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Uganda— Ugandan Village Phone Initiative Adopts Bangladesh Model

Kampala, Uganda, November 18, 2003 — Uganda’s Vice President, Professor Gilbert Bukenya, yesterday officially launched “MTN villagePhone,” an IFC-supported joint venture between the country’s leading telecommunications company, MTN Uganda, and Grameen Foundation USA.  The vice president launched the rural telecommunications initiative in a ceremony in rural Kayunga District, by making a symbolic inaugural call using the Village Phone business owned by Sophia Nalujja, one of 115 Village Phone Operators currently operating across Uganda.  
MTN villagePhone extends telecommunications access to rural villages in partnership with local microfinance institutions by creating opportunities for individuals living in impoverished rural areas to become “Village Phone Operators.”  Village Phone Operators take microloans for the equipment for as little as US$230 to be repaid over a period of up to 12 months. They then raise their incomes by selling mobile phone service in areas where electricity is unavailable and the existing MTN network can be accessed only with a booster antenna and other equipment.
IFC has provided funding for the project from its SME Capacity Building Facility, its grant window for innovative small business pilots and partnerships. The CBF support continues IFC’s commitment to improving telecommunications in Uganda. In 1997, before privatization of the state-owned telecom company, IFC advised the Ugandan government on introducing much-needed competition via an auction process to license a second private national operator. The bid was won by MTN, which has become the country’s leading telecom company, holding a 70 percent share of the entire subscriber market.
The CBF’s mandate is to help transfer good models of small business development from one country to another. It thus took a strong interest in this replication project initiated by the U.S.-based foundation arm of Bangladesh’s 2.8 million-borrower microfinance institution Grameen Bank. Since teaming with other partners to launch an IFC-financed mainstream cellular company in Bangladesh six years ago, the well-known nongovernmental organization has operated a parallel project called Grameen Telecom which has enabled 40,000 village operators to sell phone time to local residents and thus earn average net incomes of $700 per year—roughly twice the national average. The new access to information generated by this profitable, self-sustaining project is credited with increasing the social status of women and enhancing productivity in villages.
"Grameen Telecom has always been cited as one of IFC's successes in terms of extending services to rural areas and empowering women,” said the World Bank Group's Director for Global Information and Communication Technologies Dr. Mohsen Khalil. “As a result, we strongly support the expansion of this program to Africa, where connectivity remains a challenge, particularly in rural development and bringing Africa into global information economy. The program is also consistent with the World Bank Group's information and communications technology strategy, which is increasingly emphasizing the need for innovative, inclusive solutions to extending universal service to poorer, rural areas."
The first replication of that model outside of Bangladesh, MTN villagePhone is currently working with five Ugandan microfinance organizations: Foundation for International Community Assistance, Foundation for Credit and Community Assistance, Support Organization for Micro-Enterprise Development, Uganda Microfinance Union, and Ugandan Women's Finance Trust. The joint-venture company will continue to partner with other microfinance organizations to further expand services throughout Uganda.
Grameen Foundation USA is a nonprofit organization based in Washington, D.C., which empowers the world’s poorest people to lift themselves out of poverty with dignity through access to financial services and information.  The Village Phone program is managed by the Grameen Technology Center, an initiative of Grameen Foundation USA, and is supported by the World Bank infoDev, IFC, and others.  
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.