It’s been an extremely tense week in Zimbabwe and some of the governments actions over the past few days make it pretty clear why Zimbabwe ranked 174th on the Heritage Economic Freedom List for 2018. Among 47 countries in the sub-Saharan region we rank 44th and some of the decisions such as shutting down the internet this week offer a glimpse into why we rank so lowly…
So what’s this Economic Freedom list anyway?
The Heritage Economic Freedom Index is a measure of Economic Freedom within a country and you may be wondering what “Economic Freedom” is to begin with. Well Heritage describes it as follows:
Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.
As you read the passage you slowly realise that a lot of these things are beyond the reach of most Zimbabweans.
So why are we ranked so lowly?
The compilers of the list gave a perfect description of why Zimbabwe has one of the least free economies in the world and I’ll let you read it for yourself without paraphrasing or changing a single word they give in their description:
Zimbabwe’s economy is characterized by instability and volatility, both of which are hallmarks of excessive government interference and mismanagement. Massive corruption and disastrous economic policies have plunged the country into poverty. An inefficient judicial system and general lack of transparency severely exacerbate business costs and entrepreneurial risk. The government will likely adopt desperate short-term measures to stave off economic collapse, possibly including a unilateral de-dollarization that would reopen the door to hyperinflation, further crippling the private sector and severely undermining macroeconomic stability.
The fact that the government doesn’t fully enforce property rights means as long as there isn’t a major policy shift and behaviour around issues of land ownership not much will change.
Oh, what happened to being “open for business?”
The shutting down of the internet over the past few days is a clear sign that the government doesn’t care about local businesses and how much they lose by such short-sighted moves. If you rely solely on the internet for business or any other process the government just flipped you a serious middle-finger and made it impossible to make money. For businesses like Hwindi, Nifty Planr, or us here at Techzim we lose bucket loads of money when the government decides to flip a switch as if they were playing with a toy. Then that same government comes out and talks about empowering entrepreneurs. If they want to empower entrepreneurs then maybe making sure they themselves are not the ones affecting our income streams is vital.
Another perfect example of how government believes they can control and interfere with every business was clear when today they made the announced that they had met with combis and effectively started regulating that combis charge 10c/km. Though government does not own combis they felt the need to interfere with another business, in a similar way they interfered with Delta’s move to charge their beverages in USD. Though the moves by both combi operators and Delta may not have been popular with the general populace this interference is typical and it can happen to any business.
Just ask internet service providers and mobile networks how much money they’ve lost because of an unforeseen move that was out of their control. Regardless of how much you optimize your business to make money, as long as that business is in Zimbabwe, there’s a chance that the government will scupper your income with one blow. A blow you may never recover from, especially for entrepreneurs…
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On the contrary, ISPs and mobile network providers aren’t losing money. Firstly, Econet et al, are experiencing increased voice and SMS traffic, which is more money. It also pays more than data services. Secondly, whether you bought data bundles, or pay monthly for your data, you most likely aren’t getting a refund for the service you didn’t receive. The customer takes the loss, not the service provider. Finally, service providers probably didn’t have to pay their upstream internet providers, money which they again get to keep. In my opinion, that’s why they were quick to comply, because they didn’t have much to lose.
As customers, we must act to recover those lost days of service so that ISPs do feel the pinch. That way, next time they’ll act on everyone’s interest.
NO! NO! NO!. Almost everything you said is wrong.
(1) First off ISP’s are definitely losing money, it’s in the name (Internet Service Provider) their whole business model is based on selling Internet access and if they are not doing they lose money. Their employees have to be paid month end, they have to service their loans, and other fixed costs that don’t go away just because they didn’t do business that month.
(2) Unless Zimbabweans start to phone and sms like it was the year 2004. Then for Econet and other mobile service providers (MSP’s) the loss of revenue from Internet traffic is going to hit them hard.
(3) You are probably right about there being no chance of refunds…..
(4) Business is about growing your investment. So for service providers getting to keep money instead of having to pay upstream Internet providers.
(5) The consequences of refusing to comply with the Government directive to shut down Internet is the stuff that gives Ceo’s of ISP’s and MSP’s nightmares. Their companies might face heavy fines or lose licences to operate,or they could face imprisonment. So they had a lot to lose.
(6) Typical Zimbabwean logic blame anything and everyone else, but by all means avoid blaming true culprits for bad behaviour. Kick the dog when Sekuru farts.
Sorry number 4 is incomplete. I meant to say.
Business is about growing your investment to make a profit , so for service providers getting to keep money instead of having to pay upstream Internet providers that is totally missing the point of why they started their business in first place. The aim is to sell Internet access with a markup to make a profit. Not keep the money they already have. They want to make more money
1) Internet for consumers generally is not sold like tomatoes, buying what you need as and when it’s needed. Most internet is paid for in advance, be it by data bundle, or a prepaid connection like ZOL Fibroniks. Even post paid connections have a fixed cost, that won’t be adjusted to cater for this shutdown. So, that business is already done, so you can’t say the ISP didn’t do business this month. They did, it’s only that the customer didn’t receive what they paid for.
2) Any increase in voice and SMS traffic, over what was there before, will result in an increase in related revenue. There’s no rocket science required here.
3) No response needed
4) You have missed the point totally. Business is about selling a product, adding markup to result in profit, agreed. But, in this case, they are keeping both the product cost and markup, because they neither have to pay the supplier for what the customer “bought”, nor are they refunding the customer.
5) Consequences of not complying have been ignored plenty of times by service providers, Econet being notorious for this. Where was complaince when Kwese TV was required to comply with BAZ? Where was compliance when cellular networks had to pay licence fees. Like I said, it’s about what you stand to lose (or gain).
6) Again, you missed the point. I wasn’t responding to who is to blame, I was only responding to the claim that ISPs made losses.
It’s very sad.Our government was supposed to take into consideration that other people are doing their businesses via internet.This was supposed due before they moved on to shutdown this kind of platform
I will not pay a cent on any profit i make on my businesses this year. I have never had to deal with such a situation before. I rely 100% on facebook and youtube for ads.
I have spoken.
The entrepreneurs bit is another side but the most terrible is how it has added a cost in communication to the already starved populace who are bleeding from the 2% then the $3 for fuel. I thought I heard leadership of this country talk about the importance of dialogue and I am worried who they are talking to before implementing these measures? Seriously!!!
Very gud at formulating policies that favors and protect their interests and at times good policy formulators however very poor implementors. What a government.
Wish if this hypocrisy comes to an end and people to see the dominating serpents as they are.why would someone pretends to be a vessel of God whilst he is nothing than an agent of the devil.we said we want to restore our legacy is saying statements which are far from the truth our so called legacy?? why would someone wish to address the symptoms of the problem and not the root cause .the crissis in Zimbabwe like now is not political violence and this is not the time to point fingers at one another,but rather to be brave enough to vohemly call a spade a spade and not a shavel.let’s build the nation with two pillars of transparency and accountability and let the “do as l say not as l do ” ends in the bible
First of all they have not win any election since 2002. Secondly is very clear they don’t have a clue… All these stayaways are pointless. What we need is civil disobedience.. still paying these vultures till they show us where our money is going. Simple and will hurt them where it counts their greedy pockets. We can’t substitute one politician for another
I wonder, how many people decided to stay home because of the second blackout? I know we were told to because, surprise surprise, we could not verify what was happening around us in real time! This upcoming bill will probably have a similar and permanent effect on the confidence of investors! Its yet another essential aspect they/we can’t rely on anymore.
How can investors invest in a country that shuts down the internet. Very unwise move by the government. Kana mazvitadza ipawo mukana kunewamwe vamboedzao.