How taxes could have negatively affected Zimbabwe’s internet penetration

Nigel Gambanga Avatar

The last time anyone was counting, Zimbabwe’s internet penetration stood at 44.5%. This figure was presented recently by POTRAZ, the national telecoms regulator in its second quarter report for 2015.

This percentage, which is a reflection of the extent to which the internet is being accessed by the citizens of this country, was a 0.2 % increase from the previous quarter. However, one other remarkable pattern was also displayed in the same POTRAZ report.

In the first half of 2014, we were actually experiencing an increasing internet penetration rate. It jumped from 43.1% in the first quarter of 2014, to 47% and from the second to the third quarter of 2014 it rose marginally to 47.5%.

In the two consecutive quarters, it fell from its 47.5% high to the 44.3% that was being rebounded from in the latest report. So what seems like an improvement in internet penetration is actually a feeble attempt at recovering lost ground.

POTRAZ, Zimbabwean internet,
A graph representing the changes in Zimbabwe’s internet penetration

What caused the change?

There a lot of factors that could be singled out for low internet penetration. Limited infrastructure investment from operators is one drawback, then there’s the cost of internet services and supporting tools like devices for accessing it that keeps users at bay.

A receding penetration, however, had to have been caused by other factors. In the Zimbabwean context, it’s easy to point to a wheezing economy that has made online access less of a priority for most people over the past year.

There is one other huge change that happened during the period of decline. The government introduced a 25% import duty on mobile devices in the last part of 2014.

This meant that distributors passed on the cost to the consumer and all devices became more expensive. Whatever excitement that was being cultivated in having that first internet experience on mobile devices was pacified by higher device costs.

In the absence of harder data, it can be argued that the import duty might not be the leading factor. Instead we’ll have numbers on reducing disposable incomes being brought up to explain every industry lull.

But the trends from POTRAZ are too compelling to ignore here. This is the case especially after the telecoms operators have all voiced their challenges with the import duty on devices and its effect on their industry.

These same troughs in internet penetration have a correlation with telecoms revenue. In an industry where voice communication is losing sex appeal, the outcomes of broadband pricing are going to be a key determinant of overall telecoms performance.

One would expect a stronger, unified lobby from telecoms operators to have this duty removed or, more realistically, revised downwards to accommodate the impact it could have on their future revenue prospects.

By now, the State should have noticed how “minor adjustments to the telecoms sector can have a huge impact on operational outcomes and ultimately, the taxes repatriated at the end of the year.

One response

  1. Anonymous

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