsequent negotiations and they include Second protocol28 which covers financial services (adopted 21 July 1995, entered into force 1 September 1996); Third protocol which covers movement of natural persons (adopted 21 July 1995, entered into force 30 January 1996); the Fourth protocol: basic telecommunications and the (adopted Fifth 30 April protocol: 1997, financial entered services into force 5 February 1998) (adopted

14 November 1997, entered into force 1 March 1999. The GATS components are summarized in Figure 2.

28

There is no First Protocol. The name was reserved for some least developed countries commitments, which were to take effect a few months after 1 January 1995, when the results of the 198694 Uruguay Round negotiations came into force. In the end, these delayed commitments were incorporated into the Uruguay Round agreement, and so there was no need for a separate protocol.

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Figure 2: Components of the GATS GATS

Framework of Rules
Contains General Obligations conducive to international trade in services including: Most Favoured Nation Treatment Transparency Increasing participation of developing countries Economic integration Domestic Regulation Recognition Monopolies & exclusive service suppliers Business practices Emergency safeguard measures Payments & Transfers Restrictions to safeguard the Balance of Payments Government Procurement General Exceptions Subsidies

National Schedules of Commitments

Submitted by each of the 133 signatory countries. Schedules contain commitments regarding restrictions and limitations to market access and National Treatment. Schedules typically comprise: Cross-industry commitments Industry-specific commitments with respect to 4 modes of supply Cross-border supply Consumption abroad Commercial presence Presence of natural persons

Annexes and Ministerial Decisions

Provide information regarding subsequent negotiations to temporary MFN exemptions: Annex on MFN exemptions Annex on movement of natural persons supplying services under the agreement Annex on air transport services Annex on financial services Second Annex on financial services Annex on negotiations on maritime transport services Annex on telecommunications Annex on negotiations on basic telecommunications Decision on Institutional Arrangements for the GATS Decision on Certain Dispute Settlement Procedures for the GATS Decision on Trade I Services and the Environment Decision on Negotiations on movement of natural persons Decision on financial services Decision on Negotiations on Maritime Transport services Decision on Basic Telecommunications Decision on Professional services Understanding on Commitments in Financial Services

Source: US ITC Investigation No. 332-399

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4.6 Services Schedule of Specific Commitments under the GATS Each WTO Member is required to have a Schedule of Specific Commitments which identifies the services for which the Member guarantees market access and national treatment and any limitations that may be attached. The Schedule may also be used to assume additional commitments regarding, for example, the implementation of specified standards or regulatory principles. Commitments are undertaken with respect to each of the four different Modes of service supply. Member States list specific commitments on service sectors and on activities within those sectors which they are willing to liberalise. A specific commitment in a services schedule is an undertaking to provide market access and national treatment for the service activity in question on the terms and conditions specified in the schedule. These commitments guarantee access to the countrys market in the listed sector, and they spell out any limitations on market access and national treatment. In a service sector where the member has not made any commitments or where a member expressly limits access, GATS will not apply because the scope of those obligations depends on the scope of the specific commitments made in the members Schedule. In circumstances where a Member finds itself committed in sectors it had not anticipated the interpretation to cover, that member has the liberty to withdraw or modify the commitments29 on conditions that the withdrawal or modification is negotiated and other members are compensated if there is loss. There are 3 types of specific commitments that can be negotiated in connection with GATS: a) Commitments on market access Nationals of third countries are granted the right to provide services on national territory. However, access to the market under GATS can still be limited. For instance, it is possible to impose quantitative limits for each country and to include them in GATS commitments schedules, with regard to, say, the number of service providers, the type of services that can be provided or the type of company or shareholding. Market access can vary depending on the Mode of service delivery. For example, a country may be very open to service providers in the construction sector with regard to the supply of services by foreign companies which have a local
29

GATS Article XXI:3-5

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subsidiary (Mode 3), but will not grant access to its construction market for individual service providers who come in temporarily to carry out construction work (Mode 4). Access to the market can also be limited 'horizontally', i.e. so that it applies to all sectors.

b) Commitments on National Treatment In addition to market access, most countries also generally grant national treatment in the same sectors, i.e. treatment equal to that which is granted to their own services or service providers. Here, too, specific limitations may be listed. c) Commitments on Domestic Regulations In those sectors where a country has made specific commitments, it will take steps to ensure that all of the rules (laws, regulations, administrative decisions, etc.) are administered in a reasonable, objective and impartial way. The provisions of GATS on domestic regulations are simply procedural rules and do not govern the content of rules. The GATS gives members the right to regulate services on their territory according to the objectives of national policy. 4.7 Analysis of Ugandas Schedule of Commitments for the Development of E-Commerce 4.7.1 Overview of Ugandas Schedule of Commitments In order to understand the potential of GATS in the development of Ecommerce in Uganda, it is necessary to look at Ugandas current commitments as scheduled under GATS. Ugandas schedule of services commitments under the GATS focuses on 2 basic services sectors Tourism and Travel Related services as well as Telecommunication. Specific commitments under GATS are relevant to the ongoing growth of global electronic commerce with regard to: The services involved in the infrastructure for electronic commerce (e.g. telecommunications and computer services). The online supply of services across borders via electronic networks.

67

The ability of businesses providing services involved in electronic commerce to establish themselves in foreign countries The temporary entry into foreign countries of providers of services involved in electronic commerce.

The value of such commitments is in providing and ensuring a secure and predictable basis for international trade in these services. It is generally accepted that the GATS Modes of supply of most relevance to the online delivery of services via electronic networks are Mode 1 (cross-border supply of services without the physical movement of the service supplier) and Mode 2 (consumption of services abroad). This means that the existing Mode 1 commitments listed on each WTO members GATS schedules would apply to the delivery of services via the internet. This would provide Foreign Service suppliers a transparent set of rules regarding the specific level of market access and national treatment to which any given WTO member has committed itself for the provision of Services. Therefore, a greater number of scheduled commitments under Mode 1 services would help provide the certainty needed to maintain a favorable environment for the development of E-Services. Tourism and Travel Related Services Uganda has scheduled commitments in only two of the tourism sub-sectors namely hotels and restaurants, travel agencies/tour operators. In both sub-sectors, Uganda has made full commitments listing none under market access and national treatment for Modes 1 and 2, i.e. market access or national treatment to Foreign Service providers with regards to cross border trade and consumption abroad. Foreign services providers and tour operators are therefore able to offer services electronically with no restrictions. With such commitments under this sector, ecommerce can be developed as there are no restrictions on especially Mode 1 and 2. This means that foreigners interested in Ugandas tourism sector can book, pay and basically transact business over the internet before they can travel to Uganda to consume the services. More so, it certain services like culture and art are provided

68

through an internet site accessible through payments, they can still access such services wherever they are without having to travel to Uganda. Since there are no limitations on market access through Mode 1 and 2, the provider of the above services can provide their hotel services to Ugandan through the internet or physically and tourists (service consumers) can freely come into Uganda and enjoy the tourism industry. Since Uganda is currently focussed on marketing herself abroad through Brand Uganda30 tourists can book through the internet for the service long before they come to Uganda. There will definitely be cheaper costs of international calling with the liberalization of the industry. For commercial presence, a foreign service provider is granted access to the Ugandan market upon government approval in accordance with the Investment Code Act Cap 92 Laws of Uganda, and the regulations under it. Uganda is not bound under Mode 4 except for technical personnel subject to the immigration laws. Uganda is bound to follow the National Treatment principle for Mode 1, 2 and 3 and only technical personnel for Mode 4.

Telecommunication Services The telecommunications sector is the backbone for all other sectors and accordingly has important economic, social and national security implications and it has a dual role as a distinct sector of economic activity and as the underlying transport means for other activities. Telecommunication is one of the sectors in which Uganda has committed itself31. This sector covers facilities based public-switched voice telecommunication services on fixed network infrastructure. Sub-sectors are listed under this sector and they are interpreted in the paragraphs that follow. Regarding e-commerce, Ugandas commitments are basic voice services, including over value-added networks such as Internet Private Voice network services to third parties, but excluding video and audio broadcast services. Limitation under crossborder supply is to the effect that international basic voice telephony traffic must be

30

Uganda looks at US for tourism growth BusinessinAfrica online- Mail& Guardian Posted Wed, 24 May 2006 . Found at; http://www.businessinafrica.net/news/east_africa/414776.htm last accessed on 7th June 2006. 31 Uganda Schedule of Specific Commitments

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carried through networks of the duopoly major licence holders32 and other preexisting licence holders33, according to the terms of those licences.34 to enjoy lower prices. Regarding market access, there is no limitation to the consumption abroad of those services (Mode 2). This implies that any foreigner can use these services while in Uganda without limitation. It also creates opportunities to attract foreign direct investment (FDI) when there is infrastructure in the form of an efficient communication sector. This mean that services like banking or architectural services transmitted via telecommunications or mail from WTO Member country into Uganda can only be allowed if they flow into the country without going through existing license holders. There is a limitation on Mode 3 (Commercial Presence), which means that a service supplier from one WTO Member can establish territorial presence, say through ownership or lease of premises, in Uganda to provide a service (e.g. domestic subsidiaries of foreign insurance companies or hotel chains). Duopoly exclusivity was granted only to Uganda Telecom Limited (UTL) and Second National Operator (SNO)35 and one other party subject to Uganda Government review after 200336. The review was successful and the duopoly privileges have since been lifted. The service provider company must now be registered in Uganda. Since1998, there have been new providers like MTN, raising the providers to 3. With the opening of this limitation, foreign companies can now come and invest. Increased competition is expected to promote efficiency. The movement of natural persons (Mode 4) is limited to technical personnel in cases where qualified Ugandans are not available or cannot become available. The entry
32

With the

current opening of cross border supply, Internet consumers in Uganda are expected

These duopoly providers have been in existence until May 2006. The Uganda Communications Commission, the body that regulates the nation's communications industry, officially rescinded MTN Uganda and Uganda Telecom's duopoly privilege on May 16 after mounting pressure from potential ICT investors and the media. The monitor 22may 2006 33 The pre-existing licence at the time of these commitments were; Ugandan Telecom Limited(UTL) and Second National Operator (SNO) 34 Ugandas revised schedule of Specific Commitments Supplement 1, GATS/SC/89/Suppl.1/Rev.1 29 November 1999, can be accessed from the WTO website. www.wto.org
35 36

"SNO" means the first public operator other than UTL issued with a major licence.

The review is done by the Uganda Communication Commission and more service providers are now eligible.

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and temporary stay of Foreign service suppliers is subject to compliance with laws, regulations and guidelines in force in Uganda37. This means that a foreign company or service provider is not allowed to bring its staff to work for it in Uganda unless they are technical staff and no Ugandans are available or can become available to give that service. Regarding national treatment commitments, there is no limitation for Mode 1, 2 and 3. This implies that Uganda is not allowed to operate discriminatory measures benefiting domestic services or service suppliers as compared to the treatment it gives to foreign service providers. Uganda is expected not to modify, in law or in fact, the conditions of competition in favour of her domestic or own service industry. For Mode 4 (movement of natural persons), it is not bound to treat them like Ugandans except for the technical personnel stipulated under market access. Another sector in which Uganda has made commitment is the mobile cellular voice and data38. For crossborder supply of mobile cellular voice and data, roaming is allowed but cross-border access permitted only via network of duopoly major licence operators.39 There is no market access limitation on consumption abroad of the service. Market access is limited for commercial presence in that at the time of commitment in 1999 there were already 2 operators existing. It was committed that up to 2003 a maximum of 3 (3) operators would have cellular mobile licences as a service.40 The third operator was to be UTL which is now in operation with cellular services. For a company providing cellular services to have market access under the Schedule, it must be registered in Uganda. This means that since there are already 3 cellular operators there is no market access for another operator in Uganda. Just like the case of basic voice services, Uganda is not bound under Mode 4 in respect of technical personnel in the absence of Ugandans to do the same. As far as national treatment is concerned Uganda is bound for Mode 1, 2 &3. Under Mode 4, the commitment is extended to the technical personnel. This liberalization is going to give room to companies like Vodafone to also enter the market with less expensive services.

37 38

They have to follow regulations relating to foreigners acquiring work permits. Ugandas Schedule of Specific Commitment page 4 39 Duopoly licence holding is no longer in existence by virtue of rescinding the privilege by UCC in May 2006. 40 ibid

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For Data services TCP/IP (Internet)41, market access is available for cross-border supply now since the limitation of international voice over Internet, not permitted during the five-year exclusivity period of the duopoly major licence holders has ended. There is no limitation on consumption abroad and commercial presence; only that the latter requires companies to be registered in Uganda. Market access limitation on Mode 4 is the same as for the above sub-sectors. Uganda is bound under national treatment for Modes 1, 2 &3. National treatment limitations are in respect of technical personnel as far as Mode 4 is concerned. Global mobile personal communications by satellite operations services are also listed under the Communications sector. Market access for cross-border supply is only permitted only under agreement with one or both of the duopoly operators as well as arrangements under GMPCS-MoU42, to which Uganda is a signatory. Under the MoU, signatories have an arrangement of cooperation through the sharing of information. Modes 2, 3, and 4 are similar as for internet service providers. There are no national treatment limitations except for Mode 4 under which limitations exist (other than for technical personnel). Another area in which Uganda is committed is Paging services. Market access

limitation was originally in respect to Mode 1 and was permitted only via networks of duopoly major43 licence operators. This meant that a foreign service provider could only provide paging services in Uganda through duopoly major licence operators. The restrictive duopolistic arrangement has been lifted which is a significant milestone in the development of Uganda's telecommunications sector, which would also mark the start of possible innovative and entrepreneurial activities that will yield greater efficiency in communication services, more employment, more incomes, spread of ICTs and a plethora of other benefits.44
41 42

Uganda is now open to other

service providers with very good sources of low cost telecom solutions. This will
Ibid Global Mobile Personal Communications By Satellite (GMPCS). The GMPCS-MoU is a cooperative framework signed by Member States, GMPCS System Operators, GMPCS Terminal Manufacturers and Service Providers. The objective of the cooperation is to allow GMPCS subscribers to take their terminals anywhere and, more importantly, to use them in countries where they are licensed. The final text of the GMPCS-MoU was adopted on 18 February 1997. It was signed by Uganda on 20th July 998. 43 The Uganda Communications Act of 1997 Section 2 defines major licence with reference to radio communications and telecommunications to include a licence for the provision of local, long distance or international telephone services, trunk capacity resale, rural telecommunications, store and forwarding messaging, cellular or mobile services.

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result in innovative communications technology being transferred into the country by all sorts of IT investors. There is no limitation in respect to Mode 3 and Mode 2. This means that it is simple for local ICT companies to now manage their own VSAT (Very Small Aperture Terminal) links where they can transmit data directly.45 It also means that a service provider can come in Uganda and establish a paging service business without hindrance if all domestic investment regulations are followed. In respect to National Treatment, there is no limitation for Mode 1, 2 & 3 and Uganda is not bound on Mode 4. Foreign suppliers can provide paging services without going through the major duopoly licence holders. International basic voice telephony traffic, except cross-border access alternative for is allowed but cross-border access for roaming and paging services must be carried out through the networks of the duopoly major licence holders and other pre-existing licence holders, according to the terms of those licences. Global mobile, personal communications by satellite operations are permitted only with agreement with one or more duopoly operators as well as arrangements under GMPCS-MoU, to which Uganda is a signatory. Similarly Data services TCP/IP (Internet) were scheduled as having no market access limitations (None) except international voice over Internet, which is not, permitted during the five year exclusivity period of the duopoly major licence holders. The same services when traded under Mode 2, consumption abroad generally face no market access and national treatment restrictions. Modes 3 and 4 are more restrictive. Additional commitment is made in the interpretation of "Major licence" and "Minor licence." These are as by the definitions given by the Uganda Communications Act 1997.46 These ceased to exist on 16th May 2006.47 The reference paper contains definitions and principles on the regulatory framework for the basic telecommunications services. Among the issues, Uganda has the liberty to

safeguard against anti-competitive practices in the communication industry

44

Elias Biryabarema Uganda: End of Telecom Duopoly to Cut Costs, Boost Quality The Monitor May 22nd 2006, 45 This is because the International Data Gateways, which have also been freed up, will permit Uganda to enjoy a foothold on the telecommunications outsourcing prize 46 Major licence includes a licence for the provision of local, long distance or international telephone services, trunk capacity resale telecommunications, store and forward messaging, cellular or mobile services and; minor licence includes all other licences not being major licences. 47 N 46 above

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including: engaging in anti-competitive cross-subsidization; using information obtained from competitors with anti-competitive results; and not making available to other services suppliers on a timely basis technical information about essential facilities and commercially relevant information which are necessary for them to provide services.48 Commitments. With the end of the duopoly in 2006, and thus the opening up of the telecommunication service industry, it is expected that as more providers come into the market, the costs on telecommunications will decline and internet use will increase. This is likely to improve the environment for e-commerce as telecommunications is one of the service sectors essential for the development to ecommerce. According to Ugandas schedule of specific commitments, Uganda has not made specific commitments in any of the sectors with potential in electronic commerce such as financial services, education services and Health services that can be traded and provided electronically. And there is need to further liberalise these services if Uganda is to benefit from global e-commerce. However, it is important to note that the danger of jeopardising a domestic economy through unplanned liberalisation is real. Therefore Uganda needs to understand that the nitty-gritty of liberalising Ecommerce services requires critical analysis for each individual sectors in which it is applied as well as a good legal and regulatory framework. Table 4 shows Ugandas revised Schedule of Specific

48

Reference Paper to Ugandas Schedule of Commitment under the Agreement of Telecommunication under GATS. Adherence to the reference paper is an additional commitment to which Uganda is bound under the Schedule. The Schedule of Commitment and the Reference paper can be accessed on the World Trade Website: www.wto.org.

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Table 4: Uganda Revised Schedule of Specific Commitments in Basic Telecommunications

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons Sector or sub sector Limitations on Market Access Limitations on Additional National Commitments Treatment 2. Communication Services 2.C. Telecommunications Telecommunications Services* Facilities based publicswitched voice telecommunication services on fixed network infrastructure: (a) Basic voice services, including over value-added networks such as Internet Uganda undertakes the obligations contained in the reference paper attached hereto. (1) International basic voice (1) None telephony traffic must be carried through networks of the duopoly major licence holders and other preexisting licence holders, according to the terms of those licences. The interpretation of "Major licence" and "Minor licence" are as by the definitions given by the Uganda Communications Act 1997.50

(b) Private voice network services to third parties

(2) None (2) None (3) SNO inaugurated service 21 October 1998. Thereafter, Uganda Telecom Limited (UTL) and Second National Operator (SNO)49 duopoly exclusivity, subject to Uganda Government review after 2003. Neither UTL nor its affiliates shall hold interests in the SNO or its affiliates nor shall SNO or its affiliates hold ownership in the UTL or its affiliates. Company must be registered in Uganda. (3) None

49

"SNO" means the first public operator other than UTL issued with a major licence.

50

Major licence includes a licence for the provision of local, long distance or international telephone services, trunk capacity resale rural telecommunications, store and forward messaging, cellular or mobile services; and minor licence includes all other licences not being major licences.

