Thursday, March 25, 2010

Zimbabwe Reaches Turning Point In ICT

Zimbabwe has reached a turning point in its destiny and ICT markets in the country are taking off, according to a new study published by Technology Strategies International in partnership with BroadGroup TMT Ventures.­ The report says that the Global Political Agreement, as tentative as it is, coupled with the dollarisation of the economy after years of hyperinflation, have resulted in a surge in investment into the ICT sector in the country.

"The acid test for the Zimbabwean ICT sector is to see what companies already active in the sector are doing", says Christie Christelis, President of Technology Strategies International. "Over the past year we have seen massive investment into the mobile market in Zimbabwe, with the number of subscribers more than doubling in a single year."

Although the country is experiencing a chronic shortage of capital, and the political situation is far from stable, it is evident that there is a huge latent demand for ICT services. The recent surge in demand is demonstrative of that, says Christelis. With a mobile teledensity of 31.5 (per 100 population) Zimbabwe is still well behind the rest of Africa, indicating that there is still strong potential for growth over the next five years.

He acknowledges that the risks are high in the Zimbabwean market, but points out that the window of opportunity for foreign investors to make large returns is likely to remain open only for the next two years. By that time the situation in Zimbabwe will have stabilized to a much greater extent and the high return/high risk opportunities will have been taken.

"There is a unique opportunity for private equity investments in Zimbabwe," Christelis says. "The country's banks are unable to provide any capital for business ventures, and Zimbabwe is on the blacklist of a number of donor organizations. Savvy private equity investors - those with an appetite for risk - are likely to make very good returns if they enter the market now."

Three of largest opportunity areas, according to Christelis, are the mobile market, both at the retail and infrastructure levels, providing last mile access through advanced technologies such as Wi-Fi, and laying down broadband infrastructure to connect to the undersea cables circling Africa. The country has dismal international internet bandwidth. Increasing the available bandwidth will do much to stimulate the economy, he says.

The report predicts that over the next five years the number of mobile subscribers in Zimbabwe will grow at an annual rate of about 25% (CAGR), while internet usage will double.

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