Mike Nxele looks at the growth of Zimbabwe's telecommunications sector and provides policy options for future growth. Presented at 'Moving Forward with Pro-poor Reconstruction in Zimbabwe' International Conference, Harare, Zimbabwe, (25 and 26 August 2009)

1. Harare, 25 August 2009
Mike Nxele

2. Background and Overview
ICT’s Growth and Development: Focus on Mobile
Mobile Banking and The M-Pesa Success Story
The Zimbabwe Economy and Impact on the Telecommunications
Sector
Policy Options and The Way Forward
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There is no facet of life that ICT’s do not touch.
ICT’s are acknowledged as enablers of social and economic
development (G8, 2000).
ICT’s are central to the promotion of the goals of the
Millennium Declaration.
ICT’s have the potential for poverty alleviation and
improvements in the quality of the lives of people (WSIS 2003).

4. 4
International interest in ICT’s and Information Society issues
has increased markedly in recent years: two World Summits
on Information Society (WSIS) in Geneva in 2003 and Tunis in
2005.
What was significant was the recognition that ICT’s are not only
drivers for economic growth, but a key component in addressing
the development challenges (OECD 2009).
Global initiatives to promote ICT’s for development are: the
Digital Opportunities Task Force (DOTFORCE 2000), the UN
ICT Task Force (2001), the Global Alliance for ICT Development
(GAID 2006).

5. 5
Therefore, promotion of ICT’s should be part of any Nation’s
Development Agenda.
This must be reflected in how ICT’s are placed within the Vision
and National Development Strategies and Plans.
Resource Allocation for ICT’s; ICT’s Infrastructure Development.
Ultimately ICT’s must be accessible to everybody at affordable
prices.
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6. 66
Fixed Telephony
Mobile
Internet
Broadband
These technologies are not mutually exclusive but can be
treated as separate technologies as each has its own profound
and transformative impact.
Impact is different for the different telecommunications
technologies: Fixed, Mobile and Internet, Broadband.

7. 7
This paper will focus on mobile technology because of its great
appeal to the majority of people in the developing world and
has the greatest impact in their lives and a direct livelihood
effect.
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During the past 10 years (1998 – 2008) of economic decline in
Zimbabwe, ICT sector did not play its rightful role as an engine
of growth.
Mobile growth fast and remarkable elsewhere in Africa, except
in Zimbabwe.
Emphasized linkages between telecommunications and
economic growth.
Zimbabwe was metaphorically disconnected.
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Recovery of ICT sector needs to be central to Zimbabwe’s
Economic Reconstruction Program.
Basis of this argument is the Conceptual and Empirical Evidence
of how ICT’s in general and mobile telecommunications in
particular have contributed to Economic Growth, Development
and Poverty Alleviation.
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ICT’s within the context of Capabilities and Freedoms
ICT’s and Empowerment (Gender Dimensions)
Contexts of the broader views of Wellbeing and Livelihoods
Poverty Alleviation, the BoP, the MDG’s
Knowledge Economy , Social Perspectives
Governance

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Paper highlights growing importance of Mobile Banking as a
means of extending Banking and Financial Services to the poor
and the unbanked, citing the success of M-Pesa in Kenya as a
Case Study to demonstrate the extent to which Mobiles can play
a transformative role in the lives of people.
Paper concludes by arguing for greater engagement in
promoting the growth and development of this sector within the
policies and actions of the State and any of its Agencies
concerned with the sector.
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It appreciates the efforts made in turning the economy as this is
the only context within which the promotion of ICT’s can be
accommodated, and the pro ICT measures taken in the Mid
Term Review July 2009.
It urges greater efforts to open up the market to greater
competition, and proposes a more ex poste type of Regulation
rather than the current ex ante.
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How important is Good Communications HHHooowww iiimmmpppooorrrtttaaannnttt iiisss GGGooooooddd CCCooommmmmmuuunnniiicccaaatttiiiooonnnsss SSSSyyyysssstttteeeemmmm ffffoooorrrr EEEEccccoooonnnnoooommmmiiiicccc
GGGGrrrroooowwwwtttthhhh????
Social Overhead Capital (SOC) is critical for economic growth
(electricity, communications, road network);
Communications is a key component of SOC;
Investment in telecommunications infrastructure, especially
Backbone Infrastructure is part of productive spending; has an
impact on Aggregate Supply.
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Communications Systems Impact:
Organisation of business life
Productivity of firm and workers
Organisation of household and community life