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Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons Sector or sub sector Limitations on Market Access Limitations on Additional National Commitments Treatment (4) Unbound except for technical (4)Unbound personnel unless Ugandans are or except for become available. Entry and technical temporary stay of foreign service personnel suppliers subject to compliance with stipulated under laws, regulations and guidelines in Market access force in Uganda. Unbound except for technical personnel stipulated under market access. Private voice & data for 1) None except cross-border access 1)None closed user groups (group of alternative for voice should be people with stable common through the duopoly major license and long term economic holders interest) 2) None 2) None 3) Resale of excess capacity not 3) None allowed 4) Unbound except for technical (4)Unbound personnel unless Ugandans are or except for become available. Entry and technical temporary stay of foreign service personnel suppliers subject to compliance with stipulated under laws, regulations and guidelines in Market access force in Uganda. o) Other Mobile cellular voice and 1) Roaming is allowed but cross1) None data border access permitted only via network of duopoly major license operator 2) None 2) None 3) Two operators existing up to 2003 a maximum of 3 (three) operators to have cellular mobile licenses as a service. The third operator will be UTL. Company must be registered in Uganda 4) Unbound except for technical 4)Unbound personnel unless Ugandans are or except for become available. Entry and technical temporary stay of foreign service personnel suppliers subject to compliance with stipulated under laws, regulations and guidelines in Market access force in Uganda. - Data Services TCP/IP 1) None, except international voice (Internet) over internet, not permitted during the five-year exclusivity period of the duopoly major license holders. 2) None 2) None 3) Company must be registered in 3) None Uganda in Uganda

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Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons Sector or sub sector Limitations on Market Access Limitations on Additional National Commitments Treatment 4) Unbound except for technical 4) Unbound personnel unless Ugandans are or except for become available. Entry and technical temporary stay of foreign service personnel suppliers subject to compliance with stipulated under laws, regulations and guidelines in Market access force in Uganda. -Paging Services 1) Cross-border permitted only via 1) None networks of duopoly major license operator 2) None 2) None 3) None 3) None 4) Unbound except for technical personnel stipulated under Market access 1) Cross-border permitted only via networks of duopoly major license operator 2) None 3) Company must be registered in Uganda 4) Unbound except for technical personnel unless Ugandans are or become available. Entry and temporary stay of foreign service suppliers subject to compliance with laws, regulations and guidelines in force in Uganda. 1) Permitted only with agreement with one or more duopoly operators as well as arrangements under GMPCS MoU to which Uganda is a signatory 2) None 3) Company must be registered in Uganda 4) Unbound except for technical personnel unless Ugandans are or become available. Entry and temporary stay of foreign service suppliers subject to compliance with laws, regulations and guidelines in force in Uganda. 9. Tourism and Travel related services A. Hotels and Restaurants 4) Unbound 1) None

-Private mobile radio - Trunked mobile radio

2) None 3) None 4) Unbound except for technical personnel stipulated under Market access

Global mobile personal communications by satellite operations

2) None 3) None 4) Unbound except for technical personnel stipulated under Market access

1) None 2) None 3) Government approval required through Investment Authority

1) None 2) None 3) None

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Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons Sector or sub sector Limitations on Market Access Limitations on Additional National Commitments Treatment 4) Unbound except for technical 4) Unbound personnel unless Ugandans are or except for become available. Entry and technical temporary stay of foreign service personnel suppliers subject to compliance with stipulated under laws, regulations and guidelines in Market access force in Uganda. B. Travel Agencies/Tour 1) None 1) None Operators 2) None 2) None 3) Government approval required through Investment Authority 4) Unbound except for technical personnel unless Ugandans are or become available. Entry and temporary stay of foreign service suppliers subject to compliance with laws, regulations and guidelines in force in Uganda. *Excludes video and audio broadcast services 3) None 4) Unbound except for technical personnel stipulated under Market access

Note: The numbers in parentheses in columns 2 and 3 refer to the Mode of delivery, (e.g., (1) is Mode 1, cross-border Mode of supply). The word none appearing in column 2 or 3 indicates that the Member is imposing no limitations on market access or national treatment, as the case may be, for the corresponding Mode of supply. The word unbound indicates that the Member is not committing to provide market access or national treatment, as the case may be, for that Mode of supply. For bound sectors, Members may not maintain measures that are inconsistent with Articles XVI or XVII and for which no limitation is inscribed in the Members schedule. For unbound sectors, Members are free to maintain measures that are inconsistent with Articles XVI and XVII provided that the measures otherwise conform to the general obligations and disciplines set forth in Part II of the GATS framework agreement. This methodology for scheduling services commitments, shown in the above table, is referred to as a bottom up or positive list approach because WTO Members must actively list sectors for them to be subject to market access or national treatment commitments.

It is, therefore, clear that Ugandas schedule is not exhaustive to ensure the growth and development of e-commerce in Uganda. However it is important to note that most of the services though not committed or bound under the WTO GATS schedule, they have been subject to autonomous liberalisation under the IMF/World Bank policies and some of the domestic laws and regulations do reflect movement towards a more liberalised services sector.

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4.8 Inadequacies and Limitations of Existing GATS Commitments (Mode 1) A close analysis of Ugandas schedule of specific commitments illustrates the fact that under tourism and travel-related services, Uganda scheduled none for Mode 1 under both national treatment and market access. Under the telecommunications sector, until May 2006, there were some restrictions under mode 1 to the effect that international telephony traffic must be carried through networks of the duopoly major license holders (Uganda Telecom and MTN) and other pre-existing license holders (CELTEL) according to the terms of those licenses. However, with the removal of these restrictions, it is hoped that there will be more service providers and this will spur the growth and development of ecommerce. liberalized and there is need to look especially No other service sectors are at those that can be traded Services

electronically, say education, health and others covered in Ugandas liberalize them to further the development of e-commerce in Uganda.

Export Strategy and further develop them to match foreign competition and then

With regard to other WTO members, numerous studies have examined in detail the level of commitments for cross-border supply of services51. In general, it is observed that the commitments under mode 1 are much less in-depth than the commitments under Mode 3. Though most Mode 1 entries were left unbound due to lack of technical feasibility in the Uruguay Round, due to advances in technology they are now fully tradable in electronic form and should be reflected in the schedules of specific commitments especially in the developed countries but not LDCs like Uganda. Highly regulated domestic services prone to strict regulatory precaution by governments such as in financial, health, education and professional services are less inclined to be fully open up to foreign service providers.

An examination of the structure of Mode 1 commitments for all Members for a large set of service activities reveals that there is much scope for improving existing GATS Mode 1 commitments as a means of enhancing electronic trade in services. In
51

See S/C/W/99, March 3, 1999, Background Note by the Secretariat, Bacchetta, Low, Mattoo Et Al (1998), Karsenty (2000), Mattoo & Schuknecht (2001), P. 52 Ff, OECD (2000) And Wunsch & Hauser (2002), P. 119-121.

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general the commitment level across WTO Members and service sectors is quite heterogeneous. Only a few service sectors are committed by at least two-thirds of WTO Members. For example, in 2000 only few service sectors particularly amenable to electronic transactions (other business services, professional services, financial services) had commitments by significantly more than half of the WTO membership. Except for some business services (e.g. advertising and management consulting services), the GATS Mode 1 commitments on these three rather liberal service sectors are often only partial commitments. In some sectors, nearly two-thirds of the commitments guarantee full market access (e.g. news agency services) whereas in others, like voice telephone services, most commitments are of a partial nature. Lack of mode 1 commitments also applies to the most liberal sectors like business and computer services that (due to their generally low level or regulation) are known to be relatively well-covered by GATS commitments. In Accounting, auditing and book keeping and Data processing, for example, only 67 and 66 Members, respectively, have made commitments. In accounting, the majority of the 67 Members enter some limitations to free market access and national treatment, while in data processing only around two-thirds of these commitments guarantee unrestricted market access. In other sectors that can be subject to electronic transactions (audiovisual, education, health, education, recreation, etc.) the number of commitments is even more limited. Audiovisual services have received only 19 whereas adult education has received 31 commitments. The scheduled limitations to the cross-border supply do not vary much across sectors and are few enough to be enumerated. Specifically, nationality, residency, commercial presence, authorization, licensing and local authentication requirements constitute the majority of cross-border service trade barriers. These limitations aim to heavily restrict, if not outright prohibit, the crossborder supply of services. Few quantitative market access limitations have been entered but a significant amount of national treatment limitations exist on crossborder supply. Looking at BPO services that developing countries are supplying, the picture is hardly more positive. The lack of a proper classification scheme that would allow GATS Members to schedule comprehensive commitments on BPO services is only 80

part of the story. Whereas for instance, the most liberal GATS schedules almost always include full commitments on data processing, they offer surprisingly little in some of the categories that are likely to be the most important ones to guarantee full market access for BPO and support services (Supply services of office support personnel, Telephone answering services, other business services. Matoo and Wunchs 2002). 4.9 Correlation between GATS and E-Commerce E-commerce is catered for under the general obligations under GATS. It is part and parcel of some of the services covered by the GATS. In Ugandas case, the Agreement on Basic Telecommunication is the most relevant as far as e-commerce is concerned. The WTO Agreement on Basic Telecommunication is an annex to the Fourth Protocol of the General Agreement on Trade and Services (GATS), which was implemented on February 5, 1998 (www.wto.org). It improves market access for telecommunications equipment suppliers, vendors and service providers by ensuring that all service suppliers seeking to take advantage of scheduled commitments have reasonable and non-discriminatory access to and the use of public basic telecommunications networks and services. Services covered by this agreement include voice telephony, data transmission, telex, telegraph, facsimile, private leased circuit services (i.e. the sale or lease of transmission capacity), fixed and mobile satellite systems and services, cellular telephony, mobile data services, paging and personal communications systems. Value-added services were not covered in this agreement, but they have since been included in more recent telecommunications services negotiations. The discussion of the relationship between GATS and e-commerce will remain open since any approach to a common understanding will be subject to further development of e-commerce in the physical and cyber marketplace. The issues of concern in e-commerce under GATS include:

Clarification of Modes of delivery for electronic supply; Relationship between the electronic supply of services and the GATS specific commitments based on technological neutrality; 81

Applicability of GATS provisions to electronic supply of services, including general obligations (MFN, transparency, domestic regulation, competition, payments and transfer, etc.) and specific commitments (market access, national treatment or additional commitments);

Electronic supply as cross-border or for consumption abroad; Classification and scheduling of newly emerging electronic services; Telecommunications commitments and the Internet access; Classification and equivalence between goods (GATT) and services in electronic supply; domestic regulations (http://userpage.fuberlin.de/~jmueller/its/conf/berlin04/Papers/Choi_Ghernaouti-Helie.pdf). likeness in MFN and national treatment principles; (Article VI of GATS) affecting e-commerce

Specific commitments (bindings) under GATS are relevant to the ongoing growth of global electronic commerce with regard to: The services involved in the infrastructure for electronic commerce (e.g. telecommunications and computer services). The online supply of services across borders via electronic networks. The ability of businesses providing services involved in electronic commerce to establish themselves in foreign countries The temporary entry into foreign countries of providers of services involved in electronic commerce. The value of such bindings is in providing and ensuring a secure and predictable basis for international trade in these services. It is generally accepted that the GATS Modes of supply of most relevance to the online delivery of services via electronic networks are Mode 1 (cross-border supply of services without the physical movement of the service supplier) and Mode 2 (consumption of services abroad). This means that the existing Mode 1 commitments listed on Ugandas GATS schedule would apply to the delivery of services via the internet. This would provide foreign service suppliers a transparent set of rules regarding the specific level of

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market access and national treatment to which any given WTO member has committed itself for the provision of e-services.

CHAPTER FIVE 5.0 LEGAL ASPECTS 83

5.1 Key Legal Issues under GATS Under the WTO Work Programme on e-commerce, the GATS Council concluded that services could be supplied electronically under any of the four modes of supply. An issue arose, however, to the effect that it would be difficult to determine whether a service supplier was providing a service on a cross boarder basis to a consumer located within the country making the specific commitment or on a consumption abroad basis to a customer located outside the country making the specific commitment.52 The classification under modes 1 or 2 may have far reaching legal implications. For example, which national legal system is applicable to the electronic delivery of services-the country where the supplier is located or where the consumer is located? There were some discussions to the effect that GATS does not address jurisdiction but no substantive agreement was reached.53 Another legal issue is the meaning of likeness under GATS. The general MFN obligation and specific National Treatment commitments apply only to the extent that a foreign service or service supplier is like a domestic service or service supplier. Questions regarding the meaning of likeness under the GATS exist and yet the GATS does not provide guidance on when services may be considered like services and this issue also remains untested by the WTO Dispute Settlement. Therefore, the task of bringing more legal certainty to the concept of likeness under GATS still stands and would be important for the development of e-commerce as well. With regard to domestic regulation, the GATS Council was of the general view that provisions concerning domestic regulation in Article VI of the GATS apply to the supply of services through electronic means. The purpose of GATS Article VI is to recognise the right of WTO members to regulate services while at the same time ensuring that such regulations do not constitute an unnecessary barrier to trade. The main issue was to ensure that domestic regulatory measures do not constitute necessary barriers to trade. However, what legally constitutes an unnecessary
52 53

GATS Council E-Commerce Report, S/L/74 at Para 5 General Council, Second Dedicated Discussion on E-commerce under the auspices of the General Council on May 6, 2002, WT/GC/W/475 (20 June 2002) at section 5

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barrier to trade is not clearly defined by GATS and neither has it been tested by the Dispute Settlement Body of the WTO. 5.2 Legal Concerns for Ugandas Service Sector under GATS At the national level, e-commerce raises a number of legal issues and uncertainties concerning validity, legal effect and enforceability of electronic transactions in a legal environment based on paper such as that of Uganda. The existing requirements for the use of written documents, contracts or manual signatures for trade transactions are major obstacles to the development of ecommerce in Uganda as well as issues such as data protection, taxation, customs duties, security and authentication, intellectual property rights, liability of internet service providers, illegal and harmful content, internet governance, electronic payment systems, consumer protection, jurisdiction, applicable law and dispute resolution mechanisms.54 There is need to adapt the existing laws and regulations to accommodate electronic commerce in order to increase legal certainty for both businesses and consumers in electronic commerce before any further liberalisation of services under GATS. Issues to be addressed include: i) Requirement for written, signed and original paper documents in most of the commercial laws in Uganda such as law of contract, sale of goods, business transactions, insurance, etc. Most of these laws require to be concluded and evidenced in writing for validity of contract and enforceability in the event of litigation as well as the requirement for a manual signature for authentication. All these play a role in issues of admissibility and evidential weight in judicial and administrative proceedings. The United Nations Commission on International Trade Law (UNCTRAL) Model Law on Electronic Commerce, adopted in 1996, aims at providing national legislators with a set of legal principles and guidelines for removing some of the above uncertainties. Uganda can take advantage of that. ii) The implementation of trademark, copyright and patent protection in an electronic environment is yet another challenge for Uganda whose intellectual Property Laws are outdated as they have been there since colonial times until recently when they
54

UNCTAD Report, Legal Dimensions of electronic commerce, TD/B/COM.3/EM.8/2 of May 1999.

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have been a subject of reform by the Law Reform Commission. Legal issues include the protection of intellectual Property owners, allocation of domain names, and dispute resolution of disputes arising out of electronic commerce. The World Intellectual Property Organisation (WIPO) adopted the WIPO Copyright Treaty and the Performances and Phonograms Treaty in 1996 in a bid to deal with some of the issues raised by ecommerce by updating the legal principles underpinning international protection of Intellectual Property rights (IPRs). These treaties also clarify what national laws should look out for such as preventing unauthorised access to and use of creative works of IPR owners which may be accessed and downloaded anywhere in the world. iii) Issues of consumer protection are also important to address in the development of e-commerce. Electronic commerce in Uganda may not reach its full potential if consumers are not assured that online environment is a safe and predictable place for them to do business. Legal issues include rights such as consumer confidence and consumer protection rules from unfair or deceptive acts and practices between buyers and sellers in an ecommerce environment. While some of these issues may not be new in character, Uganda does not have a comprehensive law on consumer protection and the increase in the volume of e-commerce transactions with foreign firms will only make matters worse. In this respect, Uganda needs to analyse and use as models, consumer protection laws of other countries that can be modified to suit its circumstances like South Africa or the Guidelines on e-commerce and consumer protection developed by the OECD.

Analysis of Laws and Regulations for the Development of E-commerce in Uganda 5.3.1 Law on Financial Services

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The guiding law on the control and regulation of the financial services sector is the Bank of Uganda Act, Cap. 51. Under Section 4(2) (i) and (j) of the Act, it provided that the Bank of Uganda shall, inter alia: be the clearing house for cheques and other financial instruments for financial institutions. supervise, regulate, control and discipline all financial institutions, insurance companies and pension funds institutions. The function of a clearing house is clearly spelt out under Sections 36 and 37 of the Act. The import of these provisions on the electronic delivery of services is that: All electronic cards as financial instruments have to be cleared through Bank of Uganda. The issuers of such cards are subject to the supervision, control and discipline of Bank of Uganda. The issuers of such cards are subject to the supervision, control and discipline of Bank of Uganda. If this were to happen then the issuing institution of the financial instruments would have to be resident in Uganda and with licenses issued by Bank of Uganda. To appreciate this, we have to examine the Financial Institutions Act, 2004. Under Section 3 of the Act, Financial Institution business is defined as the business of: engaging and administering means of payment, including credit cards, travellers cheques and bankers drafts; providing money transmission services; creating and administration of electronic units of payment in computer networks. In the same vein, the Act defines Foreign Exchange business as: Any facility offered, business undertaken or transaction executed with any person involving a foreign currency inclusive of any account facility, credit extension, lending, issue of guarantee, counter-guarantee, purchase or sale by means of cash, cheque, draft, transfer or any other instrument denominated in a foreign currency.

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From the above definitions, it is clear that the delivery of electronic financial services is either financial institution business or foreign exchange business which, according to Section 4 requires the operator to obtain a licence issued under the Financial Institutions Act. Additionally under Part V, Section 44(1)-(5) of the Financial Institutions Act on prohibition and restriction, it is clearly forbidden to offer such services in the category of electronic financial services. The financial instruments that underpin the electronic financial services are, inter alia, stored value cards as defined under Section 44(6) as: In this section stored value card means a card for which a person pays in advance a sum of money to the issuer in exchange for an undertaking by the issuer that on production of the card to the issuer or a third party (whether or not some other action is required), the issuer or the third party, as the case may be, will supply goods or services or both goods and services; and for the purpose of this section card includes any token, coupon, stamp, form, booklet, other document or thing. The provisions of the Bank of Uganda Act and the Financial Institutions Act have to be read together with the Foreign Exchange Act. In its long title, it is provided that the Act is meant to, inter alia, provide for the making of international payments and transfers of foreign exchange. With the above provision in place, Uganda cannot make commitments under the GATS for the liberalization of financial services. The law has to be amended first so that restriction on: commercial presence forex transfer clearing of financial instruments

are lifted to enable foreign suppliers deliver financial services in Uganda.

