Zimpapers Logo

Alexander Gonese
According to the 2013 Global Competitiveness Index (“GCI”) Zimbabwe is ranked 132. Using the 2013 world economic outlook database by IMF, Zimbabwe has a GDP per capita of less than US$1 000 thereby signifying that it is a factor driven economy. Factor driven economies refer to those which are mainly driven by institutions, Infrastructure and the macroeconomic environment.
An ITU study of telecommunications and development, The Missing Link, concluded that “telecommunications can increase the efficiency of economic, commercial, and administrative activities, improve the effectiveness of social and emergency services and distribute the social, cultural and economic benefits of the process of development more equitably throughout the country.” Although it is recognised as an essential catalyst for growth,  our institutions, infrastructure and the macroeconomic environment are however generally  not conducive for investment in telecoms sector.

Licence Fees
Despite the liquidity crisis currently haunting the nation, Posts and Telecommunications Regulatory Authority of Zimbabwe POTRAZ pegged mobile telecoms companies’ 20-year licence renewal fee at US$137,5 million. The table below gives a comparison of Safaricom of Kenya and Econet Wireless Zimbabwe. The table above shows that although Econet operates in a country with GDP per capita 26 percent lower than of Kenya, it pays a licence renewal fee per subscriber per year which is 5,41 folds more than that of Safaricom. In absolute terms the licence fee demanded by Zimbabwean authorities at US$6,875 million per year is therefore 154 percent higher than the fee levied upon Kenyan operators.

In addition to the US$137,5 million license renewal fees, Zimbabwean mobile operators also pay an annual license fee through contributing 2 percent of their audited annual gross turnover to the state compared to 0,4 percent of turnover by Kenyan operators.

Infrastructure
Extensive and efficient infrastructure is paramount for ensuring the swift functioning of the economy, since it is an important factor in determining the location of economic activity as well as the kinds of activities or sectors that can develop in a particular instance. The Zimbabwe economy was immensely affected by the effects of the lost decade which resulted in the deterioration of the quality of infrastructure
Currently, Zimbabwe has electricity challenges which force the use of stand-by generators by mobile telecoms so as to minimise network down time. This has resulted in the increased use of diesel and Econet is among the highest single consumers of diesel in Zimbabwe, thus further catapulting the operating costs of the company. Policy makers must introduce policies that will allow companies that are heavy energy consumers to participate in the production of energy for the nation. Such policies include rebates, tax holidays etc.

Macro-economic environment
The stability of the macro-economic environment is important for business and, therefore, is important for the overall competitiveness of a country. Zimbabwe remains unattractive to international financing, largely due to external debt estimated at about US$7 billion. This has resulted in the unavailability of sustainable long term funding with the available short term loans being too expensive to assist industry. In such an environment the Government must introduce policies to stimulate domestic investment instead of stifling the few players that are investing in the domestic economy.  Econet must be allowed to grow so that it offers world class communication services which will in turn stimulate the local economy.

Conclusion
To take you back to my previous article, the table below shows that Econet is a competitive and efficient firm when compared to its peers in Africa.

For feedback email: [email protected]