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Communications and Growth in Developing Countries:
Good communications networks widens markets
Widens buyer and supplier networks
Creates better information flow
Lowers transaction costs
Substitutes for costly physical transport
(quite significant in rural Africa)
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Communications and Growth: CCCooommmmmmuuunnniiicccaaatttiiiooonnnsss aaannnddd GGGrrrooowwwttthhh::: aaaa MMMMaaaaccccrrrroooo AAAAnnnnaaaallllyyyyssssiiiissss
Dual causality of Telecommunications and Economic Growth
Better Communications – Higher Economic Growth
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Telecommunications and Investment
A 1% increase in GDP corresponds to an 8% increase in
Investment in Telecommunications (OECD).
A 1% increase in fixed and mobile penetration leads to an
increase in net foreign investment of 1.2% and 0.5%
respectively (Furthers Economics).
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Growth Effects of ICT
1.2
1
0.8
0.6
0.4
0.2
0
Source: Qiang 2009 , World Bank 2009
Note: The y axis represents the percentage-point increase in economic growth per 10-percentage-point increase in telecommunications penetration.
All results are statistically significant at the 1 percent level except for that of broadband in developing countries, which is at the 10 percent level.
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Impact of ICT’s on Economic Growth:
Of the 4 communications technologies i.e. Fixed, Mobile,
Internet and Broadband, Fixed Networks have the lowest
impact on economic growth and Broadband has the highest.
Impacts are invariably larger for developing countries than
for developed countries, in each of the technology categories.
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Broadband
10% increase in high speed internet leads to 1.38% increase in
Economic Growth low and middle income economies (Quiang,
Rossoto), World Bank 2009
For high income economies impact is lower;
European Commission wants to make broadband a USO by 2010;
36% of households in Europe have Broadband, with an Annual
Broadband growth rate of 20%. Broadband Internet access tripled
since 2003.
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Mobile Impact
10% penetration of mobile – 0.6% economic growth rate.
In developing countries 10% penetration – 1.2% growth i.e.
double the impact.
Impact underestimated by as much as 75% because it ignores
indirect impact on downstream industries and consumer welfare
(McKinsey). Combined impact estimated 8%.
In the East Africa countries of Kenya, Uganda and Tanzania, 1%
penetration resulted in 1.25% increase in GDP in 2006 (GSMA).
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22. “People in the developing world are getting more access at an
incredible rate- far faster than they got access to new
technologies in the past . . . The Digital Divide is rapidly closing.”
(World Bank, February 2005).
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Images courtesy of Jon Stern

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An entire range of economic services enabled by mobile have
emerged.
Beyond economic impacts are other improvements and
freedoms being made and enjoyed by almost everybody
including the BoP’s.

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Communications and Growth: CCCooommmmmmuuunnniiicccaaatttiiiooonnnsss aaannnddd GGGrrrooowwwttthhh::: aaaa MMMMiiiiccccrrrroooo AAAAnnnnaaaallllyyyyssssiiiissss
SIM project (Vodafone) 2004
Mobiles have transformational benefits (enabling people to
do new and innovative things that unlock opportunities that
never existed before (M. Barling).
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Incremental Benefits
Efficiency Benefits: doing more with less; saving money and
time; access to information enabling better decision making.
Transformational Benefits
New innovative offerings, unlocking new opportunities e.g.
M-Banking
Production Benefits
Creation of new livelihoods
Selling of phone cards, airtime, downstream industries creates
thousands of job
Social and Economic Empowerment
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26. phoner~1.gif
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IInnnnoovvaattiioonn Incremental benefits: Bringing people and
markets together in agriculture
• Esoko collects price information on crops in local markets and distributes it using SMS and
internet to farmers and buyers in 10 West and Central African countries
Bakin Birgi
(Monday)
Zinder
(Thursday)
Tanout
(Friday)
Niamey
(Sunday)
Home market
65 km ~ 3 hours
2 mins
20 km ~ 1 hour
750 km ~
not accessible
Farmer in Niger
2 mins
Source: Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger, Jenny Aker, 2008, African Economic Outlook 2009, OECD Development Center, 2009