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Under Section 5, it is an offence to engage in the business of dealing in foreign exchange without a licence issued under the Act. The same prohibition is set out as a restriction under Section 9 as hereunder: 1) Except with the prior permission of the Bank of Uganda, no person shall engage in foreign exchange business. 2) All payments in foreign currency, to or from Uganda, between residents and non residents, or between non residents, shall be made through a bank. 3) Every transfer of foreign exchange to or from Uganda shall be through a person licensed to carry out the business of money transfers. 4) Where the Bank of Uganda has reason to believe that an offences is about to be or has been committed, the Bank of Uganda may require a bank to obtain the permission of the Bank of Ugandan before executing any payment referred to in subsection (2), and the permission shall be granted solely on the basis of a determination by the Bank of Uganda that the payment is consistent with the laws of Uganda. The net effect of all the above provisions is that the electronic trade in financial services is restricted. 5.3.2 Regulation of Education Services As already noted, a regulatory framework is needed to deal with the diversity of providers and new cross-border delivery modes, and becomes more urgent as international trade increases. In some countries, this may mean a broader approach to policy which involves licensing, regulating and monitoring both private (profit and non-profit) and foreign providers to ensure that national policy objectives are met and public interests protected. It may also involve a shift in government and public thinking- while higher education remains a public good, both public and private providers can fulfill this public function. This in turn may introduce greater competition among providers and general confusion for the consumer. Hence a coherent and comprehensive regulatory framework is called for- to serve national interests and protect the interests of different stakeholders, especially students.

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The current business licensing system imposes high costs on the private education service providers. It is important for Government to implement measures to improve and simplify the business registration process. Like it takes 36 days involving 17 procedures to start up a business in Uganda which needs to be drastically reduced Before one can establish a secondary school, nursery, private primary, private senior secondary or commercial secretarial school and college, one has to first obtain a trading license for the same.55 commercial presence include: Under this mode the major barriers against limit on direct investment by education providers

(equity ceilings)56, nationality requirements57, restrictions on recruitment of foreign teachers, government monopolies, high subsidization of local institutions, difficulty in obtaining authorization to establish facilities, economic needs test on suppliers of these services, prohibition of higher education58, adult education and training services offered by foreign entities 5.3.3 Regulation of Distribution Services Law in Uganda on distribution services requires: (A) Commercial presence of the supplier as a precondition for engaging in business. (Refer: a) Business Names Registration Act, Cap. 109 See Sections 1, 2, 3, 4 and 12. b) The Companies Act, Cap. 110 See Sections 1, 2, 107, 109, 121, 201, 202 and 370. c) The Auctioneers Act Cap. 270 (B) Licensing before you a supplier can engage in any distribution service. (Refer: d) Trading (Licensing) Act See Sections 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 20, 26, 31 and 32. e) The Markets Act, Cap. 94 and Regulations See section 1.
55 56 57

Section 8 Trade (Licensing) Act Cap 101 One has to satisfy the requirements of the Investment Code Act

Uganda Citizenship and Immigration Control Act, Cap. 66 requires a foreign national to acquire a work permit for him or her to be able to work in Uganda.
58

Public Universities and Other Tertiary Institutions Act .

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f) The Shopping Hours Act, Cap. 99, Section 1. g) The Tourist Agents (Licensing) Act, Cap. 100. h) The Auctioneers Act, Cap 270) (C) Restrictions on foreigners doing business in Uganda: i) See Section 59 of Uganda Citizenship & Immigration Control Act, Cap. 66. Also Schedule 4 Class of entry permits. Also Regulation 25 of SI No. 16/2004 Uganda Citizenship & Immigration Control Regulations, 2004. See Section 5 of the Trade (Licensing) Act, Cap. 101. j) Investment Code Act, Cap. 92 See Sections 1, 9, 10, 11, 12, 13, 14, 18, 21, 22, 23, 24, 25 and 29. Note should also be taken of, especially, the definition of Foreign Investor in Section 9. Also specific note should be taken of S. 10(5) - Foreign Investor who intends to engage in trade only to incorporate a company in Uganda and deposit USD 100,000. (See Role of Bank of Uganda on forex remittance and also note the requirement for entry permit. It also requires applying for trade licence). In light of the above laws, delivery of electronic distribution services is apparently prohibited in Uganda. 5.3 Legal Framework for E-Commerce There are currently six different mediums of electronic commerce (ecommerce): telephone, fax, television, electronic payment and money transfer systems, Electronic Data Interchange (EDI) and Internet. Although phone, fax and television remain the most widely used electronic mediums to promote or conduct commerce, much of the current excitement and debate on e-commerce is the result of the rapid ascendancy of Internet. Internet has made international transmission of services possible in ways and on a greater scale than the traditional modes such as fax, phone and television. It is being used today to buy abroad many back-office services such as electronic publishing, website design and management, customer call centres, medical records management, hotel reservations, credit card authorizations, remote secretarial services, mailing list management, technical on-line support, 91

indexing and abstracting services, research and technical writing, and technical transcription. Internet has also become a medium for electronic transmission of many products, traditionally traded in the form of goods. For instance, books, CDs, movies and computer programmes can now be transmitted internationally in digital form. It is not easy to identify a single practice or model law for the Internet. The issues comprising the legal framework within which the Internet flourishes are too disparate and legal systems in various countries are too different. Nevertheless, there are certain issues that any nation needs to consider in assessing its policies and there are certain international models to draw upon for elements of an Internet regulatory framework. The key issues relevant to international models that comprise an e-commerce framework include telecommunications liberalization, recognition of electronic documents (including their legality as contracts and evidence), consumer protection, electronic funds transfer and the use of credit and debit cards, dispute resolution, ISP liability, and domain names. These are highlighted in the sections that follow. Telecommunications Liberalization This is one of the most important issues in the promotion of trade in services. When telecommunication is liberalised, it introduces competition at all levels (local and international) and concerns different technologies (wireline, wireless, and cable). There is, however, need to take care regarding the timing and structuring of the liberalisation. The importance of telecommunications liberalisation hinges on the fact that the Internet depends heavily on the telecommunications system. Experience shows that competition and privatization can drive down prices and thereby make services, including the Internet, more affordable. This was demonstrated when MTN and UTL were allowed to operate as mobile phone service providers and Celtels prices fell dramatically to more affordable rates. In Uganda It has also been demonstrated that as more and more internet cafes opened up, the internet charges have now dropped from around Shs 100 per minute to between Shs 15 and 25 per minute. The liberalisation also promotes innovation, infrastructure development, and improvements in the quality of service. This has also been demonstrated in the case 92

of mobile telephone service providers in Uganda. At least in theory, this implies that Uganda needs to examine its laws, regulations and licensing practices to identify and remove barriers to competition, innovation, and the development and deployment of advanced services, taking into account the global trend toward convergence of voice, text and video technologies. Electronic Documentation In order to promote e-commerce, there is need to create a legal framework for recognition of electronic contracts, the admissibility of electronic evidence and the acceptability of electronic submissions to government agencies. In most developed countries legal obstacles have been removed to allow recognition of contracts made by electronic means. In Uganda, the law requires certain contracts to be in writing, or to be signed. For example, how can Uganda categorise an electronic message as writing or not? Can Uganda recognise an electronic notation as a "signature"? Furthermore, can one make an electronic contract by e-mail? If so, when will an email message be considered sent, and when is it received, such that a party is bound by it? It is not clear whether the existing laws in Uganda cover delivery and receipt of e-mail. In addition, can the existing Ugandan laws on evidence be used to address electronic based evidence? For example, can electronic documents be used as evidence in courts? How does one distinguish an original in the context of electronic messages? In legal systems where the "best evidence is required, is electronically stored information acceptable? As a result, effort has been made to address those issues to make e-commerce relevant to the current Ugandan situation. The proposed Laws for Electronic Commerce have been made in response to these questions. Specifically, the Electronic Signatures Bill (see Appendix 1) makes provision for electronic signatures that will secure electronic transactions in Uganda. It provides for secure digital signatures and establishes a public key infrastructure. In Uganda an E-commerce Bill that articulates these issues has been tabled. Some of the issues can be addressed by bringing e-government to regulatory requirements. This will be required when rules call for the submission to a government agency of a written application, report or form: can an electronic record 93

suffice (assuming the government has created the technical capacity for online submission)? The Local Government project on transmission of cheques is relevant here. General Practice Relating to Legal Requirements of a Writing The practice adopted by most countries on legal requirements of writing can be drawn from the Model Law on Electronic Commerce, promulgated by the United Nations Commission on International Trade Law (UNCITRAL) in 1996 The (http://www.uncitral.org/english/texts/electcom/ecommerceindex.htm).

UNCITRAL Model takes a straightforward, functional approach. Rather than requiring amendments throughout a country's entire legal code (finding every use of the words "writing" or "signature" and variants thereof), it establishes several principles of general applicability. Information Technology can best be addressed in provisions relating to legal recognition of data messages which provides that information shall not be denied legal effect, validity, or enforceability solely on the ground that it is in electronic form (Article 5). Anytime the law requires a writing, that requirement is met by information in electronic form if it is accessible so as to be useful for subsequent reference (Article 6). Where the law requires a signature of a person, that requirement is met in relation to a data message if a method is used to identify that person and to indicate that person's approval of the information contained in the data message, and that method is as reliable as was appropriate for the purpose for which the data message was generated or communicated, in light of the circumstances, including any relevant agreement by the parties (Article 7). An electronic data message meeting certain functional criteria can be treated as an "original." (Article 8). Where the law requires that certain documents, records or information be retained, the Model Law specifies that such requirement is met by retaining data messages, provided certain specified criteria are satisfied. (Article 9). The UNCITRAL Model Law recognizes that there might be some exceptions to the use of electronic documents - cases of special sensitivity where the existence of a signed original paper is still desirable. For example, land transactions, divorces, adoptions, and wills are categories where the law in Uganda has traditionally required greater assurances that the parties have agreed on a common set of binding commitments (such as seals, signatures, or notarization requirements). 94

Evidence The admissibility and evidential weight of data messages is key to settlement of ecommerce disputes. The UNCITRAL Model Law is the best starting point for dealing with evidentiary issues. It includes Model language specifying that, in legal proceedings, nothing in the application of the rules of evidence shall apply so as to deny the admissibility of an electronic document in evidence on the sole ground that it is in electronic form or, if it is the best evidence that the person adducing it could reasonably be expected to obtain, on the ground that it is not in original form. The UNCITRAL Model Law goes on to state that information in the form of a data message shall be given "due evidential weight." (Article 9). Online Contracts For ecommerce to develop there must be a fully fledged legal framework validating online contracts. The UNCITRAL Model includes provisions on the formation of contracts: in the context of contract formation, an offer and the acceptance may be expressed by means of electronic messages, and that a contract cannot be denied legal effect or enforceability on the sole ground that it was formed by electronic messages. It also covers recognition by parties and attribution of data messages and covers acknowledgement of receipt, time and place of dispatch and receipt of data messages. 59 Other barriers to ecommerce based on UNCTRAL Model may be removed. For example, Cryptography-based Digital Signatures which are Modern techniques of encryption make it possible to verify the identity of a person online and to link a document to a particular person, ensuring that a sender of a message is the person he claims to be. Cryptography can also ensure that a document has not been tampered with in transmission or storage. In practice, however, achieving these goals is very complicated. The challenges are more technical than legal, requiring the establishment of a public key infrastructure that can make keys available in a trustworthy way. Some governments have tried to hasten the resolution of these

59

UNCITRAL Model, Article 11-15, See also Article 5.2 of the EU Directive on a Community framework for electronic signatures (1999)http://europa.eu.int/comm/internal_market/en/media/sign/Dir99-93-ecEN.pdf

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issues by creating a regulatory structure for licensed certificate authorities, who manage the key infrastructure.60 Consumer protection E-commerce will flourish only if the legal system enforces both commercial and consumer contracts. This means that the court system must work effectively and without imposing excessive delays or costs on those who seek to invoke the power of the courts to enforce contracts or settle other disputes. Special protections are warranted in the case of consumers. A consumer can be defined as "any natural person who is acting for purposes that are outside his or her trade, business or profession.61 The protection of consumers consists of laws in this respect which include prohibiting misleading advertisements, regulating consumer financial services and consumer credit; and liability for defective products. In addition, specifically in the field of online contracts and other distance contracts, rules should ensure that consumers are provided with certain rights such as the right to withdraw, timeline performance and protection against fraudulent charges. In respect to protection against fraudulent charges consumers should not be held liable for amounts billed to them for "unauthorized transactions." In the event of fraudulent use of his payment card, the consumer may request cancellation of payment and reimbursement of the amounts paid. Vendors should promptly refund consumer payments for unauthorized transactions or sales transactions in which consumers did not receive what they paid for. Where unsolicited goods or services are supplied, the consumer's failure to reply should not constitute consent.

Electronic Funds Transfer and the Use of Debit/Credit Cards

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If there is a desire to adopt a regulatory scheme for certificate authorities, the best models are the European

Directive on a Community framework for electronic signatures (1999) this can be found at: http://europa.eu.int/comm/internal_market/en/media/sign/Dir99-93-ecEN.pdf and the UNCITRAL Model Law on Electronic Signatures (2001) available in PDF at: http://www.uncitral.org/en-index.htm
61

See Directive 2000/31/EC of the European Parliament and of the Council of 8 June2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (the EU Directive on E-Commerce).

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Relevant banking laws must be amended to accommodate payment through credit/debit cards, for both domestic and international e-commerce. This is a complex area of the law, but an important one. There are many types of "epayments" including automated clearing house (ACH) funds transfers (including electronic checks), credit card payments, and stored value or e-money payments. There are also high value payments made between banks and separate laws often cover these. One of the challenges of establishing an effective e-commerce regime is identifying a payment mechanism that can be used effectively in an online environment. Developing a viable payment option will require resolving certain issues of security, liability and taxation. In addition, there may be a need to establish legal authorization to permit the use of new electronic currencies in some instances. Credit cards and bank transfers are the most prevalent forms of online payments used in the developed countries like the US. Nonetheless, many consumers remain reluctant to use credit cards online due to concerns about maintaining the security of their credit card information. Furthermore, credit card usage is not common in Uganda mainly because the financial sector is not yet developed to involve the use of e-finance. In part to address these challenges and otherwise facilitate high volume and low value purchases over the Internet, a variety of alternate payment mechanisms, including smart cards, e-cash, digital cash and cyber cash, can be introduced. It is also important to recognize the need to incorporate consumer protection components into any regulatory structure adopted for payment mechanisms. The European Union, for example, has announced the urgent need for Community level legislation establishing a right and basic conditions for refunds in the event of nonauthorized transactions and non-delivery of merchandise. This can be expanded to include failure to deliver a service. Legislation already exists in the US establishing rules to protect consumers in the event there is unauthorized use of their credit cards.

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International practice is governed by the Bank for International Settlements which has a Committee on Payment and Settlement Systems, and produces many reports including a "Survey of Electronic Money Developments" and also "Core Principles for Systematically Important Payment Systems"62. UNCITRAL also has a Model law on International Credit Transfers (i.e. wire transfers).63 This Model Law, adopted in 1992, deals with operations that begin with an instruction to a bank to place at the disposal of a beneficiary a specified amount of money. It covers such matters as the obligations of a sender of the instruction and of the receiving bank, time of payment by a receiving bank, and liability of a bank when the transfer is delayed or other error occurs. As for credit cards or funds transfers, these are regulated by private agreement (between financial institutions, participating merchants, etc) and then through consumer protection laws. In the United States, the bank regulators have adopted a regulation called "Regulation E" which specifies the protections for consumers using credit cards. However, questions still remain as to what happens if a card is stolen, or when a consumer says that a mistake was made. The details of such protection become so relevant to consumer trust in e-commerce which is key to the latters development. Dispute Resolution Disputes between buyers and sellers (e.g., failure to deliver the requested merchandise, disputes regarding payments, etc.) are inevitable in any commercial environment. However, concerns or uncertainty regarding how such disputes will be resolved in an online environment may make parties hesitant to purchase services electronically. In these e-commerce related disputes, where relatively small amounts of money are frequently at issue, recourse to the courts is often not a practical option for most consumers and small businesses. To help alleviate these concerns and instil consumer confidence in online systems, it is advisable to encourage the use of mechanisms that permit a fast, low-cost and easily accessible resolution of large numbers of low value transactions. distribution services.
62
63

This is especially so in respect to online

http://www.bis.org/cpss/cpsspubl.htm http://www.uncitral.org/en-index.htm

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It is important to note that the establishment of ADR mechanisms need not result from government initiatives. Instead, the private sector, local non-governmental organizations or other neutral entities may create and effectively administer these programs. Governments, however, should work with other interested stakeholders to develop and encourage these mechanisms. In addition, to the extent that existing legislation would hamper or prevent the establishment and use of ADR mechanisms, governmental reform of the legal regime may be necessary. ISP Liability Another important element of a successful e-commerce regime is providing mechanisms to limit the civil and criminal liability of Internet Service Providers (ISPs) where these entities are acting as intermediaries who are merely providing backbone access to the Internet. This approach is needed to protect ISPs from a variety of potential claims, including copyright infringement, unfair competition, misleading advertising, defamation and trademark infringement, where the offending activities are conducted by third parties who are using an ISPs services. This liability limitation for ISPs has been enshrined both in most developed countries and some developing countries laws. The liability could be limited to: in instances where an ISP is merely providing Internet access or transmitting information provided by a third party via its communications network, the ISP is functioning as a mere conduit. In such circumstance the ISP will not be liable for the information transmitted provided that certain conditions are met (i.e., the ISP did not initiate the transmission, select the receiver of the transmission, or select or modify the information contained in the transmission). An ISP that transmits information provided by a recipient (or user) in a communications network is not liable for the automatic, intermediate and temporary storage of that information. This limitation of liability should apply where these acts are performed for the sole purpose of making the informations subsequent transmission to other recipients more efficient. Again, the ISP may lose this legal protection under certain defined conditions, such as if it modifies the information that is being transmitted. Domain Names

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The guidelines for management of country top level domain name do not need to be included in any e-commerce legislation that is adopted by a government. Nonetheless, this policy issue is an important one that can be integral to the development of e-commerce applications. Management of a countrys domain name, therefore, should be considered as a part of the overall e-commerce strategy that is being developed by a government. Cache servers make complete copies of works in order to place them in physical locations that are closer to users. This practice improves the speed and efficiency of the network. The creation and management of a domain name may also be important to consider particularly when Uganda is participating in the development of the East African Common Market. Therefore, before Uganda can further liberalise service sectors of interest or otherwise making commitments under the GATS in order to benefit from the development of e-commerce, there is need for Uganda to first consider the current legal, institutional and policy framework as it applies to the various service sectors that can be implemented under the e-commerce infrastructure. This is in line with the fact that Uganda as a member of the WTO has the right for domestic regulation by virtue of Article VI of GATS. However, it is important to note that even after the policies, laws and regulations needed to promote ecommerce are put in place, there is still a greater task of putting in place an ICT infrastructure which is fundamental in realising the full benefits of ecommerce.

