Increased Data Prices Proposed by RBZ Could Worsen Existing Conditions
The Zimbabwean Reserve Bank (RBZ) is about to increase the cost of your mobile data. They've imposed 'fair pricing' for internet packages in an attempt to address complaints about mobile operators preferring USD over local currency, Zimbabwean dollars (ZiG).
The cellular network companies have been under heat for providing exclusive USD-based promotions for internet data, ignoring ZiG, which has sparked concerns among key players.
Let's face it, it's not just whisper; some bundles are exclusively available in USD, and here's why.
RBZ is joining hands with POTRAZ and TOAZ to ensure adherence to the new pricing guidelines. The Financial Intelligence Unit (FIU) will supervise this compliance to ensure consumers can purchase data in their desired currency.
If everything went according to the government, the ZiG would be universally accepted and desired. But unfortunately, that's not the case. The reason cellular operators are after USD is the same reason we dig greenbacks.
Mobile operators undeniably need USD for equipment and software purchases. They aren't making deals at Willowvale, after all.
Implications of the 'fair pricing' decree
Prepare for the demise of some promotional bundles and a hike in prices for others.
Even though the government insists the USD-ZiG exchange rate is one-way, the street smarts say otherwise.
If operators use the official exchange rate to convert USD packages to ZiG, they would be way cheaper in ZiG. This could lead Zimbabweans to spend their USD to buy the same bundles in ZiG and subsequently offload unwanted ZiG onto operators.
With reduced USD revenue, operators would have to rely even more on the RBZ for forex that they don't have.
An alternative approach for operators could be raising their USD prices to ensure the ZiG values aren't too low. This would also result in lower USD sales.
This isn't rocket science; it's what happened to big retailers. So, while it's unfortunate that Zimbabweans earning in ZiG can't access certain USD-only bundles, tackling this issue the way RBZ wants would only make things worse.
As data costs are already steep for economy-struggling Zimbabweans, something needs to be done, but this isn't the remedy.
Insights
The Reserve Bank of Zimbabwe's 'fair pricing' directive can have diverse impacts on both mobile operators and the broader Zimbabwean economy:
Potential Consequences for Mobile Operators
- Reduced Revenue: Compliance with the directive might result in reduced revenue for mobile operators, affecting their profitability and network investment capabilities.
- Operational Burden: Stricter regulation could lead to additional operational costs and challenges for mobile operators.
- Market Scale-down: Smaller operators might struggle more to comply with these regulations compared to larger ones, potentially driving market consolidation.
Potential Consequences for the Zimbabwean Economy
- Enhanced Consumer Access: Lower data prices could make internet services more affordable, boosting digital inclusion and economic engagement.
- Economic Growth: Increased internet access could boost economic growth by fostering e-commerce, remote work, and digital innovation, particularly in sectors like fintech[1].
- Inflation Influence: If the directive leads to reduced operator profitability, it could hinder economic growth and contribute to inflationary pressure if operators pass on costs in other ways.
- Regulatory Perspective: The directive might influence the broader regulatory environment, impacting investor confidence and affecting how other sectors perceive government intervention in pricing strategies.
- The 'fair pricing' regulations imposed by the Reserve Bank of Zimbabwe could potentially decrease revenue for mobile operators, leading to challenges in network investment and profitability.
- In the broader Zimbabwean economy, this directive may promote increased digital inclusion and economic engagement through more affordable internet services, potentially stimulating growth in sectors like fintech, but could also contribute to inflationary pressure if operators pass on costs in other ways, or influence investor confidence and the regulatory environment negatively.
