1 Entrepreneurial Capacity, Government Intervention and Diffusion of Technologies in Uganda: Comparing the Supply side of Modern Types of Energy and Mobile Telephony Technologies George B. Batte Makerere University Business School gbatte@mubs.ac.ug Izael P. Da Silva Strathmore University – CERESD Centre of Excellence in Renewable Energy and Sustainable Development idasilva@strathmore.edu Abstract The diffusion of modern technologies plays a critical role in job creation. Mobile Telephony Technology (MTT) has been successfully diffused in Uganda, within a short time, and with minimal government intervention. However, despite heavy government interventions, Modern Energy Technology (MET) remains outside the reach of most Ugandans. Low access to MET seems to be contributing to Uganda’s under-development and unemployment. Projects initiated to spur MET diffusion haven’t been very successful, and METs widely used in other developing countries and successfully piloted in Uganda have found minimal diffusion and failed to upscale. Although policy makers are quick to blame poverty and ignorance for the slow diffusion of MET, the rapid diffusion of MTT in similar environments have put to doubt most these arguments. This study explored the diffusion of technologies in Uganda, using entrepreneurial capacity as an independent variable. By comparing the fast diffusing MTT with the slow diffusing MET, this study helps to provide a better understanding of the dynamics of technology diffusion in Uganda. Using government documents and a questionnaire survey targeting employees of MTT and MET vending firms, the study identifies differences in intervention related to governance, regulation and funding between MTT and MET vendors, which significantly affect some aspects of Entrepreneurial capacity. The study also found evidence of significant differences in the constructs of Entrepreneurial Capacity measured for MET and MTT vending firms that affect technology diffusion. 1. Introduction With less than 10% of its rural population having access to electricity (MEMD, 2008), low access to modern energy poses one of the biggest challenges to economic transformation in Uganda (World Bank, 2004). Government realises this challenge, and has initiated several projects with the aim of increasing access (MEMD, 2008). In the 2011/12 financial year, the energy sector spent $521 million in form of project support and subsidies, and more has been contributed in terms of tax waivers and development partner support (MOFPED, 2012). This represents a 70% increase in budget allocation; and indicates the importance government attaches to the energy sector. However, with electricity still contributing just 2% of Uganda’s energy mix (MEMD, 2008) progress in disseminating MET has been slow. Many successful experiments and pilot trials have not translated into replicable models for national adoption (Karekezi & Raja, 1997). Low diffusion of MET has been attributed to poverty, lack of technical skill, lack of exposure, poor infrastructure, poor access to finance and lack of willingness to change (MEMD, 2007). However, the relatively more successful diffusion of more expensive and seemingly less critically important technologies in similar environments has put to doubt most of these arguments. In comparison to government and donor driven MET, entrepreneur-promoted- MTT, unknown in Uganda before 1995, has found greater diffusion. Within a period of 16 years, the percentage of Ugandans owning a