HomeBusiness DigestForex shortages crippling our services - Econet

Forex shortages crippling our services – Econet

By Sure Kamhunga

REFERENCE is made to your article headlined “Zim pays a fortune for abysmal telecoms”, (Zimbabwe Independent, April 6).

tica, sans-serif”>While it is true that Zimbabwe’s telecommunications sector is grappling to meet demand and, to a large extent, service quality has been compromised, it must be appreciated that there are severe and sometimes extremely frustrating challenges facing both the mobile and fixed telecom operators in the country.

Obviously, the wish of any telecoms operator anywhere in the world is to meet requirements for products and service on demand, ensure acceptable and internationally recognised service level and customer care standards and contribute to the economic development and success of a country in which they operate.

But the sad truth is that in Zimbabwe, we are still a long way off from reaching a situation where a customer can walk into any supermarket, high-density kiosk or departmental store and buy a pre-paid line, or apply for a fixed line and have it installed in less than a month as is the case in South Africa.

Although the demand for telecommunications services in Zimbabwe continues to outstrip supply — as evidenced by the long waiting list at the fixed telephone operator, Tel*One (some people on the waiting list have even forgotten when they applied or last renewed their application), and the extortionist prices people are paying for pre-paid mobile lines on the so-called black market — the stark reality is that, for now, there is very little telecom operators can do about this because of the well-documented chronic and worsening shortage of foreign currency crippling the country.

Operators can build hundreds of towers and other infrastructural equipment that use local content and which can be paid for in Zimbabwe dollars, but these will lie idle unless they can import essential components, such as radio equipment required to make the network operate.

Even if all the weekly foreign currency issued on the auction floor were to be given to the four operators — Net*One, Econet, Telecel and Tel*One it is doubtful that they would be able to build enough capacity to meet the demand for service in Zimbabwe, and create enough capacity to allow for the exponential growth in subscriber numbers.

Obviously, demanding all the available foreign currency is an unrealistic and far-fetched proposition because the central bank has a national and economic obligation to provide foreign currency for all the country’s needs, including food and fuel imports, in addition to assisting the telecoms sector.

And indeed, let it be put on record that the central bank has been very helpful in allocating foreign currency to the telecoms operators, but this still remains a drop in the ocean compared to the sector’s huge and growing requirements.

It must be borne in mind that all key equipment used in a telecommunications network is imported because we do not have local capacity to manufacture, and this naturally requires that operators raise foreign currency.

On the other hand, mobile operators such as Econet Wireless have to pay for software licences for each customer connected on the network, again which fees have to be paid in hard currency.

As one of the operators who has been criticised for delays in expanding capacity and eliminating congestion, Econet still however do pride itself on providing a high quality service to our customers even though we are still battling because of this foreign currency situation.

It is a technological and business miracle that despite the extremely difficult situation being faced, the country still has a reasonable telecommunications system on the ground, although there is clearly room for significant improvement.

It is also gratifying to note that the local operators have been very innovative to get around the problem of foreign currency requirements in order to provide services.

For example, Econet has had to sell shares in its sister company in Botswana, Mascom Wireless and part of the proceeds have been used to import equipment that is currently being installed as part of a $200 billion expansion project — one of the single largest investments to be made in Zimbabwe in recent years, and the largest ever since Econet commenced operations in July 1998 when it had only 10 000 customers.

The expansion, which has reached an advanced stage, is aimed at not only adding switching capacity, giving the network room to double the subscriber base by the end of 2005, but also reduce to manageable levels network congestion that has frustrated many subscriber, particularly during peak periods.

Econet also intends to release more lines on the market although this will be a gradual and deliberately well-managed process to prevent network instability. In short, the company would not be able to eliminate the waiting list for lines.

There are encouraging reports of other local operators also implementing their own expansion plans but again this will only be a temporary relief because of the huge demand. Massive expansion projects to eliminate demand require massive injection of hard currency, which is simply not available right now.

Once the country’s macro-economic situation has stabilised through complementary and supportive monetary and effective fiscal policies and measures, and access to international and bilateral credit improves, the telecom operators would obviously take advantage of these to further expand their networks and ensure the country has a world-class telecommunications service.

This will in turn result in not only providing the engine for economic growth, but also create thousands of jobs in downstream service sectors and industries, ranging from your neighborhood retailer of recharge cards and pre-paid lines to street vendors, dealer shops and manufacturers of recharge vouchers.

And indeed, the day will in the not too distant future dawn on buyers and sellers of pre-paid lines currently enjoying unbelievably high margins selling lines at commercially acceptable prices and not the current situation where the cost of a pre-line far exceeds the gross monthly income of some workers in Zimbabwe.

That is the challenge that the mobile operators face.

*Sure Kamhunga is group head (media relations) with Econet Wireless group.

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