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CHAPTER SIX 6.0 VIABILITY OF E-COMMERCE UNDER GATS IN UGANDA 6.1 Key Issues There are a number of questions that need to be answered in order to determine the viability of e-commerce in Uganda under GATS. The main issues to address include the following: The implications or relevance of Ugandas current commitments to the GATS. Adequacy and sufficiency of Ugandas commitments to the GATS to spur services liberalisation. The correlation between GATS and E-commerce or the significance of GATS to e-commerce. The potential of e-commerce in economic growth and national development. The extent of trade liberalisation in e-services (services that can be traded online). Ugandas ability to realise the full potential of e-commerce under the GATS as well as the opportunities and challenges it faces. The appropriate strategy to follow in order to realise the full potential.

In order to answer these questions and determine Ugandas e-commerce viability under GATS, this study examines the implications of GATS and identifies opportunities as well as challenges faced by Uganda in the light of the various issues that have been discussed in this report. 6.2 Implications of the GATS to the Ordinary People The interpretation of the GATS Commitments may have different implications for different sections of the Ugandan population. One interpretation of the GATS for the ordinary, poor Ugandans is that their access to basic services is threatened. This is because the basic services have traditionally been subsidised by Government and this has made it possible for both the poor and the rich in Uganda to access the services. Under the GATS, the services can only be provided in competition with super-rich multinational companies. Article XVII of the GATS on National Treatment

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requires the national Government to accord equal treatment to indigenous and foreign-owned companies. The host Government cannot protect its small company by supporting it against unfair competition without extending the same support to the foreign company, which foreign company may already be very rich. A foreign company which will come to invest in Uganda under the GATS would not need any support from its mother Government because it is already well established. This implies that the small companies in Uganda will be marginalised or completely edged out because they have very limited opportunity to compete with the rich multinationals in providing the services. Under the GATS, the motive for service provision is profit-making. There is no assurance that Foreign Direct Investment (FDI) will meet the needs of ordinary poor Ugandans. Experience shows that foreign investors will stay in the country only as long as they are making profits. Foreign companies will not tolerate customers who will not pay their bills promptly. Yet, it is well known that at the current levels of poverty, many consumers in Uganda find it hard to pay their bills promptly particularly for public utilities such as electricity and water. If profits are not forthcoming, the foreign companies will wind up and go, leaving the poor Ugandans without even the little service they had before because the small Ugandan firms will have been edged out. It is also well known that foreign companies do not cater for the needs of low-income earners. This has been demonstrated in the case of foreign hotel and super-market operators. The services provided by the foreign investors are way beyond the reach of the majority of Ugandans. In that respect, the ordinary Ugandans, who are the majority of the population, are seen to be further marginalised by the GATS. 6.3 Implications of the GATS for National Policy Priorities The GATS is likely to pose a major threat to Ugandas freedom to determine its domestic policy. Article VI.4 of the GATS constrains the flexibility of policy makers to pursue objectives that might be pertinent for the people of Uganda. The GATS will only help Uganda to meet its priority needs if further liberalisation does not deprive local governments of their ability to make policies that allow their people to afford and access basic services. The Article on Domestic Regulations refers to 102

qualifications, procedures, licensing and technical standards and states that they should be no more burdensome than necessary to ensure the quality of the service. The article does not give the criteria for determining more burdensome than necessary. In addition, quality of the service does not address the issue of distribution and accessibility of services by the people. The implication of this article is that government regulation is only allowed as long as it does not constitute an unnecessary barrier to trade (http://www.seatini.org/publicationsfactsheets/gats.htm). Furthermore, while the GATS appears to make provisions for flexibility, the commitments are irreversible. It allows members to negotiate their commitments against compensation (Article XXI). Uganda should note that it does not have the capacity to utilise the provided flexibility because it does not have the financial capacity to meet the required compensations. In addition, it would be extremely difficult for Uganda to prove that the reason for its desire to reverse any of its commitments is solely due to a negative impact attributed to increased liberalisation of a particular service sector. This, therefore, renders irreversible any commitment that Uganda has made under the GATS. Policy makers should bear in mind this fact every time they make a commitment on behalf of Uganda. 6.4 Opportunities for Uganda The adoption of ICTs such as the Internet makes it cheaper and easier for firms to extend their markets, manage their operations and coordinate value chains across borders (Cavusgil, 2002; Williams et al., 2001; Globerman et al., 2001). As Alan Greenspan (2001) has said, "By lowering the costs of transactions and information, technology has reduced market frictions and provided significant impetus to the process of broadening world markets". ICT adoption fosters globalization by reducing transaction and coordination costs and creating new and expanded markets with economies of scale64 E-commerce is acclaimed to be one of the most visible examples of the way in which information and communication technologies (ICT) can contribute to economic growth (UNCTAD, 2002). E-commerce can act as a means of helping Uganda to
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Impacts of Globalization on E-Commerce Adoption and Firm Performance: A Cross-Country Investigation 2002 Kenneth L. Kraemer, Jennifer Gibbs and Jason Dedrick 103

improve its trade efficiency and facilitate its integration into the global economy. In theory, it can allow business enterprises to become more competitive and provide jobs, thereby creating wealth. The 2002 UNDP Study on Promoting E-Business Exports in Uganda indicates that Uganda has potential to deliver back office tele-services to foreign businesses. The major tele-service categories that offer Uganda great potential and opportunities are data entry for which there is a substantial outsourcing market and for which Uganda has significant competitive advantages; call centres such as those responsible for airlines and hotel reservations dealing with clients and customer support, or telemarketing call centres that specialize in phone selling; surveys and charitable solicitation, and online distance tutoring services to North American and English speaking European school children using VOIP technology. Uganda has taken measures aimed at taking advantage of ICT and provide basic communication services to all people in Uganda within a reasonable distance. One of the key areas that can facilitate e-commerce in Uganda is telecommunications. The development of communications infrastructure is expected to spur the development of the services sector in particular and increase productivity in other sectors of the economy. The target is to turn Uganda into a knowledge-based economy and enable it to effectively participate in the outsourcing business industry on the international market. The new ICT policy (draft) and the planned National Information Technology Authority (NITA) are opportunities Uganda can use to tap the benefits of e-commerce in complying with the GATS. The GATS makes provision for less developed countries like Uganda to carry out policies and activities that will allow them to participate in services trade (Preamble to the GATS & Article IV). The Article provides for a developing country member to strengthen its domestic services as well as its efficiency and competitiveness by accessing technology on commercial basis; increasing access to distribution channels and information networks as well as liberalisation of market access in sectors and Modes of supply that are of interest to them (Article IV: I of the GATS).

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The GATS provides that liberalisation takes place with due respect for national policy objectives and Members development status. Uganda is thus allowed flexibility for opening fewer sectors, liberalising fewer types of transactions and progressively extending market access line with the countrys development status. This is an opportunity Uganda can exploit in order to benefit from the GATS. Uganda has been implementing an economic liberalisation policy. This has potential for attracting foreign direct investment (FDI) and help Uganda to overcome structural obstacles. The presence of foreign investors in the economy can also help to improve software and IT services and develop international partnerships in business service delivery. Collaboration with multinational companies has potential for knowledge and skills transfer. This is another opportunity available to Uganda in its efforts of implementing the GATS commitments. One of the most exciting opportunities to come out of the e-commerce revolution is the opportunity to provide teleservicing from Uganda. Uganda has a major advantage in this area due to the lower labour costs and weak local currencies. Examples of possible areas of opportunity include the following: Offline services Desk-top publishing Web design and building Software coding Translation services CAD based architectural detailing Digital scanning of documents Consultancy and research Multimedia production Music production Cultural education programmes Online services Internet call centres 105

 Backroom processing of travel reservations, credit card applications etc. 6.5 Challenges for Complying with the GATS 6.5.1 General Challenges Whereas e-commerce can greatly reduce the transaction costs faced by Ugandan business people and the price of services that the average consumer pays, this medium is not as widely used as it could be. The Service Sector Export Strategy 2006 revealed the underutilization or underdevelopment of the use of ICTs and ecommerce as a medium of trade in these key service sectors with export potential. The education sector is weakened by the minimal use of ICT and the limited exploitation of E-learning capacity and facilities in the Universities and institutions of higher learning. The health sector on the other hand is weakened by limited exploitation of telemedicine and other electronic Medicare services. The general under development of an electronic financial payment system, in the financial services sector hinders all forms of electronic service delivery as a whole. Despite the apparent export potential there is remarkable absence of involvement in both the low-end niche market of outsourcing services and in the high-end knowledge based ICT outsourcing services such as e-learning and e-tutoring. Past attempts to join the global outsourcing industry have been frustrated65 by lack of strategic marketing policy, the existence of telecommunications duopoly that limited access to telecommunication system and the high costs of internet access. The high costs of infrastructure have also limited the use of ecommerce in the health services delivery. 6.5.2 Challenges Relating to Modes of Supply under E-commerce These arise as a result of the traditional concepts on supply of services (Leon Steenkamp,). For example, if a consumer opened an account online at a financial institution located in a foreign country there would be questions as to whether the financial service has crossed the border. It would be asked, for example, under what Mode would such a service be handled? A problem would arise because different countries differ in their commitments in respect of the different Modes and there is a
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UEPB 2005 :41

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possibility of having different regulatory regimes in the different countries regarding the same service. Lack of clarity may lead to disputes as to whether a given online transaction should be classified under Mode 1 or Mode 2. Where e-commerce is involved it is difficult to distinguish between the two Modes and the GATS does not offer any textual solution to the problem. 6.5.3 Challenges Relating to the GATS General Obligations The likely difficulty in Ugandas compliance efforts may come about because of the inherent nature of the GATS obligations. The GATS has two main categories of obligations. One category consists of general obligations that apply directly and automatically to all WTO Members regardless of their sectoral commitments. The other category consists of specific commitments whose scope is limited to sectors and activities in which a WTO Member has decided to assume market access and National Treatment obligations (Leon Steenkamp,). The concerns in this case are related to the possible impact e-commerce may have in relation to the general obligations in reference to GATS principles. One example is the Most Favoured Nation (MFN) Principle. The principle is aimed at ensuring non-discrimination among Members. But Members have a right to list exceptions. This limits the impact of the MFN principle. It means that if Uganda wanted to export a service say to UK, it may not be able to do it because UK may have that particular service on its list of exceptions. It would, therefore, nullify the intent of the principle and this would make it hard for Uganda to comply. Another challenge is related to Domestic Regulations. The GATS Preamble recognises the right of members to regulate and to introduce new regulations on the supply of services within their territories in order to meet national policy objectives. Domestic regulation can be used to discriminate against foreign service providers if it is not regulated. A question arises as to what extent can international cross-border transactions via the internet be regulated? This is an apparent conflict that is likely to cause disputes in services trade. It stems from the fact one cannot develop effective multilateral disciplines without compromising national sovereignty. The GATS, therefore, is weak on this provision. However, Article VI attempts to bring fairness in domestic regulation: in all sectors where specific commitments are undertaken, each Member shall ensure that all measures of general application affecting trade in

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services are administered in a reasonable , objective and impartial manner (GATS, a VI (I)). Nevertheless, it is not clear what criteria is used to determine reasonable manner. This also applies to electronically supplied services (Leon Steenkamp, ). The problem is that internet services are intangible and borderless in nature and this makes it difficult to regulate the provision of online services as effectively as conventional goods. This can be illustrated by taking an example of a foreign service supplier who trades only via internet and has no physical presence in Uganda. If a consumer accesses internet services through an ISP resident in UK using a local address in UK, it would appear that the consumer is a Ugandan resident. The question then would be: Can the government of Uganda hold the ISP in UK responsible for meeting Ugandas regulatory requirements on internet service provision? Today there are internet service consumers in Uganda in that category. This is one of the cases illustrating the fact that e-commerce can pose serious impediments to the implementation of the GATS on domestic regulation It is largely because it is difficult to control the content and flow of information on the internet. Such inherent difficulties would make it difficult for Uganda to effectively comply with the GATS. In spite of the highlighted difficulties, new technologies can offer some hope. But the situation is still difficult for Uganda to access such technologies given the level of poverty. 6.5.4 Physical Infrastructure The infrastructure for access to e-commerce services in Uganda is very limited. The lack of adequate physical e-commerce infrastructure remains the most immediate impediment to electronic commerce in Uganda. As technology advances and global companies establish their various forms of communications infrastructure, and governments move to a more liberalised telecommunications policy, the physical infrastructure is expected to become less of a problem. The physical infrastructure barriers include inadequate telecommunication systems, poor internet connectivity as well as lack of access to necessary hardware and software (e.g. limited facilities for web hosting, design and maintenance services). Ownership/access to computers and other related equipment and IT services is still low in the country. Government has made efforts to address some of the constraints 108

by lowering or eliminating tariff and non-tariff barriers on IT hardware and software. It has also removed VAT on IT related products imported into Uganda. However, this is not enough to ensure adequate access. 6.5.5 Underdeveloped Services Sector Liberalisation of e-commerce in Uganda without a developed services industry limits the benefits available to Uganda under GATS. The GATS provisions on Special and Differential Treatment (The GATS, Par. 44 of the Work Programme WT/MIN (01)/DEC/1) presumes an exporting developing country. In addition, WTO Members are free to place limitations on conditions of access granted and to discriminate against foreign suppliers, provided they list any such measures in their Schedule of Commitments. This implies that WTO Members can maintain measures that do not conform to market access (Article XVI) or to National Treatment (Article XVII) as long as they list them on their schedules. This provision is unfavourable to Uganda at the current stage of its development. Until it has developed commerce-related services to export, this will remain a challenge in its efforts to comply with the GATS. 6.5.6 Internet Security One of the main concerns of online transactions is the degree to which the Internet can be secured. E-commerce relies on the ability of buyers and sellers to identify themselves and provide some form of assurance to one another when doing a business transaction on the net. This means being able to verify digital signatures, negotiate deals and make electronic payments. Contracts need to be kept confidential and the systems should be stable and reliable. Uganda has not yet developed capacity to ensure internal security for these. In May 2000 the I LOVE YOU virus moved with such speed around the world and infected even the most secure computer systems including Defence Departments of governments, the British Parliament and the White House. Over 10 million computers were infected and billions of dollars lost in damaged information and time taken to repair the damage. The virus spread via an email message forcing many large banks to shut down and disconnect from the outside world until the problems were solved. If an email message can cause such mayhem, for an LDC like Uganda with limited technological and human capacity, how secure can the Internet be? Lack

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of case studies in Uganda is an indication that, relative to developed economies, the environment for e-commerce is not conducive. 6.5.7 Lack of Skills and Capacity A major obstacle for the e-commerce infrastructure is the lack of skilled people to maintain the equipment. Without these services, the infrastructure could break down within a short time. The inadequate educational facilities available in Uganda are a hindrance to the development and use of e-commerce in a liberalised services trade environment. The training in IT available in Uganda leaves a lot to be desired. Two graduates in computer science from one of the top universities in Kampala confessed that they were never allowed to assemble or even connect the cables of a computer throughout their training. Another who did his internship in one of the top government ministries lamented that he was not allowed to touch any of the computers at the place where he was supposed to have had hands-on instruction on the use of computers. As a result, even those who get access to computers cannot effectively use them because of the poor skills training they receive. In addition, people who own computers have problems of maintenance and servicing because those skills are lacking. There are many offices in Uganda who get computers with internet connection with the help of foreign donors but after the projects under which they came come to an end, the owners no longer maintain or use them and they are disconnected from internet service. This is a challenge that government needs to address in order to realise the benefits of liberalisation. 6.5.8 Shortage and Unreliability of Electricity Another problem is the lack of reliable power supply. Most people in Uganda now who use computers rely on inverters. It is common now in town to find internet cafes closed for many hours because of lack of electricity or running on fuel generators. These cannot operate large networks and they are expensive. It is not clear when Uganda will get adequate and reliable electricity supply but certainly not in the next few years. 6.5.9 Legal and Regulatory Framework Uganda has an inadequate legal regulatory framework to match the era of ecommerce. Most Ugandan laws are obsolete. In addition, the advent of ICT has necessitated enactment of laws that were not there before, but in Uganda this has

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not happened yet. For example, Uganda does not have adequate laws to address issues of internet security, taxation under e-commerce, electronic signatures and jurisdiction issues. In order to comply with the GATS, these and other pertinent laws must be put in place. Although there is an ICT policy awaiting cabinet approval, there is need for an operational policy that streamlines all the issues of major concern in liberalised services trade and e-commerce. Otherwise, opening up under the GATS without such laws and regulations would create more problems than blessings for Uganda. 6.5.10 Unemployment It has been argued that with e-commerce, liberalised trade in services can increase employment. This may not necessarily be true for Uganda. The country is actually likely to suffer increased unemployment as a result of going online in the face of a liberalised service sector. The Ugandan working population is largely unskilled particularly in information technology. Going online implies that there will be less demand for unskilled labour. Moreover the sector will be open to foreigners who are more competitive in IT. 6.5.11 Government Barriers There are a number of government policies and regulations in Uganda which have a detrimental effect on the proliferation of e-commerce into the country. They include: The insistence of government to continue a duopoly sector and protect inefficient telephone networks which has resulted in high communication costs making e-commerce activities unnecessarily costly and uncompetitive. Lack of government strategy or support to develop world-class enterprises. A poor business, even if connected to the web and e-commerce enabled, will not succeed in a competitive world. Companies in Uganda are ignorant of international opportunities, the needs and requirements in international markets and how to service the needs properly. Governments should be doing more to help enterprises identify international opportunities and take advantage of them. Government insistence on maintaining ownership and management of logistics networks such as airports resulting in inefficient, costly and unreliable services, which are incompatible with an e-commerce environment.

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Bureaucratic export and import procedures resulting in lengthy customs clearance times, which nullify the benefits of speed in transactions offered by e-commerce. This affects service levels and increases the cost of business operations.

Restrictions on imports and exports such as permits and licences, and the time taken to obtain these permits, place barriers in the way of fast and efficient e-commerce activities.

