I read a blog post some time that was titled “Zimbabwean entrepreneurs are 10 years behind in technology”. It had me thinking for a bit to be quite honest. I’ve never thought this way about our country or our people but it did have me thinking. Are there cases where we’re just not with it? I later decided to broaden the subject a little to cover entire business products and services that seem to have caught on elsewhere in the world but have just failed to take root in Zimbabwe. I also want to take a look at the possible reasons in each case. Perhaps someone out there can figure out how to make these a success in Zimbabwe
Fiber and wired internet connections
Zimbabwe is a mobile internet country. According to the PORTRAZ in 2017 Zimbabwe registered 6.9 million active mobile internet connections as compared to 31345 fiber internet connections. There’s been a lot of talk about fiber but the fact is we are mobile based. Fiber internet of course has the advantage of much greater bandwidth (up to 100Mbps) than wireless 4G (up to 18 Mbps).
The cause for this? Besides the high cost of wired solutions can be pinned down to the lethargy of fixed operators over the years. They were still operating on old monopolistic terms, requiring massive paperwork and deposits for phone line connection at a time the country was in dire economic trouble. Mobile operators offered prepaid in the 1990s, fixed operators would only do so 2 decades later. Mobile internet became available and at very good speeds in 2007/8. By the time fiber came around the wireless options had cornered the market.
The way the world consumes media and content has changed drastically over the last 20 years. Gone are the days of buying the album. iTunes ushered in an era of buying the song digitally and now services such as Apple Music and Spotify offer unlimited music streaming for a flat fee. Television too was disrupted in the same manner. Streaming services have changed the world.
We’ve spoken about the internet connectivity landscape in Zimbabwe and this somewhat explains the lack of uptake in these services but there’s more to it. Payment systems play a role. While Ecocash has a competent payment system it’s integration into digital payment has had varied success. With the bulk of the country going unbanked (more on this later) and our currency problems, participating in such services is a hassle.
There’s a lot of work going on locally in this space though, at least on the video side of things. And rightly so as YouTube is the world’s most popular streaming service. Perhaps we will see a true take off with quality local content that is relevant to people.
To say e-commerce has taken off in other markets is a massive understatement. E-commerce is a behemoth that is growing to unprecedented heights. Amazon Prime day in the US recorded US$1bn in sales. Alibaba’s Singles day in China brought in a whopping US$17bn. Now those are very large figures compared to our economy but fact remains it just hasn’t hit our shores like that.
Now many will be quick to point at our internet service but honestly e commerce is largely mobile driven. Also I talked about payments earlier on and they do form part of the problem. However if I were asked to single out a main cause it would come down to business practices. You’d be hard pressed to find a working e commerce or partially e commerce business in Zim. Fresh in a Box has done a good job but try buying groceries online or getting your food delivered and results may wildly vary. There’s a sort of desire to jump to the online business without fixing the underlying offline business.
The elephant in the room. Banking in Zimbabwe is just not for everyone. Not many really. Most of the problems I’ve mentioned payment systems, something our banks are equipped to handle but do not have the ability to pull it off. According to the reserve bank of Zimbabwe there are 3.16 million low cost bank accounts in Zimbabwe as of the first quarter 2018. This figure actually grew from 2.2 million in the previous quarter. This number made up 57% percent of bank accounts in the country. Contrast with Ecocash who in 2017 had close to 3.2 million active subscribers. Before the crippling cash crisis.
High unemployment and lack of formal employment mean that the requirements banks place on account opening are above the reach of many. Banks also have a terrible distribution network if you look at rural Zimbabwe. Our economy was largely cash based until being forced to opt for electronic money. And when they opted for electronic it was with a solution that worked for them; mobile money. The mobile money providers stepped in and offered the transaction platform and simplicity that people needed. The banks own halfhearted attempts at mobile platforms lacked innovation and offered the same limited service that accounts did. There are other factors of course, the hyperinflationary era and the current cash crisis have not painted banks in the most positive light with people. This is only made worse with banks profits continually growing in a tough economic time for the people. And the banks have done little to help their image.
This one shouldn’t be a surprise after talking about banking; these two are joined at the hip. Insurance is big business the world over. Consider products such as life insurance, home & contents, Health insurance (medical aid) and other specialized insurance products. This business is not as prominent in Zimbabwe as in other parts of the world. The many tales of people who lost everything with one unfortunate disaster or event should be enough to mobilize people to seek insurance and for insurance companies to innovate around tailored solutions.
With low incomes and little to no disposable income, it’s very difficult for people to afford insurance. Although one would argue that these are in fact the reasons people cannot afford to be uninsured. The process through which insurance companies design products is complicated and an article of its own but it really shouldn’t be enough to explain the lack of product appeal. Look at how well the market has taken to burial plans, so the market is clearly not insurance averse. The burial plan providers have catered packages that appeal to what people want to do not what the companies want people to do.
Consumer credit has a lot of negative stigma attached to it but it is still a major source of growth. Homes the world over have been bought, built and furnished with credit. Entire industries have been propelled on credit such as mobile phone plans. However our beloved nation has not taken to credit well at all. Banks have time and again irked the people with their unwillingness to lend to the people.
We’ve spoken about low incomes, low disposable incomes, lethargy in the banking industry and a general distrust among people for these institutions. A major factor here is also the view of credit within the people. With credit already being looked to as an option to put food on the table or clothes on your back the psychological association with credit is negative. From the banks side they do need to enter credit agreements that will be seen to term and it’s not hard to understand why they would have stringent credit requirements in this economy.
Any other products you can think of that are popular in other parts of the world but have not so far taken root in the Zimbabwean market? Why do you think it is that way?