SA is opening funding and support to the Zimbabwean telecommunications sector, ensuring the industry benefits from much needed investments.
The countries recently signed a bilateral investment agreement to promote and protect trade in the agro-processing, telecommunications, mining and infrastructure sectors.
Trade and industry minister Rob Davies says South African development finance institutions, such as the Industrial Development Corporation, are already considering a number of infrastructure development projects in Zimbabwe.
The country, which has three mobile and one fixed-line operator, namely Econet, NetOne, TelCel and TelOne, has been marked by political instability and stunted economic development. Fixed-line penetration currently stands at 3%, while mobile penetration is at 15%.
“The thing that has plagued the industry, until last year at least, was the lack of investment and hyper-inflation... There is huge opportunity; the industry is growing despite the challenging economic conditions people live in,” says Protea Hirschel, industry analyst at Frost & Sullivan.
Davies says a memorandum of understanding (MOU) on economic cooperation for the two countries has been finalised and is expected to be signed early next year. The MOU would ensure there is coordinated engagement between the private sectors from both countries, and cooperation between institutions to improve capacity building, he notes.
signing of the agreement will create an enabling and protective environment for investments made by nationals of both countries in each other's territories,” says the DTI.
Troubled telcos
Davies says the signing of the investment treaty would build much-required business confidence in Zimbabwe's industry, and ensure the re-integration of the country into cross-border investments.
In April, the Zimbabwean government embarked on a 25-project planning initiative, over 100 days, in an effort to stimulate the revival of the country's ICT industry. The government was expected to develop a national communications infrastructure master plan and ICT Bill, among other programmes, after consulting with stakeholders.
There were also concerns by operators that the market could be opened up to a fourth operator, following criticisms on high tariffs, poor connection speeds and poor customer service. Hirschel says that, while some operators are under-capitalised, the national regulator is not considering licensing a fourth mobile operator.
“What the country needs now is network infrastructure. The networks of all operators need to be expanded - on all levels,” Hirschel points out.
Reducing risk
Zimbabwean economic development and investment promotion minister Elton Mangoma says the agreement would offer companies and individuals increased security and certainty under international law when they invest, or set up a business in other countries party to the agreement.
Hirschel adds that the agreement would allow South African investors certainties, which were previously not available due to political instability in Zimbabwe. Rights to ownership and private property would give private investors the openness to relax.
“The reduction of the investment risk flowing from the agreement is meant to encourage companies and individuals to invest in the country that concluded it. Allowing foreign investors to settle disputes with the host country through international arbitration is an important aspect in this context,” says Mangoma.
Related story:
Zimbabwe resurrects its ICT industry
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