27. Innovation Reaching the poor through nneeww bbuussiinneessss mmooddeellss
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Trickling down the Global Income Pyramid
Postpaid
6.1 billion mobile users in 2012
4 billion mobile users in 2008
3 billion mobile users in 2007
2 billion mobile users in 2005
0.8 billion
US$40/day
1.5 billion people with US$4-40/day
1.3 billion people with US$4/day
1.4 billion people with US$2/day
1.3 billion people with US$1/day
Microfinance
Prepaid
Micropaid
Phone Sharing
By 2012, there will be 6,1 billion mobile subscribers reaching ever lower income populations
Source: New Growth Markets, Nokia Siemens Networks, 2008, Wireless Intelligence, 2009

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Why is Mobile Banking important?
It is an opportunity to bank and the unbanked and extend
financial services to the power (ttttrrrraaaannnnssssffffoooorrrrmmmmaaaattttiiiioooonnnnaaaallll))))....
A form of empowerment as it links the informal and semi-formal
financial services market: (SSSSoooocccciiiiaaaallll EEEEccccoooonnnnoooommmmiiiicccc IIIInnnncccclllluuuussssiiiioooonnnn).
Encourages flow of remittances, now 2nd most important
source of resource flows to the developing world after FDI.
Remittances a USD5 billion market in direct revenues and 2.5
billion in indirect revenues by 2012. There is a business case.
There is a big market in Africa (high and increasing mobile
penetration with low access to financial services).
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Regional Economies, Access to Financial Services
and Mobile Penetration, 2008 and 2012
Sources: Mobile Penetration – Wireless Intelligence
Access to Financial Services - The World Bank, Finance for All?
*) projected
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Mobile Remittances are cheaper
TTTTrrrraaaannnnssssaaaaccccttttiiiioooonnnn ccccoooossssttttssss for domestic transfers hhhhaaaavvvveeee bbbbeeeeeeeennnn ccccuuuutttt bbbbyyyy
11110000 ttttiiiimmmmeeeessss in Kenya with mobile-payments
To send 9 €, Western Union asks a commission of 50 %,
M-Pesa mobile service requests 5 %
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TTTThhhheeee MMMM-PPPPeeeessssaaaa SSSSttttoooorrrryyyy
A form of Money Transfer Service transacted through the
mobile phone in Kenya. It handles money transfers airtime;
top-ups and transfers; payment for utility bills.
Introduced in March 2008 by Safaricom,
the leading mobile operator.

32. Mobile MMMMMMMooooooobbbbbbbiiiiiiillllllleeeeeee BBBBBBBBaaaaaaaannnnnnnnkkkkkkkkiiiiiiiinnnnnnnngggggggg aaaaaaaannnnnnnndddddddd tttttttthhhhhhhheeeeeeee MMMMMMMM--PPPPPPPPeeeeeeeessssssssaaaaaaaa SSSSSSSSttttttttoooooooorrrrrrrryyyyyyyy
The M-Pesa Run-Away Success Story

33. Awarded Kenya Banking Award for Product innovation
UN World Business and Development Award
Passed the Central Bank of Kenya Audit for Openness and Safety
Audit also stated that M-Pesa has helped reduce financial
exclusion in the country
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Mobile MMMMMMMooooooobbbbbbbiiiiiiillllllleeeeeee BBBBBBBBaaaaaaaannnnnnnnkkkkkkkkiiiiiiiinnnnnnnngggggggg aaaaaaaannnnnnnndddddddd tttttttthhhhhhhheeeeeeee MMMMMMMM--PPPPPPPPeeeeeeeessssssssaaaaaaaa SSSSSSSSttttttttoooooooorrrrrrrryyyyyyyy

