Moving forward in Zimbabwe - Brooks World Poverty Institute - The ...

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Moving forward in Zimbabwe Reducing poverty and promoting growth Figure 9.1: Zimbabwe’s subscriber growth, 2000-2008. Figure 9.2: Operators’ subscriber growth in Zimbabwe, 2000-2008. Source: Supplied upon request from POTRAZ (2009) Source: Supplied upon request from POTRAZ (2009) When the data are disaggregated further (see Table 9.1 and Figure 9.2) they reveal a market dominated largely by one player, with the others hardly registering any growth at all. By 2008 Econet Wireless had a 76 per cent market share of mobile subscribers and 60 per cent of total telephone subscribers, including fixed. Accurate data on effective demand for telephony in Zimbabwe are not easy to come by, but it is not inaccurate to observe that all the operators suffered capacity constraints. Demand for telephony has far outstripped supply, turning the market into a suppliers’ market. Poor service quality, especially network congestion, has been a feature of telephony in Zimbabwe. Furthermore, the fact that demand for services far outstrips supply has generated a thriving black market for the few mobile phone lines available, which by 2009 retailed at anything between US$50 to US$100. This compares with other countries, such as Uganda and Kenya, where mobile lines are ubiquitous and retail at less than a tenth of the rates found in Zimbabwe. Clearly the crisis created a service capacity gap that needs to be addressed. The situation was not helped by The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), which tried to balance the legitimate demands by operators for a tariff structure that ensures their viability, with an equally legitimate obligation to ensure an affordable service for the consumer. Often, it failed to satisfy either of the parties. For example, pricing regulations implemented in July 2007 forced operators to charge the equivalent of US$0.005 (half a US cent) per minute against an international average of US$0.15. Operators were not happy with this suboptimum tariff, yet at the same time, that tariff was beyond the reach of many ordinary mobile users, whose incomes were no more than US$10 per month. Operator viability was further hurt by the non-availability of foreign currency, with the only source being the thriving parallel (black) market, which was, however, criminalised. Financial results declared using the official exchange rate would show a deceptively rosy picture. Table 9.1: Zimbabwe’s subscriber growth since 2000. 2000 2001 2002 2003 2004 2005 2006 2007 2008 ECONET 93,706 134,000 139,402 151,000 173,000 362,000 477,000 648,908 988,656 NET ONE 89,949 91,800 114,000 117,000 130,000 197,000 215,488 331,000 418,065 TELECEL 82,786 84,690 85,000 95,000 130,000 140,000 156,698 245,746 248,000 TEL ONE 238,956 249,400 257,777 300,921 317,000 328,000 335,561 344,502 364,281 Total 505,397 559,890 596,179 663,921 750,000 1,027,000 1,184,747 1,570,156 1,641,565 Total mobile 266,441 310,490 338,402 363,000 433,000 699,000 849,186 1,225,564 1,296,565 % growth (F) 1 4 3 17 5 3 2 3 6 % growth (M) 65 17 9 7 19 61 31 44 35 Source: Supplied upon request from POTRAZ (2009) 104
Moving forward in Zimbabwe Reducing poverty and promoting growth The poor performance of the Zimbabwean mobile sector is particularly noticeable when juxtaposed against the rapid growth elsewhere in Africa. Mobile usage was growing by an annual average of 52 per cent for Sub-Saharan Africa. With only one million subscribers in 1996, the continent had registered 100 million by 2005, and a record quarter billion by December 2008 (ITU, 2009a: 13). Available estimates suggest that by June 2009 there were about 289 million subscribers in Africa. Table 9.2: Selected regional economies’ mobile cellular subscriptions, 2003 and 2008. Mobile cellular subscriptions per 100 inhabitants 2003 2008 CAGR % 2003 - 2008 Ghana 3.8 48.3 66.7 Kenya 4.9 42.1 54 Mozambique 2.3 20.2 54.6 Nigeria 2.5 41.6 75.4 South Africa 35.9 92.2 20.7 Tanzania 2.4 31.4 67.9 Uganda 2.9 26.8 56.1 Zambia 2.1 29.1 68.6 Zimbabwe 2.8 13.1 35.9 Source: ITU 2009a. 9.3 Mobile growth: comparative analysis with selected countries Table 9.2 below compares the performance of mobile growth against growth in eight other regional countries, if only to dramatise the extent to which growth in Zimbabwe was slow. Kenya has striking similarities with Zimbabwe in terms of the structure of the economy and the timing of the launch of mobiles and introduction of competition. Kenya had two mobile operators and one fixed, but mobile subscribers grew from 180,000 in 2000, to 7.34 million by December 2007 (CCK, 2008). It is clear that the protracted crisis in Zimbabwe affected the uptake and provision of telephony in two main ways. Firstly, the crisis created an unfavourable investment climate that stifled network expansion. Secondly, the crisis affected the ability of most Zimbabweans to make a living, which brought about a significant decline in effective demand for telephone services. The net result was a substandard mobile telephony service that lagged behind comparable country experiences in the region. 9.4 Growth in other ICT subsectors The Internet Measuring internet use in Africa is highly speculative, but estimates suggest that by the end of 2007 more than half of the 50 million users were in North Africa and South Africa (ITU, 2008). In Zimbabwe, available statistics suggest the country had about 1,351,000 internet users. This gives an internet penetration of 11.9 per cent and would make internet penetration higher than mobile penetration for comparable time periods. The figure of internet users in Zimbabwe is higher than that given for other countries such as Zambia, Tanzania, and Uganda, which, as we saw in Table 9.2, have experienced significant mobile growth rates. The explanation for this is not clear, but it could be that in the absence of access to mobile telephony, people used the internet through cybercafés as an alternative communication channel, particularly when communicating with the diaspora community. Figure 9.3: Selected regional economies’ mobile cellular subscribers, 2000 and 2006. Source: African Development Bank 2009: 59. 105
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