Zim internet adoption doubles since 2015

ALMOST half of Zimbabwe’s adult population now uses mobile internet, doubling since 2015, a global telecom operators’ body GSMA report shows. This doubling in adoption rates is a clear indication of the growing importance and reliance on digital connectivity in the country.

“The usage gap (covered but not connected) makes up 70 percent of the unconnected population,” GSMA stated.

“The majority of internet users are accessing legacy 2G or 3G technologies, rather than 4G. One in six people still do not live in an area covered by a mobile broadband network.”

The expansion of coverage has, more appallingly, almost stopped in recent years, according to GSMA.

While 4G coverage expanded to 39 percent in 2021, it stayed at 35 percent between 2017 and 2020. 3G coverage has been steady at 84 percent since 2018.

“Just over six percent of the country’s population does not have access to any mobile coverage (2G or higher),” GSMA said.

As expected, due to the challenging operating environment, mobile investment in Zimbabwe has not been spared from the impacts of tax reform.

“Mobile investment and usage have been impacted by the challenging macro-economic environment but also by an increasing burden in mobile sector taxation,” reads the report.

As a result, base station deployments have stalled.

“This slowdown in deployment coincides with the period in which the tax burden on operators has significantly increased higher Universal Service Fund, excise duties and smartphone fees.”

One of the primary challenges facing internet access in Zimbabwe is the high cost of data.

It comes as telecom rates have increased significantly as a result of the severe devaluation of the Zimbabwean currency.

The frequent tariff adjustments in local currency have resulted in some sections of the industry calling for the adoption of USDpegged tariffs to preserve value and help the companies reinvest in their networks.

Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) approved telecom tariff increases with a 100 percent rise in the local currency, explaining that the move was necessary to ensure the viability of the sector.

Economist Vince Musewe recently told Business Weekly that the information and communication technology sector is a key sector for economic growth and development.

“Companies in that sector must continually innovate and bring in new technologies if we are to keep up. These companies must therefore be viable and attract the necessary capital,” he said.

“This requires viable service pricing models and pegging to USD would be a positive move to ensure they generate decent revenues. However, we must be wary of profiteering where ICT companies make huge profits without upgrading their services.”

Foreign companies tend to consider establishing operations or partnering with local entities when they can rely on predictable costs and returns.

Industrialist and Confederation of Zimbabwe Industry’s President, Kurai Matsheza, said a stable pricing framework creates an environment conducive to sustainable economic growth by providing businesses with greater confidence in their long-term planning.

“The US dollar allows for better planning and predictability of revenues or rewards for goods and services. The downside is that a US dollar environment tends to be high-cost and attracts imports or offshoring of services to cheaper jurisdictions with softer currencies,” he said.

“Investors look for stability, viability and sustainability. The USD may provide stability but may not be viable because demand at USD prices may be small. We tend to see demand, usage and offtake drop when we switch to USD at the low end of the market. Fully dollarising all sectors of the economy could end in failure.

“People and entrepreneurs respond to incentives. A worthwhile currency does raise and revive the impetus to innovate.”

The hikes did not apply to internet and voice services valued in US dollars. For the second quarter of 2023, total mobile operator revenues rose 170,5 percent to $435,7 billion from $161,1 billion recorded in the previous quarter.

On the other hand, operating costs were up 109,9 percent to $215,8 billion from $102,8 billion recorded in the first quarter of 2023.

Internet Access Providers (IAP) revenues appreciated by 136,9 percent to $191,2 billion from $80,7 billion in 2023’s first quarter, while operating costs for IAPs rose 428,8 percent to $224 billion from $42,4 billion in first quarter of 2023.