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From 1998 to 2008, the economy was characterized by:
negative growth rates, high inflation, massive de-industrialisation
and informalisation, and high levels of
unemployment.
There was an attendant collapse of social services, and a marked
decline in people’s standards of living as many people were
stripped of their sources of livelihoods.
The country joined the ranks of 27 other countries in Sub
Saharan Africa classified as Chronically Deprived Countries (CDC).
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Cartogram of USD 1/day poverty by country
Source: Chronic Poverty Report 2008-09
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Economic Performance 1997-2008: Selected Indicators
Sources: AFDB Selected Statistics on African Countries 2008 Volume XXVII, and IMF Regional Economic Outlook, Sub-Saharan Africa, May 2005 and April 2009;
sub sources: IMF African Department database, February 24, 2005/April 14, 2009; and WEO database, February 24, 2005/April 14, 2009
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Zimbabwe Real GDP Growth Rates, 1997-2008, annual percentage
Source: AFDB Selected Statistics on African Countries 2008 and CIA, The World Factbook
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SADC Countries Real GDP, 2000 – 2007, average change, percentage
Sources: IMF, World Economic Outlook, Financial Stress, Downturns, and Recoveries, October 2008 and Crisis and Recovery, April 2009
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Zimbabwe Inflation Consumer Price, 1997 – 2007, annual percentage
Sources: AFDB Selected Statistics on African Countries 2008 Volume XXVII
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Zimbabwe Total Investment and Domestic Saving, 1997 – 2007
Resources: IMF Regional Economic Outlook, Sub-Saharan Africa, May 2005 and April 2009
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Conceptually significant for Resource Mobilisation and
Economic development (Harrod Domar and Successor Models,
Keynesian Theory)
Growth of Asia’s NIC anchored on high Savings Ratios
Established Links between Investments in Telecoms and
Economic Growth

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Regional Economies, Gross National Savings as % of GDP, 2000 – 2006
Source: UNDP Zimbabwe, Comprehensive Economic Recovery in Zimbabwe, A Discussion Document, 2008
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Regional Economies, FDI Stock Inward, millions of USD
Source: POTRAZ 2009
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Source: POTRAZ 2009
Zimbabwe Subscriber Growth since 2000
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Zimbabwe Subscriber Growth, 2000 - 2008
Source: POTRAZ 2009
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Zimbabwe Operator Subscriber Growth, 2000 - 2008
Source: POTRAZ 2009
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Regional Economies, Mobile Cellular Subscriptions, 2003 and 2008
Source: ITU Information Society Statistical Profiles 2009 Africa
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Regional Economies, Mobile Cellular Subscribers, per 1000 inhabitants
Source: AFDB African Statistical Yearbook 2009
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The Internet TTThhheee IIInnnttteeerrrnnneeettt aaaannnndddd BBBBrrrrooooaaaaddddbbbbaaaannnndddd::::
Penetration Levels
Can we afford it?
How does Zimbabwe compare with others in the Region?
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Regional Economies, Internet and Broadband Users and Penetration
Sources: extracted from Internet World Stats for 31 March 2009; ITU African Telecom Indicators 2008 (fig. 2007)
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51. Difference between Prices between Developing/Developed Countries, 2008
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Source: ITU, Measuring the Information Society, The ICT Development Index 2009
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52. Africa has the AAAAAAAfffffffrrrrrrriiiiiiicccccccaaaaaaa hhhhhhhaaaaaaasssssss ttttttthhhhhhheeeeeee hhhhhhhhiiiiiiiigggggggghhhhhhhheeeeeeeesssssssstttttttt pppppppprrrrrrrriiiiiiiicccccccceeeeeeee ffffffffoooooooorrrrrrrr
IIIIIIIInnnnnnnntttttttteeeeeeeerrrrrrrrnnnnnnnneeeeeeeetttttttt
ZZZZZZZZiiiiiiiimmmmmmmmbbbbbbbbaaaaaaaabbbbbbbbwwwwwwwweeeeeeee iiiiiiiissssssss ccccccccoooooooommmmmmmmppppppppeeeeeeeettttttttiiiiiiiittttttttiiiiiiiivvvvvvvveeeeeeeellllllllyyyyyyyy lllllllloooooooowwwwwwwweeeeeeeerrrrrrrr
tttttttthhhhhhhhaaaaaaaannnnnnnn tttttttthhhhhhhheeeeeeee RRRRRRRReeeeeeeeggggggggiiiiiiiioooooooonnnnnnnnaaaaaaaallllllll aaaaaaaavvvvvvvveeeeeeeerrrrrrrraaaaaaaaggggggggeeeeeeee........ OOOOOOOOrrrrrrrr iiiiiiiissssssss iiiiiiiitttttttt????????
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Zimbabwe, Internet and Broadband, 2000 - 2008
Source: ITU, ICT Eye (online)
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What does this mean for Zimbabwe?
Telecom Sector suffered a lack of investment that affected all
the other sectors.
Recovery of the sector hinges on recovery of the economy.
But Sector recovery can also assist economic recovery. Sector
has demonstrated its capacity to survive economic turbulences,
especially in Africa (recall the dotcom crisis in 2000?).
But it needs a set of measures that assuages the fears of
investors.
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What does this also mean for Zimbabwe?
A great Mobile Banking market awaits in Zimbabwe.
Remittance can bring transformational production to
incremental benefits to improve the livelihoods of people.
Remittance can promote socio-economic inclusion through
provision of access to financing.
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Remittances a Business Opportunity for the Mobile Players in
Zimbabwe:
An estimated ¼ of population leaves abroad.
Many harbor wishes of coming back.
Many household in Zimbabwe are supported by someone
leaving abroad.
Most of the money is transmitted through unofficial channels.
Official channels accounted for 1% of remittances from South
Africa – 2007.
Growing the Mobile Market and introducing services such as
Mobile Banking can benefit many people in Zimbabwe.
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Lessons for Recovery Program
The mobile sector failed to exploit the barriers to entry
placed by the Reserve Bank of Zimbabwe (RBZ) in 2004
restricting the formal channels for remittances.
Money Transfer Agencies were restricted to only four, and
subjected to some stringent reporting conditionalities.
Further, in 2005, the RBZ further decided that recipients
receive their money in local currency at official exchange
rates.
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A recent ICT survey came up with three major issues dogging
ICT’s in Zimbabwe:
1. Infrastructure Development and Employment i.e. availability,
affordability and accessibility;
2. Finance Resources Mobilisation drive in support of ICT4D
activities;
3. Human Resource Development and Capacity Building.
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Infrastructure Development
Promoting Competition Private Partnerships
Lowering Entry Barriers
Cost of acquiring a License in Zimbabwe is on the high side.
This will impact the pricing structure as providers seek to
recover their investment. In turn it affect service uptake.
GSM established that in long run lower entry barriers will
benefit the country and the people.
Process for obtaining license needs to be streamlined.
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Promoting Infrastructure Sharing
This is as much a regulatory issue as it is a commercial one
(part of the 2nd wave of Regulatory Reforms). Pro-active
regulation that is developmentally oriented are pursuing this
model.
In a way this is part of the Market Efficiency Gap Analysis.
New players may want to reach underserved areas but through
the use of infrastructure aimed by other.
In the case of Zimbabwe, promoting (as opposed to merely
authorizing) sharing is needed.
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Promoting Infrastructure Sharing
This could be for both passive sharing (operators sharing the
non-electrical civil engineering elements of the network –
towers, masks, pylons, ducts) or Acting Sharing (the
active/intelligence part of the networks part of the 2nd wave
of Regulatory Reforms)
Sharing reduces network development costs, makes roll out
faster and more affordable.
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Infrastructure Development
Building Confidence of the Investing Community
Promoting Competition.
Zimbabwe is a Suppliers market at the moment
Participating in Regional BB projects

