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No going back on Infrastructure Sharing despite Econet conundrum

   

Despite the minister’s less than elaborate responses in an interview with Ruvheneko Parirenyatwa on ZiFM, there is no taking away the nobility of Infrastructure Sharing and there can be no going back on it.

Excuse the man’s lack of eloquence in trying to sell a concept that is not easily understood by the generality of Zimbabweans, perhaps even Ruvheneko herself in the interview.

Firstly, the bank analogy given by the minister actually works – The problem with some Zimbabweans is we have a selfish mentality that drives us to be distrustful and skeptic of anything, good or bad.

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A typical zvangu zvaita, zvangu zviriku-fire (my stuff is sorted, i’m good) mentality. We have become so capitalistic and predatory that we consider profits by any means necessary even where goodwill must prevail. This mentality was born of the 2007 hyper inflationary era and the “money burning” days that made us so self-centered; as the only thing that mattered then was getting yours.

The above reason is why our imported products will come in at markups of 100% even where its not necessary. “Let not your right hand see what your left…”. We have taken this to mean the hand purchases a commodity turns around and inflates the margins and sells it to the left hand even if it means the left hand will remain indebted forever and the liquidity locked in that transaction will kill the whole commodity system.

No, fuel importers will not reduce prices despite global fall in prices per barrel!  No, micro-lenders will not decrease interest rates if no one says anything! Even if the vehicle is already in Zimbabwe, when duty increases, so does the price of the car that’s gathered six months dust in a showroom.

Sometime back, local financial institutions, led by CBZ bank bailed out a local bakery, Lobels, by injecting $4.5 million through Altiwave because the bread maker could not survive its obligations to them.

Another financial institution, FBC Holdings has bailed out Turnall previously and the examples are plenty for one to learn the concept without even going as far as the Greece scenario or the global financial crisis.

The ailing institutions just needed greasing to make their machinery run more efficiently to return to productivity. Real economists see an opportunity that not only benefits them, but sustains the ecosystem. Couldn’t the banks rather invest in some other bakers out of the 250 or so if they really wanted to make bread?

With that analogy, what’s wrong with Econet injecting operational capital into NetOne? Its simple economics, or is the money they are owed worth sacrificing, just so that competition fails.

The minister did not ask Econet to hand out capital investment into competing operators after all. There are several options of resuscitating a whole ecosystem to give relief to other players so that they are more profitable without losing any ground. Even if they were to do that anyway, with the way Econet understands capitalism it would be at exorbitant interest rates.

Which brings me to an observation, a conspiracy theory if you please. Has anyone also wondered as I have where Econet gets its FDI for these huge infrastructure expansion projects? The best guess, from Econet Global, a Masiyiwa company.

Effectively, Strive and company sit and decide that they need money and they all turn to the most liquid of their shareholding – Strive himself.

But Strive’s money is not cheap. Why should it be? Why shouldn’t he sell them a $350 thousand base station for twice as much? After all he is the only one who dares to invest in Zimbabwe. Why shouldn’t he then raise the interest as cushion against the high risks associated with taking a gamble. But that’s just what it is, a gamble. It can go either way.

Of course readers may also want to point out that such transactions are lendings between different companies under different economic jurisdictions. This sort of arrangement actually makes you wonder whether the shareholders are actually voting on these decisions without some undue persuasion. Or are they just happy enough with the profits to turn a blind eye.

Despite the more gracious reasons, this is also why Econet will not benefit from sharing its infrastructure. They got unreasonable loans with harsh terms to develop infrastructure which in turn is paid back by ridiculous tariffs to consumers.

Now, when the time comes to actually audit this infrastructure, it turns out that the base stations they valued at say $750 thousand could have been sourced for half as much if transparency had a part. They are not the only ones, it’s a common practice in Zimbabwean culture pointed out in the introduction.

Recent events seem to suggest that TelOne has joined the fray. They are accused in the press of buying overpriced equipment from Huawei. Thanks to disgruntlement among the ranks caused by the infamous labour ruling (which some believe was woven tactfully to coincide with the IMF staff monitored labour market flexibility restructuring, the result of which is a huge overhaul of labour at no cent in cost to the government) to “regularize” labour are backfiring as staff are spilling anonymous tips on previously ignored misconduct.

The need for an infrastructure audit in the event of infrastructure sharing poses a question that could explain the rift between local Econet management and “Shareholders in London”.

How does Econet tell Strive that an independent inquiry has pegged infrastructure at half the cost they bought it for? How are they supposed to justify that they bought expensive money because there was no control on who you buy from, or at how much you buy for?

Then again it’s just my conspiracy theory.


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