Lack

of

progress

in

setting

legal

procedures,

so

that

electronic

communications are formal and legally acceptable forces companies to continue relying on paper productions, which undermines the concept of paperless trading. Current laws do not accommodate electronic contracts and signatures. Uganda does not have proper legal framework that deals with ecommerce concerns including enforceability of the validity of electronic contracts, digital signatures and intellectual copyright and this restrict the use of encryption technologies. Although Uganda has already made great strides in abolishing exchange controls, there is still a barrier for transacting in a foreign currency on the Internet. Uganda lacks an e-commerce friendly legal framework to provide recourse for companies. 6.5.12 Loss of Tax Revenue The 1999 Declaration on Global Electronic Commerce imposes a moratorium on customs duties on electronic transmissions. If there is a substantial shift from physical to electronic business transactions that attract sales and other taxes, it is likely to erode Ugandas tax revenue. Already, the tax base in Uganda is very narrow and public expenditure largely depends on foreign financing. The implication of Ugandas commitments to global trade dictate that it abides by the international laws that govern the business. In implementing the GATS, the government needs to beware that there is a possibility of reduced tax revenue as a result of converting to large scale e-commerce. 6.5.13 Financial Intermediaries

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Banks and bank customers in Uganda are still hesitant to embrace e-commerce. In order for business to get fully involved in e-commerce, they need the involvement of banks to prevent fraud and potential losses attributable to credit card fraud. Moreover, the use of credit cards is not yet common or wholly acceptable in Uganda given the income levels of the majority of the population. This will remain an impediment in compliance with the GATS as long as the situation is not changed. 6.5.14 Logistics and Transport E-commerce is time-sensitive. Ugandas transportation and distribution networks are inadequate. In order to have efficient functioning of e-commerce in the setting of liberalised services trade, the transport and distribution sector needs to be improved. 6.5.15 Commercial Barriers Commercial barriers to e-commerce active in Uganda involve a range of issues: Electronic Bank Payments The danger with Electronic Bank Payment services is that sometimes providers do not pay their clients bills in time. Consumers are assessed late charges and damaging credit ratings. The drawback for consumers is with servers crashing and hackers downloading banking information. Whereas the banking industry has taken extreme measures to ensure the consumers privacy, no system is hacker-proof. According to banking experts, consumers can protect themselves by not downloading their banking information at the same time (they need to do it at varying times). E-signatures The major drawback to e-signature contracts is identity theft. This has become an increasing problem. Consumers and businesses alike have yet to come up with a viable option to correct this problem. One suggestion was to do business only in areas where consumers are familiar. This, however, does not help emerging companies trying to enter the marketplace. Business culture Another barrier is incompatible business processes. In Uganda entrepreneurs tend to run their businesses on instinct and experience. The e-commerce environment 113

challenges their business processes. The lack of business expertise and technical assistance to make the necessary changes denies Ugandan companies the chances of becoming e-commerce enabled. Lack of critical mass of online customers and knowledge workers Uganda does note have a critical mass of e-commerce enabled business partners or online customers within the country. Unless businesses are able to link with their local suppliers, service providers and customers electronically, they cannot conduct e-commerce within the country. Also, lack of critical mass of knowledge workers needed to operate an e-commerce business environment is lacking in Uganda. These are people skilled in IT. Lack of capacity Majority of Ugandans lack capacity (skills and finance) to take on the new technologies required in becoming e-commerce enabled. The costs and skills required to set up an internal e-commerce infrastructure are often overwhelming for small and medium businesses. Poor representation of IT vendors Uganda has a poor representation of IT vendors and support services. Companies must be able to access e-commerce software, networking products and technical assistance in order to set up their e-commerce capability. The problem is whether or not Uganda attracts enough markets for vendors to establish a big presence here. Lack of a capital market in Uganda Uganda lacks a capital market to fund e-commerce ventures. Without access to capital, entrepreneurs with credible ideas for Internet start-ups are not able to set their opportunity off the ground. Lack of confidence There is lack of confidence on the part of the international buyer in Ugandan- based websites. For companies wanting to establish a presence on the www, to attract international customers could prove difficult due to negative perceptions about their reliability. Lack of availability of logistics and financial support services

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There is lack of availability of logistics and financial support services. Uganda experiences irregular, slow and high-cost services from courier companies. Banks do not offer the same level of service and products usually found in developed economies. These deficiencies place Ugandan companies at a disadvantage. 6.5.16 Social barriers Culture and mentality Culture and mentality are significant barriers to e-commerce. This is due to lack of education and awareness in Uganda about e-commerce, fear of the technology, lack of familiarity of information technology and lack of trust in the system. This mentality limits the adoption of e-commerce. Gender issues In Uganda, more than half the population of the country are marginalized by gender. The e-revolution is an opportunity based in human intellectual resources. In Uganda gender bias has effectively locked up half of their e-commerce potential because of gender prejudices. Lifestyle differences Lifestyle differences in Uganda tend to be more community orientated (face to face) whereas the Internet is an interaction between an individual and the content on the screen. This may cause people in Uganda to take longer to realise the benefits of Internet access. Levels of education and language Due to limited literacy skills and levels of education, it is more difficult for people to adopt the new medium of communicating and interacting. This is worsened by the fact that English is the predominant ICT language and yet illiterate people in Uganda cannot use English.

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CHAPTER SEVEN 7.0 NEGOTIATIONS FOR TRADE IN SERVICES 7.1 E-Commerce and the WTO Multilateral Trade Negotiations Although the WTO does not expressly aim to regulate e-commerce as per its mandate66, the application of its rules-based world trading system to goods under GATT; services under GATS and intellectual property under TRIPS do facilitate and determine the physical, human and legal infrastructure for e-commerce. It is, therefore, no wonder that e-commerce discussions had to take root in the WTO forum. The WTO began examining trade related issues to electronic commerce after the Singapore Ministerial Conference when in May 1998 at the Geneva Ministerial Conference, the WTO members issued a declaration on global electronic commerce and agreed to continue the duty-free moratorium on electronically delivered transactions. The Declaration established a Comprehensive work Programme to examine all trade related issues relating to global electronic commerce, taking into account the economic, financial and development needs of developing countries. 67 The General council subsequently established the framework for the work Programme and asked four subsidiary bodies, the Council for trade in Goods (GATT Council), Council for Trade in Services (GATS Council), Council for Trade in Trade Related aspects of Intellectual Property (TRIPS Council) and the Committee on Trade and Development (CTD) to explore the relationship between existing WTO Agreements and e-commerce. For purposes of this study however, the focus is on the work of the GATS Council. The Councils addressed their varied responsibilities but with no concrete accomplishments. In 2001 the Doha Ministerial Declaration issued on 14 November 2001, called for the re-invigoration of the electronic commerce work program. The Declaration states that electronic commerce creates new challenges and
66 67

Article III of the Marrakech Agreement establishing the WTO lays down its specific functions WTO, The Geneva Ministerial Declaration on Global Electronic Commerce, WT/MIN (98)/DEC/2 (20 May 1998) The E-commerce Declaration

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opportunities for trade for Members at all stages of development, and we recognize the importance of creating and maintaining an environment which is favorable to the future development of electronic commerce.68 According to the Work Programme, GATS Councils responsibilities included the treatment of e-commerce in the GATS legal framework, including scope (modes of supply,) MFN, transparency, increasing participation of developing countries, domestic regulation, competition, protection of privacy and public morals, and prevention of fraud, market access and national treatment commitments on electronic supply of services, access to and use of public telecommunications transport networks and services, custom duties and classification. The General Council also directed the GATS Council to examine electronic commerce as a means of increasing participation of developing countries in the Global trading system but the GATS Council has not seriously pursued this topic. The GATS Council did not achieve much but in preparation for the Cancun Ministerial conference in September 2003, it advised the General Council that there were no requests to include e-commerce on its agenda after the issue had last been considered at its meeting in October 2001.69 The WTO members however failed to make any substantive decisions at the Cancun Ministerial and did not address the work Programme but maintained the practice of refraining from imposing customs duties on electronically delivered products and this was a key element of the Cancun Ministerial Text of 2003.

Accomplishments of the GATS Council On the analysis of the WTO work programme, there seems to be general consensus that e-commerce falls within the scope of existing WTO Agreements and that no new trade rules should be created for e-commerce when existing rules and obligations can address the issues at stake. The GATS Council in principle agreed on the following general views:
68
69

WTO Ministerial declaration WT/MIN(01)/DEC/W/1, par. 34

GATS Council, Note by the Chairman, Work Programme on Electronic Commerce, S/C/18 (9 July 2003)

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The electronic delivery of services falls within the scope of the GATS since the Agreement applies to all services regardless of the means by which they are delivered

All general GATS provisions, including the MFN obligation, are applicable to the supply of services through electronic means. Electronic delivery had given rise to very few new services The participation of developing countries should be enhanced through liberalisation of market access in areas of export interest to them and through better access to technology including encryption technology

The Annex on telecommunications guarantees access to and use of public telecommunications networks for internet access providers.70

During the recently concluded Hong Kong ministerial conference the ministers once again took note of the reports from the General Council and subsidiary bodies on the Work Programme on Electronic Commerce, and the fact that the examination of issues under the Work Programme is not yet complete. They agreed to re-invigorate that work, including the development-related issues under the Work Programme and discussions on the trade treatment, inter alia, of electronically delivered software. They further agreed to maintain the current institutional arrangements for the Work Programme and the current practice of not imposing customs duties on electronic transmissions until the next Session. 7.2 Current Services Negotiations The current negotiations under the Doha Development Agenda offer an opportunity to pre-empt protectionism and unnecessary domestic regulation of electronic services. This is best accomplished not by perpetuating the WTOs decision on duty free electronic commerce, but by comprehensive commitments on cross-border trade in services under the GATS. Full commitments on market access and national treatment would preclude, respectively, all quantitative restrictions and all forms of discrimination against foreign providers (Mattoo and Wunshc 2004).

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WTO, E-commerce and Information Technologies, A Report for the UN ICT Task Force

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Prior to the Hong Kong Ministerial in 2005, GATS negotiations proceeded on a bilateral request/offer basis where one nation issued a request document for service sector liberalization to another and indicated what it was willing to offer in a second document. At the 2005 Hong Kong Ministerial, developed countries succeeded in getting the negotiators to permit plurilateral negotiations, in addition to the bilateral request/offer negotiating method. This means that a group of countries will issue one request document demanding broad GATS coverage in a particular sector to one country or a group of countries. Rather than negotiating bilaterally, the countries would negotiate as a group. These plurilateral negotiations are not mandatory. As part of the plurilateral negotiating process, the WTO formed 13 Friends Groups that will develop joint request documents and a list of countries to which these requests will be submitted. Other Friends Groups may be formed or operate in a less formal manner. Where bilateral negotiations are not proving fruitful it is hoped that small developing countries may be in a position to negotiate better as part of a larger group with similar interests. Uganda should endeavor to ensure active participation in the groups covering services of export interest and potential such as the computer services group, Mode 3. Final draft schedules of new GATS commitments are to be submitted by October 31, 2006. It is imperative that Uganda looks at these schedules, analyses them and determine areas and sectors which can be targeted in specific countries as potential markets for our services export. Ugandas Negotiating Position at Hong Kong Ugandas negotiating position at Hong Kong did not specifically address issues of ecommerce but on the whole, reaffirmed its commitment to the objectives of Articles IV and XIX of GATS, which emphasizes the flexibility for developing countries to open and liberalise fewer sectors, and modes of supply. In the run-up to the Hong Kong Ministerial, the Government of Uganda, with the Inter- institutional trade committee, prepared negotiating positions for the country. developing, Uganda: Believing that liberalization of trade in services is of benefit to all members both developed and

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Reaffirmed its commitment to the objectives of Articles IV and XIX of GATS, which emphasizes the flexibility for developing countries to open and liberalise fewer sectors, and Modes of supply.

Requested for full market access and national treatment for all sectors and Modes of supply of export interest to Uganda and other LDCs such as professional services and construction services.

Requested that developed countries make firm commitments towards the removal of all barriers to the movement of natural persons to provide greater access to foreign markets for service suppliers including less-skilled and nonprofessional service providers on a temporary and contractual basis based on ICSO-88 classification. In addition, market access commitments in Mode 4 should be de-linked from establishment if such access is to benefit LDCs.

Taking into consideration the cross-cutting nature and the critical commercial interests of Mode 4 where LDCs have the comparative advantage, pushed for negotiations in this Mode to be pursued at a multilateral rather than the bilateral level as desired by several developed nations.

Called for full implementation of the modalities for SDT for LDCs in the negotiations on trade in services. Supported the development and application of domestic regulation disciplines, including recognition of academic qualifications, simplification of administrative procedures and visa requirements that enhance market access to the sectors and Modes of supply of export interest to LDCs.

Technical assistance to LDCs should target the development of their regulatory framework, institutional and human capacity building and to carry out national assessments of trade in services with reference to increasing their participation in trade in services.

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Strategies for GATS Negotiations Because e-commerce is a new and dynamic medium for the delivery of goods and services, it needs comprehensive consideration to ensure its true potential. In this regard, the following comments and negotiating objectives should be part of an ongoing dialogue among businesses, governments, and other stakeholders in the GATS negotiations process: Liberalization Liberalization, transparency, competition, and regulatory reform are critical to economic growth and stability. Moreover, service providers, users and consumers stand to benefit from greater competition, choice, and convenience. Infrastructure Development Basic telecommunications, value-added services, computer and related services and certain financial services (i.e. payment systems) are critical components of an ecommerce infrastructure. In the current GATS negotiations, Uganda should strive for broader and deeper commitments in all sub sectors of basic telecommunications, value-added services, computer and related services and financial services in order to promote the development of the infrastructure needed for e-commerce specifically and global trade generally. Information Technology Agreement (ITA) Increase membership in the Information Technology Agreement (ITA) and redouble its efforts to conclude the ITA II agreement. These agreements are important to ensure that the country have access to the hardware and software necessary to deploy and access the e-commerce infrastructure; Full Market Access and National Treatment Commitments Offer full market access and national treatment commitments for the sectors that are associated with the infrastructure needed for business-to-business and business-toconsumer e-commerce; and refrain from imposing new barriers to the development of the e-commerce infrastructure.

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Electronic Commerce and WTO Agreements Continue to pursue formal recognition in the WTO that current commitments under the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS) and the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), apply to electronic commerce given that electronic commerce is not a new form of trade but rather a new medium for conducting trade in goods and services; Flexibility Agree that the existing GATS classifications should be flexible enough to accommodate technological progress in the delivery of services. As technology evolves, the interpretation of the existing classifications of services based on this technology should also evolve to capture these advances. With such flexibility, Uganda can ensure benefit from the tremendous productivity increases and cost savings associated with the information technology revolution; E-Products Ensure that electronically delivered products (i.e. goods or services) receive market access and national treatment benefits that are no less favourable than those currently available for such products delivered physically. Market Opening Commitments Make meaningful market opening commitments for all services that can be delivered via e-commerce, whether on a cross-border or consumption-abroad basis. No New Restrictions Pursue a standstill commitment not to impose new restrictions that could adversely affect e-commerce during the course of the negotiations. No New, Restrictive Measures Pursue a general agreement for governments to refrain from enacting measures that have the effect of impeding, actually or potentially, international e-commerce; Agree that when legitimate policy objectives require domestic regulations, that those

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regulations will be, to the greatest extent possible, least trade-restrictive, transparent and promote an open market environment. Permanent Ban on e-Transmission Duties Make permanent the practice of not imposing customs duties on electronic transmissions. Adoption of Recommendations Pursue adoption of the recommendations made in the WTO 1998-99 work programme on e-commerce which include the need to avoid unnecessary barriers to e-commerce; and complete the work programme on electronic commerce within the WTO. Formationof an E-Services Group for Least Developing and Developing Countries For purposes of e-commerce development and plurilateral negotiations, Uganda and other developing countries could suggest the formation of a e services group for least developing and developing countries that would champion and push for mode 1 and 2 access in services sectors of interest not only in the developed world but also from among the African and least developed countries. Focus on Export and Trade of Electronic Services Uganda should take negotiation positions that directly impact the export and trade of electronic services. Push for the completion of the ecommerce work program. Self Assessment Uganda should assess the strengths and weaknesses in the service sector, the potential benefits and costs of liberalizing these services, and the role of domestic regulations and conditions in shaping these costs and benefits. The country must then decide on its negotiating stance under the GATS in specific sectors of interest and concern and on various cross-cutting issues. In particular, it needs to shape the discussions on key GATS provisions.

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CHAPTER EIGHT 8.0 CONCLUSION AND RECOMMENDATIONS 8.1 Conclusion Following the analysis done in the previous chapters, it is evident that there is a lot of potential for Uganda to exploit e-commerce and the delivery of e-services under the GATS as a means of contributing to its economic development. It is also clear that the country is faced with many challenges which must be overcome in order to realise the full potential of e-commerce under the GATS. The positive aspect of the findings is that the challenges faced by Uganda can be overcome as they have been overcome by other countries elsewhere, but only if there is commitment from both the public and the private sectors. The findings suggest that it is possible, even under inferior IT conditions and relatively little capital, to conduct profitable ecommerce in Uganda. It should be noted that this study only covered the general aspects and provides an overview of e-commerce and trade in services. It did not address the specific issues affecting sector by sector. More research needs to be done on a sector by sector basis detailing the challenges and opportunities in each individual services sector. This will provide adequate information for decision making in the specific areas of services trade. 8.2 Recommendations 8.2.1 Building a National Strategy An e-commerce strategy should be a priority for Uganda. The government should, without delay, develop an e-commerce strategy and a national e-commerce policy. Issues that should be considered include: Establishment of a dedicated section in the Ministry of Trade to focus on opportunities presented by e-commerce.

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Identification of high-potential SME exporters and provide them with technical assistance to become e-commerce enabled and competent. Creation of B2G portals allowing enterprises to tender online thereby creating a reason for SMEs to become e-commerce enabled. Supporting the establishment of business-oriented telecentres by means of financial and technical assistance, thereby fast-tracking rural connectivity. Promoting the education of people to become knowledge workers to take advantage of teleservicing opportunities. Linking with international initiatives such as that of the E-commerce section of UNCTAD.

From an e-commerce point of view, the client must feel that there is more value in buying online than the way he may have bought before. The success of Uganda in ecommerce will depend on the extent to which Government is willing to go in building a national strategy. It is considered that if that is done, entrepreneurs will be encouraged to come forward and seize the opportunities presented to them. 8.2.2 Creation of Awareness about GATS and E-commerce As a first step, Government needs to create effective awareness among the public, particularly among policy makers and the private sector, about Ugandas existing commitments to the GATS and their implications as well as the existing opportunities and the challenges the country faces. There should be increased efforts towards awareness creation about e-commerce by both private and public agencies. The public sector needs more awareness in order to make pertinent policies. This is necessary to make it possible for the private sector to appropriately position themselves for the opportunities and join hands in overcoming the challenges. Through awareness creation for software and IT services, the Government could also help the software and IT services companies in the domestic market by raising awareness about the potential of ICTs to improve productivity and hence competitiveness, and thus encourage other sectors to increase their adoption of ICT. This would also support the process of privatization and deregulation in the light of the ongoing opening of the economy to the global market). The old adage, knowledge is power, also holds true in this respect.