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Improving the Credibility of ICT Regulatory Bodies
EKOWISA Survey for 2009 found low perception in the market.
Balancing the Interest of many Parties:
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Three key requirements for a robust ICT sector are relevant in
the Zimbabwe scenario and need repeating here:
1. Timely policy and regulatory responses;
2. Cross sectoral leadership and institutional arrangements;
3. Public private partnerships that can harness the capabilities
of private sector to meet public policy objectives (World
Bank 2009).
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65. 6655
Given the link between ICT development and economic growth
and development the hope for the future of ICT’s in Zimbabwe
rest on the revival of the economy.
Promoting the ICT sector is not a matter of choice for a nation
eager to grow rapidly and improve the living standards of its
people. In the case of Zimbabwe, it is a necessity for
Zimbabwe to be reconnected to the ICT world.

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Developing a National ICT Policy
Ministry for ICT established by the new Coalition government
ICT Bill is due for tabling in Parliament
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ICT Industry:
The Pro ICT Mid-Year Fiscal Policy Review (July 2009) is
cause for cautious optimism.
It needs to be buttressed by other actions such as the
passing of the ICT Bill into an Act, the establishment of the
envisaged ICT Authority.
Further liberalisation of the market and allowing more
players.
Adoption of innovative Pricing strategies (Low Margin, High
Volume Business Models that encourage access and use by
the poor.
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The Future is Bright.
But it starts with what we do Today.
Its all about balancing the interests of various Stakeholders
(Investors, Consumers, Employees, Operators).
The comfort to be drawn is that the Mobile Sector has so far
not let anybody down anywhere in Africa, or the world for that
matter.
With the right Policies, Environment, Vision and Commitment,
it will not let us down in Zimbabwe.
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