Yesterday (13th July), Econet increased their prices across the board for none bundled stuff and tomorrow Netone is doing the same and of course Telecel will do too. This is because the regulator, POTRAZ has raised the ceiling for these tariffs. Word on the streets is that we should expect another upward revision in August. By the way, bundles will be adjusted soon by all the operators and oh- Liquid (formerly ZOL) and Telone already increased their fees.
The above is a really hard paragraph to digest. It’s too long and it is full of bad news for you and I who reside in this house of stone, Zimbabwe. These services that have become so necessary to almost all aspects of our functioning are slipping out of our reach even further but….
These services are still too cheap
The last time POTRAZ approved changes to the headline tariffs (actual tariffs not bundles) was in August 2020 just after the introduction of the forex auction by the RBZ. The official exchange rate between the USD and the Zim Dollar was 1:85 and today the official interbank rate is 1:394. In August 2020 the parallel exchange rate was 1:100 and today some folks on the street say it’s 1:780
What this means is that the value of our local money is now 4.63 times weaker according to the officials and 7.8 times weaker according to the streets since the last tariff adjustment. So, if the telecom operators aimed to get the same value they got from their services in August 2020 they should have been allowed to increase their prices by 5 times or 8 times depending on which market reflects real value.
However, the increase that has come at least for voice calls is a 60% jump, that is a 0.6 times increase. In effect therefore the operators even after their price increase will be earning far less per unit than they were earning two years ago. In hard numbers, after the price increase they will be earning 8 times less per unit if we use the official exchange rate or 13 times less if using the other one. That’s some crazy decimation of value. But still…
We cannot afford
The above is the economics at the operator end of things. The economics of our pockets is way more miserable. To use the earning situation of a random civil servant who was willing to share their financials: in August 2020 they were earning around USD320 if we converted their earnings at the official rate or about USD270 if converted at the parallel rate.
Calculating what this person will earn at the end of the month when the government effects the 100% in their Zim Dollar salary and then adding the USD100 component of the salary and the USD75 COVID allowance: our person will earn about USD340 at the official rate if the rate doesn’t change or USD257 using the street rate, assuming again that it doesn’t change before the end of the month.
By and large we are earning less and even though the telcos are getting less value per unit from us, we are less able to afford their services. That is the conundrum of this economic mess we live in.
SOS to the diaspora
You see, although the first paragraph of this article sounded as if data and calling have become so expensive, in real terms they have not. It’s just that for a great many people in Zimbabwe, no mater how cheap the services are, they just can’t afford them. This is where the diaspora comes in: A dollar worth of airtime is still quite a lot and goes a long way in placing a smile on people’s face back home.
We at Techzim recently introduced a service that allows folks in the diaspora to buy airtime for people back home. So far your response has been very encouraging, thank you. This price increase is just another reminder to all our friends in the diaspora that you can make a difference with not so much money. Of course, as you utilise our service you also support us- we are grateful.
Here’s where to buy Zimbabwe airtime from the diaspora.
4 comments
You cannot expect the price of data to remain static over 2 years, even if we were using USD only. The cost of data was high mainly because of initial infrastructure costs, which could possibly have already been recouped as Zim companies tend to want to recover these costs within a year or 2. They still have maintenance costs, but these are a fraction of the original establishment costs. The global costs of data have also been falling, everywhere except from providers Africa. These are factors you have excluded, in data being “too cheap”.
You are right that a trend of lower prices over time should be expected given economies of scale and the other factors you highlighted. Those factors are probably more than compensated for by the unique to Zim costs though: forex costs as our currency deteriorates and running the network on diesel for considerable swathes of time for example
This is what happens when a whole country is on safe mode, or survival mode. People are forced by circumstances to live a substandard life and companies are forced to make sacrifices for them to exist. It is unfortunate that, with all the natural resources endowed to the country, the policymakers would rather have citizens have enjoyment of the resources not now, but, maybe, from 2030. I wish the petty cash which was used for roads could also have been used on telecommunications infrastructure. Good roads, no medicines no food.
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