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8.2.3 Building National Infrastructure Given that Uganda is ill-prepared for the GATS particularly in terms of infrastructure, further liberalisation should be aimed at building national infrastructure. The Government will do well to bear in mind that there will be no meaningful investment in service delivery unless the infrastructure is favourable. This is an area where the public sector has greater capability and interest than the private sector. Without appropriate infrastructure, it is less likely that businessmen will be able to take advantage of the existing opportunities in e-commerce for developing the trade in services. 8.2.4 Improving Capacity of Private Firms The government should focus on improving the technical, financial and organisational structures of private firms to enable them to position themselves appropriately into the operational systems of the global e-systems. This should be taken as priority since policies alone may not suffice in the Ugandan environment where poverty levels are too high for private firms to stand on their own. 8.2.5 Promotion of Computer and Internet Literacy Government policy should promote computer and internet literacy in order to have a skilled population that will participate in the global e-trade in services. There should be more practical-oriented training rather than the current theoretical and academic training offered at most universities and tertiary institutions in the country. 8.2.6 Seeking Technical Assistance Uganda could benefit from technical assistance to help establish appropriate institutional capacity and regulatory frameworks, not only to implement her commitments, but also regulate competition within the sector. This does not only include changes in e-commerce law, but also the creation or strengthening of independent and effective regulators to prevent anti-competitive behaviour. The training of policymakers and regulators is also important to help them understand sound regulatory policy in regard to e-commerce and the policy implications of changes in the sector. Furthermore, assistance in developing strategies to take advantage of enhanced e-commerce would better enable Uganda to reach her full economic potential. Assistance may be sought from UNCTAD and other specialised 126

institutions and the areas that could be considered for technical assistance include the following: Creation of awareness of e-commerce and its benefits. In this regard, UNCTAD and other organisations such as the World Bank, ITC and the WTO would be requested to initiate discussions and projects that identify and explore specific and viable e-commerce opportunities at enterprise level. Building of institutions in Uganda to provide training and research. Uganda faces special difficulties and research is required to explore these difficulties and develop solutions and training programmes to address them. UNCTAD could take a lead in facilitating the development of multimedia training and support materials for use in Uganda, to train enterprises and government departments on e-commerce issues. Providing technical assistance at government and enterprise level. In the same way that UNCTAD were able to provide software solutions to Customs departments by developing ASYCUDA, an enterprise level e-commerce solution would be considered for Uganda. Facilitating the use of donor funds. UNCTAD could consider the establishment of a venture capital fund to finance e-commerce start-ups in Uganda. Multinational banks, logistics firms and other corporations should be encouraged to assist in bringing Ugandan enterprises into an e-business friendly environment. This could involve innovative ways of becoming electronic trusted third parties between the Ugandan enterprise and its international client in the same way that letters of credit operate. Logistics companies could consider offering Ugandan enterprises a distribution solution either by holding stocks on their behalf, close to the airport, or in the target market country. Creation of B2C portals for the Ugandan Diaspora. These are defined markets that can easily be reached and the products and services bought would be unique to Uganda. Encouraging companies to join international B2B exchanges. It is critical that companies in Uganda become aware of developments in their industry and join the B2B initiatives.

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Encouraging content creation in areas where Uganda has advantage such as traditional art, music and software products. The digital technologies allow for low-cost production of these products, which provide a commercial opportunity as well as serving to promote Ugandas culture.

Developing human resources for call centres and other online teleservicing. There is clearly a cost advantage in this area of e-commerce, but without trained people in Uganda, these opportunities will go to those countries that have created the local resources.

Developing human resources for off line teleservicing such as digital publishing, video editing, web design, multimedia authoring, desk top publishing, architectural designing, etc.

8.2.7 Improvement of the Financial Infrastructure Banks and financial institutions should innovate and devise means for promoting online financial transactions in Uganda where credit cards are not yet common or acceptable. Innovation should be based on improving the capacity of those financial institutions to meet local needs and not by simply imitating what financial institutions in the developed world are doing. 8.2.8 National Priorities during Negotiations Policy makers should identify and uphold the critical national priorities during negotiations and before making further commitments to the GATS. In case any compromises are to be made, they should only be made in the interest of long-term national gains. 8.2.9 Private Sector Participation in Policy Making Policy makers should make deliberate effort to involve effective contribution of the private sector in the making of policies that affect e-commerce development. This will not only improve on the quality and appropriateness of the policies made but it will also increase the level of awareness. Unless the public becomes familiar with national policies and priorities, there will be little hope of the existing opportunities being used or the challenges being overcome.

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8.2.10 Building of Regional Partnerships Uganda should promote a spirit of partnership with its regional counterparts such as Kenya, Tanzania and Rwanda, Democratic Republic of Congo and Southern Sudan. (where possible) particularly in the areas of telecommunications infrastructure and international trade negotiations. The partnerships should be based more on economic rather than on other considerations if the partnerships are to benefit the populations of their countries. This is because economic considerations that bring mutual benefits are more likely to succeed in holding the peoples of the different countries together than political or any other considerations. Negotiating within a regional block rather than as an individual, landlocked country is more likely to succeed. This would increase its bargaining power and would make possible the development of more viable and competitive industries in the face of global competition. In addition, if the current liberalisation of ecommerce is spread to many nontraditional services such as electronic supply across borders, it could assist in accessing high-quality telecommunications infrastructure which is crucial for the competitiveness of service providers. 8.2.11 Plurilateral Negotiations For purposes of ecommerce development and plurilateral negotiations, Uganda and other developing countries could suggest the formation of an e-services group for least developing and developing countries that would champion and push for Mode 1 and 2 access in services sectors of interest not only in the developed world but also from among the African and least developed countries. 8.2.12 Use of Bottom-up Approaches The Government and other development workers should promote the bottom-up approach in order to make e-commerce supportive to trade under GATS. This is a more sure way to make Uganda e-ready than focusing on the top-down government policies. This means that among other things, there should be more direct support for the grassroots such as enabling SMEs to access computers and other telecommunication infrastructure. The environment for the grassroots entrepreneurs

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should be made more conducive to make it possible for the population to constitute a critical mass that will provide market for the e-commerce and trade in services. 8.2.13 Branding Uganda as an IT Exporter Stronger promotion of Uganda as an IT brand in foreign markets is crucial. Currently the image of Uganda in foreign markets is determined more by tourism than by technology. Branding is crucial, and The Government will have to focus more on the promotion of IT Made in Uganda in order to support the country's software and IT service exports. This could be done, for example, through deliberate support to small Ugandan IT companies that are interested in developing their capacity to become internationally competitive and a stronger presence at international trade fairs. Business leaders consider this to be the second highest priority for the Governments e-strategy. It is the duty of the government to attract investors like software producing companies. India is a striking example of a developing country which has succeeded in emerging as a significant supplier of IT services to developed-country markets. Indias software exports were as large as US$ 1.75bn in 1998.71 8.2.14 Amendment of the Law Governments should amend the laws to address issues pertaining to the use of electronic documents to satisfy legal requirements of writing," "e-signatures" or an "original." In addition, licensing processes should be streamlined and unnecessary licensing requirements removed. Uganda needs to provide for a legal framework and Import/export procedures that are compatible with e-commerce. It also needs to promote Internet-compatible automation of customs and port clearance procedures and streamline procedures for e-commerce companies. For example, the Government may consider adopting the UNCITRAL Model type of Law for Ecommerce. If such issues remain unresolved, they will continue to be barriers to the development of e-commerce.

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The National Association of Software and Service Companies ( NASSCOM) website; http://www.nasscom.org last accessed on 9th June 2006

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8.2.15 Creation of an Internet Exchange Point (IXP) The Government should permit the creation of an Internet Exchange Point (IXP) for the country and in the major towns to avoid expensive international transit for Internet communications. This would also contribute to making Uganda an Internet communication hub.

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Mann, Catherine L., Susan E. Eckert, and Sarah C. Knight (2000), Global Electronic Commerce - A Policy Primer, Washington D.C.: Institute for International Economics. Mashayekhi, Mina and Elisabeth Tuerk (2002), The WTO Services Negotiations: Some StrategicConsiderations, Trade-related Agenda, Development and Equity (T.R.A.D.E) Working Papers, No. 14, January 2002. Mattoo, Aaditya (2000), Developing Countries in the New Round of GATS Negotiations: Towards a Pro-Active Role, Washington D.C.: World Bank, World Economy, April 2000. Mattoo, Aaditya, Rosa Perez-Esteve and Ludger Schuknecht (2001), Electronic Commerce, Trade and Tariff Revenue: A Quantitative Assessment, The World Economy, Vol. 24, Issue 7, pp. 955-970. Mattoo, Aaditya and Sacha Wunsch-Vincent (2004): Pre-Empting Protectionism in Services: The WTO and Outsourcing; World Bank Working Paper, No. 3237 (11 Mar. 2004), forthcoming in: Journal of International Economic Law (Dec. 2004), pages quoted from the draft available under Internet: www.iie.com (20 June 2004) Merges, Robert P., Peter S. Menell und Mark A. Lemley (2000), Intellectual Property in the New Technological Age, second edition, New York: Aspen Law and Business Nihoul, Paul (2001), Audiovisual And Telecommunication Services A Review Of Definitions Under WTO Law, Address to the World Trade Organizations audiovisual conference"Telecommunications and Audio-visual Services in the Context of the WTO: Today and Tomorrow," 21-22 November, 2001, at: www.ulg.ac.be/ieje/nip/ (last visited June 2006. Muroyi, R. (2003). General Agreement on Trade in Services (GATS): Fact Sheet. http://www.seatin.org/publications/factsheets/gats.htm OECD (1995), International Telecommunications: A Review Of Issues And Developments, Paris: Organisation for Economic Cooperation and Development (Committee for Information, Computer and Communications Policy). OECD (1997), Dismantling the Barriers to Global Electronic Commerce, at: www.oecd.org//dsti/sti/it/ec/prod/DISMANTL.HTML (last visited June 2002). OECD (1998a), Measuring Electronic Commerce: International Trade in Software, Paris: Organisation for Economic Cooperation and Development (Directorate for Science, Technology and Industry, Committee for Information, Computer and Communications Policy), Doc. DSTI/ICCP/IE (98)3/FINAL. OECD (1999d), An Assessment of the Costs for International Trade in Meeting Regulatory Requirements, Organisation for Economic Cooperation and Development (Trade Directorate Working), at: www.olis.oecd.org/olis/1999doc.nsf/linkto/td-tcwp(99)8-final. Riddle, Dorothy (2000), Business Guide to the General Agreement on Trade in Services, Geneva: International Trade Centre.

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Steenkamp, L., Challenges posed by electronic commerce to the operation and implementation of the General Agreement on Trade in Services. The OECD Definitions of Internet and E-Commerce Transactions found at: http://www.oecd.org/dataoecd/34/16/2771174.pdf last accessed on; 10th June 2006 UNCTAD 1997: International trade in health services: difficulties and opportunities for developing countries. Geneva: United Nations Conference on Trade and Development; Background note by UNCTAD Secretariat, TD/B/ COM.1/EM.1/2 UNCTAD (1998a), Scope for Expanding Exports of Developing Countries in Specific Services Sectors through All GATS Modes of Supply, Taking Into Account Their Interrelationship, the Role of Information Technology and Of New Business Practices, Geneva: United Nations Conference on Trade and Development, U.N. Doc. TD/B/COM.1/21. UNCTAD (1998b), Implications for Trade and Development of Recent Proposals to Set Up a Global Framework for Electronic Commerce, Geneva: United Nations Conference on Trade and Development (Trade and Development Board), Doc. TD/B/COM.3/17. UNCTAD (1998c), Policy Issues Relating To Access To Participation In Electronic Commerce, Geneva: United Nations Conference on Trade and Development (Trade and Development Board), Doc. TD/B/Com.3/16. UNCTAD (1998d), Scope for expanding exports of developing countries in specific services sectors through all GATS modes of supply, taking into account their interrelationship, the role of information technology and of new business practices, Geneva: United Nations Conference for Trade and Development, TD/B/COM.1/21, July. UNCTAD (1999a), Legal Dimensions of Electronic Commerce, Geneva: United Nations Conference on Trade and Development, Doc. TD/B/COM.3/EM.8/2, May 4, 1999. UNCTAD (1999c), Legal Dimensions of Electronic Commerce, Geneva: United Nations Conference on Trade and Development (Trade and Development Board), Doc. TD/B/COM.3/EM.8/2. UNCTAD (1999d) Report of the Expert Meeting on Capacity-Building in the Area of Electronic Commerce: Legal and Regulatory Dimensions, Geneva: United Nations Conference on Trade and Development, Doc. TD/B/COM.3/28, http://r0.unctad.org/p166/modules2001/mod3/c3em8d3.pdf (last visited September 2006). UNCTAD (2000a), Building Confidence Electronic Commerce and Development, Geneva: United Nations Conference on Trade and Development, Doc. UNCTAD/SDTE/MISC.11. UNCTAD (2000b), Tariffs, Taxes and Electronic Commerce: Revenue Implications for Developing Countries, Policy Issues in International Trade and Commodities, Study Series No. 5, New York and Geneva:

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United Nations. Doc. UNCTAD/ITCD/TAB/5, http://192.91.247.38/tab/pubs/itcdtab5_en.pdf (last visited September 2006).

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UNCTAD (2002), Audiovisual Services: Improving Participation of Developing Countries, Doc.No.TD/B/COM.1/EM.20/2, Note by the United Nations Conference for Trade and Development Secretariat, September 27,2002, at: http://r0.unctad.org/en/special/ c1em20do.htm (last visited February 2006). WTO (2003), 2003 Annual Report, Geneva: World Trade Organization. WunschVincent, Sacha (2002a), Outstanding WTO Issues and Deliverables with Respect to the Electronic Cross-border Trade of Digital Products, at:www.cid.harvard.edu/cidtrade/Papers/Wunsch_WTO.pdf (last visited February 2006). WTO, "Third Dedicated Discussion on Electronic Commerce Under the Auspices of the General Council on 25 October 2002," Geneva: World Trade Organization. [online: web] URL:Http://docsonline.wto.org/GEN_viewerwindow.asp? D:/DDFDOCUMENTS/T/WT/GC/W486.DOC.HTM. YOUSAF HAROON MUJAHID, Assistant professor (Management) National PostGraduate Institute of Telecommunications and Informatics, E-commerce & WTO Digitalizing Trade Liberalization found at http://www.pide.org.pk/pdf/psde %2018AGM/E-Commerce%20&%20WTO.

APPENDIX 1

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LIST OF LAWS APPLICABLE TO SERVICES UNDER GATS

CHAPTER ONE.........................................................................................................................9 1.0 INTODUCTION...................................................................................................................9 1.3 Objectives......................................................................................................... 12 CHAPTER TWO......................................................................................................................15 OVERVIEW OF THE SERVICES SECTOR ...........................................................15 ............................................................................................................................... 15 2.1 A Review of one Example of the Constituents of the Services Sector - the ................................................................................................................................ 15 Ugandan ICT Industry and E-Commerce........................................................15 2.2.1 National Policy on Services and Export Development Strategy ...................................16 2.2.2 Ugandas Services Export Development Strategy......................................................16 2.3 Global Services Trends.......................................................................................................19 2.4.1 Tourism ......................................................................................................................20 Education .............................................................................................................................22 Education is one of the key service sub-sectors in Uganda and the government attaches great importance to the improvement of education services. Education plays a vital role in promoting sustainable development through improving the populations various skills as well as raising awareness on various issues of national importance including improving general standards of living. The Ugandan education system follows a 7-4-2-3 pattern: seven years of primary education, followed by four years of lower secondary or Ordinary level, two years of upper secondary or Advanced level, and a further three to five years of tertiary education.........................................................................................22 Health ...................................................................................................................................22 Information Communication Technologies ........................................................................23 Overview of Ugandas Services by Mode............................................................................24 Services Trade in Uganda.........................................................................................................25 2.7 The Ugandan ICT Industry and E-Commerce................................................27 Ugandas Services Export Potential ......................................................................................28 CHAPTER THREE..................................................................................................................30 3.7 Classification of E-commerce........................................................................................37 3.8 Steps in E-commerce......................................................................................................40 Virtual Products....................................................................................................................44 Tele-services.........................................................................................................................44 Electronic Bill Payment (EBP) ........................................................................................47 Digital Signatures.................................................................................................................48 On-line Banking....................................................................................................................48 International Delivery of Services........................................................................................49 E- Tourism............................................................................................................................51 138

E-Health (Tele-medicine).....................................................................................................52 E-Learning (E- education)....................................................................................................53 ICT and E-commerce............................................................................................................54 E-finance...............................................................................................................................54 Creation of an E-Commerce Enabling Environment...............................................................55 CHAPTER FOUR.....................................................................................................................59 4.6 Services Schedule of Specific Commitments under the GATS.....................................66 Tourism and Travel Related Services .................................................................................68 Telecommunication Services ...............................................................................................69 CHAPTER FIVE......................................................................................................................83 Analysis of Laws and Regulations for the Development of E-commerce in Uganda .......86 In order to promote e-commerce, there is need to create a legal framework for recognition of electronic contracts, the admissibility of electronic evidence and the acceptability of electronic submissions to government agencies. In most developed countries legal obstacles have been removed to allow recognition of contracts made by electronic means. In Uganda, the law requires certain contracts to be in writing, or to be signed. For example, how can Uganda categorise an electronic message as writing or not? Can Uganda recognise an electronic notation as a "signature"? Furthermore, can one make an electronic contract by email? If so, when will an email message be considered sent, and when is it received, such that a party is bound by it? It is not clear whether the existing laws in Uganda cover delivery and receipt of e-mail. In addition, can the existing Ugandan laws on evidence be used to address electronic based evidence? For example, can electronic documents be used as evidence in courts? How does one distinguish an original in the context of electronic messages? In legal systems where the "best evidence is required, is electronically stored information acceptable? As a result, effort has been made to address those issues to make ecommerce relevant to the current Ugandan situation. The proposed Laws for Electronic Commerce have been made in response to these questions. Specifically, the Electronic Signatures Bill (see Appendix 1) makes provision for electronic signatures that will secure electronic transactions in Uganda. It provides for secure digital signatures and establishes a public key infrastructure...........................................................................................................93 CHAPTER SIX.......................................................................................................................101 CHAPTER SEVEN................................................................................................................116 Accomplishments of the GATS Council...........................................................................117 Ugandas Negotiating Position at Hong Kong...................................................................119 Strategies for GATS Negotiations......................................................................................121 CHAPTER EIGHT.................................................................................................................124 Investment Code, Cap 92.......................................................................................................140 Companies Act, Cap 110........................................................................................................141 Non Governmental Organisations Act, Cap 113....................................................................141 The Uganda Registration of Services Bureau Act, Cap 210..................................................142 The Insurance Act, Cap 213...................................................................................................142 National Drug Policy and Authority Act, Cap 206................................................................143 2.0 Communication.............................................................................................. 144 2.1 The Electronic Media Act, Cap 104.................................................................................144 The Press and Journalist Act, Cap 105...................................................................................145 139

The Uganda Communications Act, Cap 106.........................................................................145 Professions and Occupations............................................................................. 146 3.1 The Accountants Act, Cap 266.........................................................................................146 3.2 The Advocates Act, Cap 267............................................................................................146 3.3 The Allied Health Professionals Act, Cap 268................................................................147 3.4 The Architects Registration Act, Cap 269.......................................................................148 3.5 The Auctioneers Act, Cap 270.........................................................................................148 3.6 The Engineers Registration Act, Cap 271........................................................................148 3.7 The Medical and Dental Practitioners Act, Cap 272.......................................................149 3.8 The Nurses and Midwives Act, Cap 274..........................................................................150 3.9 The Surveyors Registration Act, Cap 275........................................................................150 3.10 The Veterinary Surgeons Act, Cap 277..........................................................................151 4.0 Intellectual Property ...................................................................................... 151 4.1 The Copyright and Neighbouring Rights Act, 2006........................................................151 4.2 The Patents Act, Cap 216.................................................................................................151 4.3 The Trade Marks Act, Cap 217........................................................................................152 Matter / Proceeding.................................................................................................................153 Foreign Applicants..................................................................................................................153 National Applicants................................................................................................................153 5.0 Proposed Laws for Electronic Commerce...................................................153 5.1 The Electronic Transactions Bill......................................................................................153 5.2 The Electronic Signatures Bill..........................................................................................154 5.3 The Computer Misuse Bill...............................................................................................154
1.0 Investment Investment Code, Cap 92 The law governing investment in Uganda is the Investment Code, 1991. The agency established under the Code is the Uganda Investment Authority (UIA), which is to promote and facilitate investment in Uganda, advise the Government on policies conducive to investment, and provide information on investment issues. One of the core functions of the UIA is attracting foreign direct investment (FDI) into the country, as well as promoting domestic investment. An investor is required to apply to the UIA for an investment license to start a business in Uganda. An investment license is issued within five working days if the application form is properly completed. The licence is normally valid for a period of not less than five years after the implementation of the project. Although there is no legal requirement in terms of a minimum investment, in practice a threshold of $100,000 has been applied to foreign investors and $50,000 to local investors. The Code allows foreigners to invest in all activities, except those relating to national security or requiring ownership of land. Foreign investors may, however, lease land for up to 99 years. They can also participate in joint ventures, including those involving the leasing of land for agricultural purposes. In addition, Uganda imposes no limit on equity ownership. Foreign ownership of up to 100% is allowed. Investors are also free to bring in and take out their capital.

