Why the ICT sector is now struggling

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By Toneo Rutsito

Zimbabwe’s telecoms sector has hit the May Day button yet it seems all normal for the average users and those in authority.

Ironically, ICTs are a key component of the social fabric, and we are yet to see the government subsidising the telecoms sector the same way it does with the fuel industry and health sector, especially after endorsing that telecommunication is now a basic human right.

Zimbabwe imports data in foreign currency; in fact millions in USD are paid monthly for data connectivity. So does it also pay for international landing fees in forex but locally, it is mandated to charge only in RTGS, with no way to recoup the forex value.

The central bank has not allocated a cent to the ICT sector for the past 2 years, because under their priority list, ICTs, unfortunately, are not that much of a priority. So the sector must make its own means.

Zimbabwe is charging the lowest tariffs in Africa, if not in the world.

At average of RTGS 22cents per minute, this cascades $0.024 USD per minute as at 12 July 2019.

This distortion, however, is not acceptable by the consumer who is also earning a salary in local RTGS and cannot be expected to pay the equivalent USD price of the value of the communication.

When both service providers and consumers are stuck up in the RTGS currency, it makes it very difficult for locals to then enjoy affordable and world class service because they are all operating in a lose-lose environment, which is a catch22 for the government.

Recently, mobile network operators are pressing for price adjustments but these are just but a cushion measure as millions of RTGS which cannot be repatriated do not add business value.

It no longer makes sense for these players to continuously do tariff increase against subscriber base which ultimately will not be able to pay for the service, even if the regulator approves the price hike.

Revenue has continued to dwindle in the sector with the current record of $37.1m decline, the trend is not stopping and we must be worried.

Zimbabwe’s national mobile penetration has dropped to an all-time low of 57.9 %.

If these figures read right to you and you don’t see any need to hit the panic button then highly likely, you are one of the same people with strong interests to sabotage the once beautiful sector.