HomeBusiness DigestCurrency, tariffs stunt local mobile firms

Currency, tariffs stunt local mobile firms

ZIMBABWE has been left behind in a booming mobile phone industry in Africa as a recession and foreign exchange crunch hampers the three operators’ ability to expand their networks, a leading industry official said.

“In term

s of penetration rate, we are the lowest in Africa. The market potential is currently estimated at 30%. Sitting at 6% we have just scratched the surface,” said Douglas Mboweni, chief executive of leading operator Econet.

In Zimbabwe, crippled by an eight-year recession, customers wait months for mobile phone SIM cards to come on the market, and most are forced to buy them at nearly 10 times the official price on the thriving black market.

“It is about forex injection. We can make all the Zimbabwe money we want, but unless we have the forex we will not do much expansion because the inputs . . . are forex denominated,” Mboweni told an annual congress of business leaders in Bulawayo late on Wednesday.

Local mobile firms are also saddled with a heavy load of international traffic — forcing them to pay out scant foreign currency to counterparts in recipient countries — because Zimbabwe’s low tariffs made it cheaper to make international calls than most other parts of the world.

“At 14 cents a minute we are the lowest in the region in terms of tariffs. Kenya is around Kenya 40-50 cents … South Africa around 20 cents. Zimbabwe today is a dumping ground for traffic,” Mboweni said.

An unreliable telecommunications system has worsened the lot of Zimbabwean companies struggling to survive in a harsh economic climate that has seen some fold under soaring inflation and frequent electricity cuts.

Officials say local firms are operating at about 30% capacity on average.

“With no communication you cannot do business. There is actually a stumbling block,” said Callisto Jokonya, president of the Confederation of Zimbabwe Industries.

Last month Econet, which has about 57% of the local subscriber share, said it aimed to increase subscribers by more than two-thirds to 800 000 after securing a US$20 million network expansion loan from the Cairo-based African Export-Import Bank.

Econet competes with two other operators, privately owned Telecel Zimbabwe, which has 17% of the local market, and state-run Net*One with 26%. — Reuter.

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