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Companies Act, Cap 110 This law provides for the incorporation and regulation of companies in Uganda. A private limited company can be registered by two or more persons. The legal documents, namely the articles and memorandum of association have to be delivered to the registrar general under section 14 who registers and retains them. Section 18 empowers the registrar to reserve a name pending the registration of the company. Part ten of the Companies Act deals with companies incorporated outside Uganda. Section 369(2) provides that a foreign company is not deemed to have a place of business in Uganda solely on account of its doing business through an agent in Uganda at the place of business of the agent. Section 370 provides for the documents to be delivered to the registrar by foreign companies carrying on business in Uganda. First, a certified copy of the charter, statutes or memorandum and articles of the company or other instrument constituting or defining the constitution of the company and if not written in the English Language, a certified translation thereof; a list of directors and secretary of the company, a statement of all subsisting charges created by the company; the names and postal addresses of one or more persons resident in Uganda and authorised to accept on behalf of the company service of the process and any notices required to be served on the company and the full address of the registered or principal office of the company. Section 374 requires every foreign firm to make out a balance sheet and profit and loss account and deliver them to the registrar for registration. In addition, section 375 lays down the obligations of a foreign company in Uganda. It is required in every prospectus inviting subscriptions for its shares or debentures in Uganda to state the country in which the company was incorporated; conspicuously exhibit in every place it carries on business in Uganda, the name of the company and the country in which the company was incorporated; cause the name of the company and the country in which it was incorporated to be stated on all billheads and letter paper and in all notices and other official publications of the company and if the liability of the members is limited, cause notice of that fact to be stated in all official publications. Non Governmental Organisations Act, Cap 113 This Act makes provision for the registration of non governmental organizations. Section 2 states that no organization can operate in Uganda unless it has been duly registered with the board. Section 3 provides that an organization can apply for registration to the secretary of the board. An application is accompanied by the prescribed fee, evidence of the statements made in the application and a copy of the organizations constitution. Section 7 states the functions of the National Board of Nongovernmental Organisations. First, the board should consider applications for registration by organizations, keep a register of registered organizations, guide and monitor organizations carrying out their

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services and make relevant recommendations to the relevant authorities in regard to employment of non citizens by the organization. The Uganda Registration of Services Bureau Act, Cap 210 This Act establishes an agency for miscellaneous registrations and collection and accounting of revenues under the Uganda Registration of Services Bureau (URSB). The objects and functions of the URSB are set out in section 4 and include: administering and giving effect to the relevant laws and providing registration services and collecting and accounting for all revenue provided for under those laws, maintaining registers, data and records on all registrations affected by the bureau and acting as a clearing house for information and data on those registrations and to charge fees for services performed by the bureau. The URSB acts as an agent of Uganda Revenue Authority in the collection of stamp duty under the Stamps Act. Section 27 provides for the seal of the bureau which should be a device in such form as the board may determine authenticated by the signatures of the Registrar General and the Secretary. The Insurance Act, Cap 213 This law consolidates the law relating to insurance and provides a comprehensive regulatory system for the insurance business in Uganda. Under section 3, no person other than a person licensed to operate under the Insurance Act, can use the word insurance, assurance or reinsurance as part of their business name. In addition, no person other than a person licensed as an insurer can issue any insurance policy on persons who at the time of effecting a contract are residents of Uganda; goods or assets situated in Uganda; ships, aircraft or other vehicles registered in Uganda and goods imported from other countries except personal effects and donations. Under section 4, no person can carry on insurance business except a company incorporated under the Companies Act, an insurance corporation established by law; a cooperative insurance society registered under the Cooperative Societies Act or a mutual insurance company. Section 6(2) sets the minimum capital requirements for a foreign company to be licensed as an insurer in Uganda. It should have a paid up capital of not less than one billion shillings in the case of a life or non-life insurance business and two and a half billion shillings in the case of a reinsurance business. The paid up capital can be invested in assets approved by the bank of Uganda and consist solely or ordinary shares each of which has the same value. Under section 7, every insurer is required to establish and maintain at the central bank, a security deposit of at least 10 percent of the prescribed paid up capital of the company. Section 13 requires an insurer to maintain a head office in Uganda and to notify the insurance commission of the location and address of the head office in writing.

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Part three of the Act sets out the procedure for licensing of insurance and reinsurance companies in Uganda. Section 28 states that no person can transact insurance or reinsurance business in Uganda without a valid licence granted for that purpose. A person proposing to transact insurance business applies to the insurance commission. Under section 30, the commission in considering an application for a licence satisfies itself to the financial status and antecedents of the applicant; the competence and integrity of the proposed management and administration, the adequacy of the applicants capital structure, earning prospects, business plans, financial plans, reinsurance and retention proposals and whether the public interest would be served by the granting of the licence. Section 64 further provides for mandatory offer to place reinsurance with international organizations, in particular with the African Reinsurance Corporation (Africa-Re), a minimum of 5 per cent of its reinsurance cessions, under article 27 of the Agreement that established Africa-re; and the Preferential Trade Area Reinsurance Company (ZEP-RE) a minimum of 10 percent of its reinsurance cessations, under articles 20 and 21 of the Agreement that established ZEP-RE. National Drug Policy and Authority Act, Cap 206 This Act provides for the national drug policy and establishes the National Drug Authority (NDA). Section 2 of the Act states the specific objectives of the national drug policy. These include: to ensure that essential, safe, efficacious and cost effective drugs are made more available to the entire population of Uganda; to make a continuous review of the needs, knowledge and resources of essential drugs; to promote the rational use of drugs both in the public and private sector, to improve government regulation and control on manufacture, production, importation, exportation, marketing and use of drugs; to improve the registration of drugs and licensing of pharmaceutical premises and to intensify research in all types of drugs, including traditional medicine. Section 3 specifically establishes the NDA while section 5 lays down its functions. Among its functions are; to deal with the development and regulation of the pharmacies and drugs in the country; to control the importation, exportation and sale of pharmaceuticals; control the quality of drugs and encourage research and development of herbal medicine and promote rational use of drugs through appropriate professional training. Part three of the Act controls drug supply in Uganda. Section 8 provides for a national list of essential drugs which can be revised from time to time. It also establishes a national formulary made of the national list of essential drugs and other drugs that are approved. Section 11 provides that all drugs imported into Uganda should be labelled, known and prescribed by their international Non-proprietary Names (generic names) except where no such names has been allocated. Section 13 provides that no person can mix, compound,

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prepare, supply or dispense any restricted drug unless that person is registered pharmacist, medical practitioner, dentist or veterinary surgeon or a licensed person. Section 14 provides for licensed persons who can deal in restricted drugs in Uganda. The applicant business should carry out the business under the immediate supervision of a pharmacist, in case of a body corporate, at least one of the directors should be a pharmacist resident in Uganda and in the case of a partnership, at least one of the partners should be a pharmacist resident in Uganda. Section 34 sets out the return of details of pharmacy business. Every person carrying on pharmacy business on any premises is required to state the location and postal address of the premises, the name and principal postal address of the person carrying on the business and the name of the pharmacist supervising the sale of drugs at those premises. 2.0 Communication 2.1 The Electronic Media Act, Cap 104 This Act provides inter alia for the licensing and regulating of radio and television stations and licensing of television sets. Section 2 provides that a person cannot install or operate a television station, radio station or any broadcasting apparatus without a licence in that respect issued by the broadcasting council. The council is required before issuing a licence to take into account the following: that the applicant is in case of an individual, a resident of Uganda; is a locally registered partnership or company or is a public corporation set up by an Act of Parliament. It also has to demonstrate proof of existence of adequate technical facilities; location of station and geographical area to which he broadcast is made and the social, cultural and economic values. Section 3 further provides that a proprietor of a television station, radio station or broadcasting apparatus should also register his or her station or apparatus with the Media Council. The Media Council cannot register any station or apparatus unless it has been supplied with the particulars relating to the person who is to be the producer in charge of the station or apparatushis or her name and address; certified copies of the relevant testimonials as proof of his or her qualifications and experience; the name and address of the station or apparatus and any such other particulars as may be required by the media council. Section 5 lays down factors for disqualification of a producer. A person cannot be appointed a producer of a station if he or she is less than 18 years; he or she of unsound mind; he or she is not ordinarily resident in Uganda and he or she does not possess the requisite qualifications prescribed by the media council.

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The Press and Journalist Act, Cap 105 This Act provides for the regulation of mass media. Section 2 states that a person may subject to the Act publish a newspaper. Section 5 provides the registration of particulars relating to an editor. A proprietor of a mass media organization is required on appointment of an editor to register with the council the following particulars in relation to the editor: his or her name and address; certified copies of the relevant testimonials as proof of his or her qualifications and experience; certified copies of the relevant testimonials as proof of his or her qualifications and experience; the name and address of the newspaper and such other relevant particulars. A person cannot be appointed an editor of a mass media organization if he or she is less than eighteen years of age; he or she is of unsound mind; he or she is an un-discharged bankrupt or insolvent; he or she is not ordinarily resident in Uganda and he or she does not possess the requisite qualifications prescribed by the Council. Part six provides for the regulation of public practice. Section 26 provides for the registration of journalists. The name and particulars of a person enrolled under the Act is on presentation of the certificate of enrolment to the council, be entered on the register of journalists of Uganda. The certificate is valid for one year and is renewable upon payment of the prescribed fees. No person can practice journalism unless he or she is in possession of a valid practicing certificate. Section 29 provides for foreign journalists. No person being an employee of a foreign mass media organization or working as a freelancer for that mass media can practice journalism in Uganda unless he or she is in possession of an accreditation card issued by the council. The Uganda Communications Act, Cap 106 Section 2 provides for the objectives of the Act which are to develop a Modern communications sector and infrastructure by enhancing national coverage of communications services and products, with emphasis on provision of communications services; expanding the existing variety of communications services available in Uganda to include Modern and innovative postal and telecommunications services; reducing governments direct role as an operator in the sector; encouraging the participation of private investors in the development of the sector and introducing, encouraging and enabling competition in the sector through regulation and licensing competitive operators to achieve rapid network expansion, standardization as well as operation of competitively priced, quality services. The Act establishes the Uganda Communications Commission that is responsible for monitoring, inspecting, licensing and regulating communications services. Part five provides the requirements for radio communication and telecommunication licence. Section 23 provides that no person can without a licence establish or use any radio communication station, possess radio communications apparatus or provide radio

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communications services; sell, let, hire or otherwise dispose of any radio communications apparatus to a person and manufacture, possess, install, connect or operate any radio communications apparatus or interference-causing apparatus. Section 24 provides that no person can without a licence establish a telecommunications station; provide telecommunications services or construct, maintain or operate telecommunications apparatus. Section 26 provides for frequency spectrum use. To ensure orderly development and efficient operation of radio communications in Uganda, the commission is the exclusive authority to issue licences for radio communications apparatus and spectrum use and licences for possession and operation of radio communication apparatus. Professions and Occupations 3.1 The Accountants Act, Cap 266 This Act establishes the Institute of Certified Public Accountants of Uganda. It also provides for the requisition and control of accountants and for the disciplining of accountants and the maintenance of professional standards. Section 4 states the functions of the institute. These include regulating and maintaining the standards of accountancy in the country and prescribing or regulating the conduct of accountants in Uganda. Under section 5, a person is eligible for membership of the institute when he or she passes the qualifying examinations conducted by the board or is a member of a society of accountants approved by the council as being a society or institute with a status equivalent to that of the institute. Section 6 provides for enrollment. An eligible person may make an application for enrollment as a full member or associate member. Under section 8, a person enrolled is on presentation of the certificate of enrollment to the register, registered as a public accountant of Uganda. Under section 20, no person can practice accountancy in Uganda unless he or she possesses a practicing certificate or licence. A person is deemed to practice accountancy if he or she for payment whether by himself or in partnership with another person: offers to perform or performs services involving the auditing, verification or certification of financial accounting or related statements; renders professional service or assistance on matters of principle, accounting procedure or certification of financial facts or data; and renders any service which in accounting principles or byelaws made by the council are services amounting to practicing accountancy. 3.2 The Advocates Act, Cap 267 The Act establishes the law council which is responsible for exercising general supervision and control over professional legal education in Uganda. It is also responsible for approving

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courses of study and providing for the conducting of qualifying examinations and exercising general supervision and control over the provision of legal aid and advice to indigent persons. The registrar of the law council, under section 7 is required to keep a roll of advocates. Section 8 provides for admission and enrollment of advocates. A person who has complied with the requirements for the acquisition of professional skill and experience may apply to have his or name entered on the roll. This however, only applies to a person who is a citizen of Uganda or who normally resides in Uganda and who is a holder of a degree of law granted by an approved university in Uganda or a university outside Uganda but recognized by the law council. Section 13 provides for temporary admission to right to practice. The Chief Justice is empowered to admit to practice an advocate of a designated country to come to Uganda for purposes of appearing in a case or matter of which he or she is admitted and he or she appears together with an advocate with a valid practicing certificate. 3.3 The Allied Health Professionals Act, Cap 268 This Act provides for the regulation, supervision and control of allied health professionals in Uganda. It also establishes the Allied Health Professionals Council which has the following functions: regulating the standards of allied health professionals in the country; regulating their conduct and exercising disciplinary conduct over them; approving courses of study for allied health professionals; approving, supervising and regulating the training institutes for the different categories of allied health professionals and supervising the registration of allied health professionals. Section 11 provides for the registrar of the council who is a public officer appointed by the Health Service Commission. The registrar is responsible for keeping and maintaining the registers of the allied health professionals, making necessary alterations and corrections in the registers and removing names from the register. Section 19 provides for the recognition of training institutes. The council may taking into account the entrance requirements, the curriculum, the professional standards exhibited by persons holding qualifications of the training institute, recognize the institution and qualifications it awards. Such institutions are then published in the gazette. Under section 21, a person is eligible for registration where he or she holds a degree of Bachelor of Science in any of the disciplines of allied health professions awarded by a university established in Uganda by law; a certificate or diploma in any of the disciplines of allied health professions and an allied health qualification. Section 29 of the Act allows the professionals to engage in private practice. However, they require a valid practicing certificate. Section 32 requires the registration of allied health units and all units should be published in the gazette.

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3.4 The Architects Registration Act, Cap 269 This Act provides for the establishment of the Architects Registration Board. Section 4 lays down the functions of the board which include: regulating and maintaining the standards of architecture in the country; registers architects; prescribes or regulates the conduct of architects in Uganda and promotes the training of architectural sciences. Section 8 provides for the registrar who is the chief executive of the board and is required to keep and maintain a register in which the name of any person entitled to have his or her name entered can be so entered showing the address, the date of entry and qualifications. Section 12 provides for the qualifications for registration. A person can only be entered on the register if he or she is a corporate member of the society or satisfies the board that he or she possesses the qualifications which furnish a sufficient guarantee of the possessions of the requisite knowledge and skill for the efficient practice as an architect. However, section 11 provides for temporary registration of persons not ordinarily resident in Uganda who intend to be resident in Uganda for the purpose of carrying on specific work or prior to entering in Uganda was in practice as an architect in that capacity as to satisfy the board of his or her fitness to serve as an architect. 3.5 The Auctioneers Act, Cap 270 This Act came into force in 1917 and is largely obsolete. It provides for auctioneering in Uganda. Section 3 states that no person carry on the business of auctioneer without being licensed for that purpose. Section 4 provides that there are licences of two kinds; namely general, authorizing the licensee to carry on the business of auctioneer anywhere in Uganda and local, authorizing the licensee to carry on the business in the place named in the licence. Section 5 provides that no local licence can authorise any person to carry on the business of an auctioneer in Entebbe, Kampala or Jinja. 3.6 The Engineers Registration Act, Cap 271 This Act establishes the Engineers Registration Board which regulates and controls engineers and their activities in Uganda. Section 17 provides that the registrar of the board should keep and maintain a register in which the name of every person entitled to have his or her name in the register can be entered. Under section 20, a person is entitled to be entered on the register if he or she is: a member of a recognized institution of engineers or is a person who has attained the age of twenty five years and is a holder of a degree, diploma or licence of a recognized university or school of engineering, has had at least two years adequate postgraduate practical training and is a member of the institution. Section 21 allows temporary registration where a person satisfies the board that he or she is not ordinarily resident in Uganda but intends to be present in Uganda in the capacity of a

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professionally qualified engineer for the express purpose of carrying out specific work for which he or she has been engaged. 3.7 The Medical and Dental Practitioners Act, Cap 272 It establishes the Medical and Dental Practitioners Council which is responsible for monitoring and exercising general supervision and control over and maintenance of professional medical and dental educational standards; promoting, maintaining and enforcing professional and medical ethics; exercising general supervision of medical and dental practice at all levels and exercising disciplinary control over medical and dental practitioners. Section 7 provides for the registrar who keeps and maintains the register of medical and dental practitioners. Under section 17, a person is eligible for registration where such a person holds the following minimum qualifications; a degree of Bachelor of Medicine, Bachelor of Surgery or Bachelor of Dental Surgery granted by a university established in Uganda by law; a medical or dental qualification recognized by the council for the purpose of registration. In addition, such a person should have acquired experience by satisfactorily serving a full-time internship in a hospital approved by the council. In case, of a person holding a qualification other than a qualification obtained from a university established in Uganda by law, the council may accept experience it may consider to be equivalent to the experience required. On the other hand, where a person applying for registration is not a citizen of Uganda and has a qualification obtained from a university established by law or any other university approved by the council, that person should obtain a temporary registration. Under section 18, the council may take into account the entrance requirements, the curriculum and the professional standards exhibited by persons qualifying from institutions other than those established in Uganda by law recognize their qualifications. Such recognized qualifications should be published in the gazette. Section 20 provides that where a person holds a qualification which is not recognized by the council or which is not awarded by the university established in Uganda by law, such a person can apply to the council which can arrange for an interview and sit for an oral or written examination for purposes of having the qualifications recognized by the council. Part six regulates the licensing and registration of private practice. A person cannot engage in private practice without holding a practicing licence. Under section 28, a registered medical or dental practitioner can apply to the council for a licence to engage in private practice either as a general medical practitioner or medical practitioner or as a specialist in his or her area of specialization. Under section 29, a person who intends to open a private health unit applies to the council for the registration of the health unit.

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3.8 The Nurses and Midwives Act, Cap 274 This Act provides for the training, registration, enrollment and discipline of nurses and midwives of all categories. It establishes the Nurses and Midwives Council which regulates the standards of nursing and midwifery in the country; regulates the conduct of nurses and midwives and exercises disciplinary control over them; approves courses of study for nurses and midwives; supervises and regulates the training of nurses and midwives and supervises the registration and enrollment of nurses and midwives and the publication of names of registered and enrolled nurses. The registrar is required to keep and maintain the rolls of nurses and midwives. The council conducts courses for training of nurses and midwives and issues diplomas or certificates. A person holding the following minimum qualifications is eligible for registration or enrollment. A degree of Bachelor of Science in nursing recognized by the council; a certificate or diploma in nursing issued by the council; a person who produces evidence satisfactory to the council is a registered or enrolled nurse or midwife in another country and a nursing or midwifery qualification recognized by the council. Under section 20, the council may also take into account the entrance requirements, the curriculum and professional standards exhibited by the persons holding the qualification of the training institutions before recognizing such institutions. Otherwise, a person holding a qualification which is not recognized may have to first attend an interview and sit for an oral or written examination. All registered nurses or midwives are issued with practicing licenses. 3.9 The Surveyors Registration Act, Cap 275 This Act establishes the Surveyors Registration Board and provides for the registration of surveyors. The functions of the board are to regulate and control the profession of surveyors and the activities of the registered surveyors within Uganda. The Act provides for a registrar who is responsible for keeping and maintaining a register of surveyors. To be registered as a surveyor, a person should be: a fellow of the Association of Surveyors of Uganda or any other recognized institution of surveyors; a holder of a degree, diploma or certificate awarded by a recognized university or school of surveying or photogrammetry and has not less than three years of practical experience and in the case of land surveyors, he or she should be a holder of a licence to practice land surveying issued by any licensing body approved by the board; the East African Land Survey Certificate or a Class A licence. However, where a person is not ordinarily resident in Uganda but intends to be present in Uganda in the capacity of a professionally qualified surveyor for the express purpose of

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carrying out specific work for which he or she has been engaged and he or she was immediately prior to entering Uganda practicing as a surveyor, apply for temporary registration. This application has to be in a prescribed form and accompanied by a prescribed fee. The board may also require an applicant to appear before it for purposes of considering the application and registration can only continue for the duration of work. 3.10 The Veterinary Surgeons Act, Cap 277 This Act provides for the registration of practitioners of veterinary surgery. It establishes the Uganda Veterinary Board and makes provision for the veterinary registrar who is required to keep a veterinary register. A person who can be registered should be a holder of a degree or diploma in veterinary science awarded by any recognized university and should have completed internship. Section 11 provides for licensed veterinary practitioners. The board can licence any person who is a veterinary officer or assistant veterinary officer in the service of government, of the East African Community or any other university college in the partner states or any person who has retired from such appointment having performed satisfactory service for at least two years who is not entitled to be registered but should be entitled to the rights and privileges and subject to the obligations of the registered veterinary surgeons. 4.0 Intellectual Property 4.1 The Copyright and Neighbouring Rights Act, 2006 On May 10th, 2006, the parliament passed the copyright & neighbouring rights act, 2006. The new Copyright legislation gives new impetus to the budding film and music industry in Uganda. It also complies in most material respects with key aspects of the WTO TRIPs agreement. Key aspects of this legislation include the following: ability of Copyright owners to register their rights; creation of a registrar and an office in charge of copyright registration and information; substantive provisions on collecting societies ; protection of a wider category of works, such as computer programs and handicrafts; no protection of works made in the public interest such as legislation or public reports; publication of the works for them to be protected; definition of economic rights and sets out criteria for exploitation of economic rights through broadcasting contracts, public performances and publishing contracts among others. 4.2 The Patents Act, Cap 216 This Act provides for the grant, registration and protection of patents. It provides for the registrar of patents who supervises the performance of the duties and functions of a registry. The patents registry performs functions relating to the procedure for the grant of patents and, in addition, registers license contracts, contracts assigning the right to a patent and contracts, assigning patents and patent applications. It also provides for patent information services to the public and maintains links with users and potential users of patent information. It also acts as the industrial property office of Uganda for the purposes

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of applications filed under the ARIPO Protocol. The registrar should maintain a register of patents in which all patents granted are recorded. The Registrar may also issue administrative instructions relating to the procedure for the grant of patents. The following fee structure applies to the administration of patents72: tem Search of Register Request for copies or extracts from Register Application fee for Grant of a Patent Correction of Application for Grant of a Patent Grant and publication fee Application for extension of a term of a Patent Annual maintenance fee Surcharge for late payment of annual maintenance fee for Patent Application to register an assignment or any other change in Ownership of an application or a patent Petition for Registration of a Licence pertaining to a patent 4.3 The Trade Marks Act, Cap 217 Fee (Uganda Shillings) 6,000/= 600/= (Per page) 180,000/= 12,000/= 300,000/= 60,000/= 48,000/= 20% of fee prescribed 60,000/= 60,000/=

This is an Act relating to the registration of Trade Marks. It provides for the appointment of a Registrar of Trade Marks and the keeping of a register of trademarks. Section 19 sets out the procedure for applying for registration of a trademark. Any person claiming to be the proprietor of a trademark he or she has used or proposes use who is desirous of registering it must apply in writing to the registrar in the prescribed manner for registration either in Part A or in Part B of the register. The registrar may refuse the application or may accept it absolutely or subject to such amendments, modifications, conditions or limitations, if any as he or she may think right. Section 20 provides for opposition to registration. When an application for registration of a trademark has been accepted, whether absolutely or subject to conditions or limitations, the registrar shall, as soon as may be after acceptance, cause the application as accepted to be advertised in the prescribed manner, and the advertisement should set forth all conditions and limitations. Any person can within the prescribed time from the date of the advertisement of an application, give notice to the registrar of opposition to the registration. The notice should be given in writing in the prescribed manner, and should include a statement of the grounds of opposition. If a person giving notice of opposition or an applicant sending a counterstatement after receipt of a copy of such a notice, or an appellant, neither resides nor carries on business in Uganda, the court or the registrar may require the appellant to give security for costs of the proceedings before the court or the registrar relative to the opposition or to the appeal, and in default of the security being duly given may treat the opposition or application, or the appeal, as abandoned.

72

See Second Schedule, The Patents Regulations, 1993.

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Fees pertaining to Trade Marks are set out, in detail, in the relevant Statutory Instrument73. The amount varies according to the nature of the transaction, and on whether the applicant is a national or a foreigner. Foreigners pay a specified amount in US Dollars whereas local applicants pay a specified amount in Uganda Shillings, for example: Matter / Proceeding Application to register a trade mark Application to register a Foreign Applicant s US$150 US$250 National Applicants UShs 2000 (US$1.2) UShs 4000 (US$2.3)

registered user of a registered trade mark in respect of within a specification These are samples from an otherwise very detailed schedule. It consistently shows that foreign applicants, who are apparently the majority, do pay far much more than the locals. 5.0 Proposed Laws for Electronic Commerce 5.1 The Electronic Transactions Bill This Bill proposes to provide for the use, security, facilitation and regulation of electronic communications and transactions; and to encourage the use of e-government services. The stated objectives of this Bill is to provide a legal and regulatory framework that: enables and facilitates electronic communications and transactions; removes and eliminates the legal and operational barriers to electronic transactions; promotes technology neutrality in the application of legislation to electronic communications and transactions; provides legal certainty and public confidence in the use of electronic communications and transactions; promotes e-government services through electronic communications and transactions with government, public and statutory bodies; ensures that electronic transactions in Uganda conform to the best practices of international standards; encourages investment and innovation in information communications technology (ICT) for the promotion of electronic transactions; develops a safe, secure and effective environment for the consumer, business and the Government for the conduct and use electronic transactions; promotes the development of electronic transactions that are responsive to the needs of users and consumers and fosters economic and social prosperity through the information society. The Bill proposes to facilitate e-government services by providing for acceptance of electronic filing and issuing of documents. Under Clause 20, any
73

public body that,

The Trade Marks (Amendment) Rules, 1988.

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pursuant to any law: accepts the filing of documents, or requires that documents be created or retained; issues any permit, licence or approval; or provides for a manner of payment, may, notwithstanding anything to the contrary in such law accept the filing of such documents, or the creation or retention of such documents in the form of data messages; issue such permit, licence or approval in the form of a data message; or make or receive payment in electronic form or by electronic means. Part five of the proposed Bill also seeks to limit the liability of service providers. Under Clause 29, a service provide cannot be subject to any civil or criminal liability under any rule of law in respect of thirdparty material in the form of electronic records to which he merely provides access if such liability is founded on the making, publication, dissemination or distribution of such materials or any statement made in such material; or the infringement of any rights subsisting in or in relation to such material. 5.2 The Electronic Signatures Bill This Bill makes provision for electronic signatures that will secure electronic transactions in Uganda. It provides for secure digital signatures and establishes a public key infrastructure. 5.3 The Computer Misuse Bill This Bill proposes to make provision for the safety and security of electronic transactions and information systems; to prevent unlawful access, abuse or misuse of information systems including computers and to make provision for securing the conduct of electronic transaction in a trustworthy electronic environment.

APPENDIX 2: GUIDELINES FOR INTERVIEWS (i) A. Online Service Users

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1. (i) Do you use any on-line services? (ii) If so, what are they? 2. Who provides the services? 3. (i) Do you know of other providers of similar services in Uganda? (ii) If so, who are they? 4. What benefits do you find in using the on-line services? 5. What difficulties (or constraints or limitations or problems), if any, do you find in accessing on-line services? 6. How efficient is the infrastructure for on-line services in Uganda (physical, institutional, legal, etc.)? 7. (i) Are there any gaps in the infrastructure? (ii) If so, what are the gaps? 8. How has the use of on-line services grown in Uganda? (e.g. in terms of consumers and service providers). 9. (i) What costs do you face in using on-line services? (ii) How big are those costs? 10. (i) Are there any taxes charged for using on-line services? (ii) If yes, what are they and what are the rates? 11. (i) How are the on-line services in Uganda regulated? (ii) Who is the regulating authority? 12. What opportunities are there for the development of on-line business in Uganda? 13. How does the use of on-line services benefit trade and economic development in Uganda? 14. What should be done to improve trade through the use of on-line services?

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GUIDELINES FOR INTERVIEWS (ii) B. Online Service Providers 1. What online services do you provide? 2. What are the categories of consumers that you serve? 3. What is the level of demand of the on-line services that you offer? (if possible give figures) 4. What benefits do your on-line services offer to consumers? 5. What problems / limitations / constraints do you face in providing on-line services? 6. What infrastructure is there in Uganda that supports on-line operations? 7. How adequate is the infrastructure to support the growth of on-line services in Uganda? 8. What are the growth trends of on-line operations in Uganda? (e.g. in terms of consumers and service providers). 9. What are the costs involved in: a) Providing on-line services b) Using on-line services (If possible, give figures) 10. Are there any taxes charged for operating on-line services? 11. If yes, what are the rates? 12. Are there any regulations that govern the operation of on-line services? 13. If so, explain what the regulations are and how they operate. 14. What opportunities are there for the development of e-commerce in Uganda?

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GUIDELINES FOR INTERVIEWS (iii) B. Policy Makers (Ministry of ICT; Ministry of Works, Transport & Communications; Uganda Communications Commission (UCC) 1. What is Ugandas policy on ICT? (If possible, get document) 2. What role does ICT play in promoting Ugandas economic growth and national development?

3. What is the degree of accessibility to: a) Internet

b) Telephone in Uganda?

4. What is the extent of accessibility to telecommunications services (internet, telephone, etc)? 5. How universal is accessibility to telecommunications services? 6. How do you monitor & regulate the use and functioning of telecommunication services? 7. What plans do you have for the future of ICT and internet in particular in Uganda?

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GUIDELINES FOR INTERVIEWS (iv) C. (Ministry of Tourism, Trade and Industry (MTTI) 1. What is Ugandas policy on trade in services (If possible, get a copy). 2. What is Ugandas policy on e-commerce? 3. What is the potential of e-commerce in promoting economic growth and national development in Uganda? 4. What commitments has Uganda made to GATS? 5. How is Uganda performing in regard to its commitments to GATS? 6. Explain how Ugandas commitment to the GATS is likely to promote Ugandas economic growth and national development? 7. What are the likely impacts of Ugandas commitments to GATS on the development of ICT and e-commerce in particular? 8. What is the trend of trade in services in Uganda? 9. What are Ugandas future plans for e-commerce under the GATS arrangement? 10. What opportunities does Uganda have for promoting e-commerce in the face of the commitments it has made under GATS? 11. What challenges does Uganda face in implementing the commitments it has made under GATS?

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APPENDIX 3: LIST OF RESPONDENTS Respondent Organisation 1. DHL 2. XPLORE WORLD 1. 3. EMIRATES AIRLINES 4. STANBIC BANK 5. SPACENET 6. STANDARD CHARTERED BANK 7. MTN 8. WESTERN UNION 9. UGANDA MANAGEMENT INSTITUTE (UMI) 10. BUSHNET 11. AFSAT COMMUNICATIONS (U) LTD. 12 KING SOLOMON INVESTMENTS 13. ONE 2 NET 14. BANKSHIRE TECHNOLOGIES LTD. 15. MAKERERE UNIVERSITY (Faculty of Computing & Info. Tech.) 16. Ministry of ICT 17. Ministry of Information & Transport 18. Ministry of Tourism, Trade & Industry Policy, Monitoring, Regulation Policy, Monitoring, Regulation Trade Policy E-commerce related service offered Courier services Tours & Travel Airline services i)Commercial banking ii)Online money transmission ISP Commercial banking ISP, Web hosting Money transfers E-learning, (VOIP, Video conferencing) ISP (VOIP, Video conferencing ISP (Audio & video streaming, Fax Over Internet Protocol, File Transfer Protocol, Domain hosting, VOIP) E-payments, Banking solutions, Web hosting (unique web hosting items) ISP (email, VOIP, Video conferencing, internet ) ISP (web hosting, VOIP, domain registration) E-learning

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APPENDIX 4: SUMMARY OF FINDINGS FROM KEY RESPONDENTS Name 1. DHL 2. XPLORE WORLD Area of Business Courier services Tours & Travel Benefits of using online services i) Less expensive ii) Convenient i) Fast service ii) Saves time iii) Convenience no trips to service provider iv) Enhances fast decision making v) Reliability vi) Convenience vii) Easy access to international community i) Reduces office paper work ii) Saves time Opportunities Challenges i) Lack of Electricity ii) Poor connectivity iii) Government bureaucracy i) Network problems with ISP ii) Demand stifled by poverty Recommendations -

2. 3. EMIRATES 3. AIRLINES

Airline services

There is mass of can be board services

still a large people who brought on of online

4. STANBIC BANK

i)Commercial banking ii)Online money transmissio n

i) Reduced need of physical movement of money ii) Increased

i) Tax exemptions for e-business growth ii) A population that is willing to learn iii) Virgin ground for

i) People in Uganda not used to internet ii) Lack of Credit card use in Uganda is a limitation to online booking iii) Low internet speed (UTL) iv) Lack of legal infrastructure for internet/e-commerce i) Poor connectivity ii) Network interruptions iii) Poor infrastructure iv) Lack of legal infrastructure (rules just on paper) v) Lack of defined

i) Create awareness ii) Provide support to create a critical mass of internet users. This will generate more opportunities. iii) Reduce licensing costs i) Create awareness ii) Improve skills training (e.g. by affiliating with internationally renown institutions) iii) Introduce broadband

efficiency

e-services iv) Potential for cheap labour vi) Growing demand

management rules & implementation vi) Inadequate skills among staff vii) Monopoly enjoyed by pioneers Challenges

iv) Remove monopoly actors

Name

Area of Business ISP Commercial banking ISP, Web hosting Money transfers

Benefits of using online services Cheap communication No response Efficiency

Opportunities

Recommendations

5. SPACENET 6. STANDARD CHARTERED BANK 7. MTN 8. WESTERN UNION

Growing demand No response Increasing demand for online services i) Exploiting the existing gap in use of credit cards

Shortage of electricity No response i) Poor infrastructure i) Small bandwidth ii) Slow internet speed iii) Lack of information about online service providers iv) Poor infrastructure v) Lack of legal framework vi) Lack of standards for online service providers vii) Lack of trust in online services i) Poor infrastructure ii) Small bandwidth iii) High costs of infrastructure set up iv) Lack of electricity v) Misallocation of bandwidth (giving too much where it is least needed & too little

Remove monopoly No response i) Set standards for online business transactions & implement them ii) Institute defined taxes for online services iii) Improve physical infrastructure iv) Improve legal framework

9. UGANDA MANAGEMEN T INSTITUTE (UMI)

E-learning, (VOIP, Video conferencing)

i) Faster & easy communication ii) Reduced communication costs

i) Increasing demand for online services ii) More schools, institutions which can benefit from e-learning

i) Use fibre optic where it is most needed ii) Reduce satellite taxes & VAT iii) Increase bandwidth & reduce its costs iv) Remove monopoly of pioneer companies

10. BUSHNET 11. AFSAT COMMUNICATI ONS (U) LTD.

Name 12 KING SOLOMON INVESTMEN TS

ISP (VOIP, Video conferencing ISP (Audio & video streaming, Fax Over Internet Protocol, File Transfer Protocol, Domain hosting, VOIP) Area of Business E-payments, Banking solutions, Web hosting (unique web hosting items) ISP (email, VOIP, Video conferencing, internet ) ISP (web hosting, VOIP, domain registration)

i) High speed communication i) Guaranteed speed ii) Reliability

High growth rates of internet service consumers i) Increasing number of online service customers

where it is most needed) vi) Poor policy regulatory framework vii) Lack of legal infrastructure i) Inadequate infrastructure i) Electricity shortage ii) Untrained end-users iii) Inadequate infrastructure iv) High costs (e.g. in US, VOIP is $0.05 per minute while in Uganda it is $ 0.28 per minute)

v) Remove corruption regulatory bodies

in

i) Create awareness about e-services ii) Introduce credit cards ii) Introduce online banking

Benefits of using online services Less costly

Opportunities i) Vacuum exports in e-

Challenges i) Poor security for online transactions ii) Small bandwidth iii) High costs of inputs iv) Verification of credit cards from Uganda iv) Poor infrastructure i) Untrained end-users ii) Small bandwidth iii) Shortage of electricity iv) Inadequate regulatory framework i) Electricity cuts ii) Need for overseas hosting of websites (for security) iii) Small bandwidth

Recommendations Create awareness Introduce credit cards Introduce online banking

13. ONE 2 NET

i) Efficiency ii) Easy communication i) Real time communication regardless of geographical

i) Increasing demand ii) Virgin internet area

i) Sensitise people

14. BANKSHIRE TECHNOLOGIE S LTD.

Create awareness

location ii) Increased sales from online marketing iii) Cheaper costs of communication 15. MAKERERE UNIVERSITY (Faculty of Computing & Info. Tech.) E-learning No limitations in terms of space, time & location i) Growing demand

iv)

Poor policy & regulatory infrastructure

i) Small bandwidth ii) Security iii) Poor infrastructure iv) Lack of a functioning legal framework