DIGITAL ECONOMY FOR ZIMBABWE Country Diagnostic Report March 2021 DE4 Di it l Econom for Afric 2021 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbankgroup.org Some rights reserved 1 2 3 4 21 20 19 18 This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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If you wish to reuse a component of the work, it is your responsibility to determine whether permission is needed for that reuse and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org. About The DE4A Assessment A diagnostic assessment of Zimbabwe’s digital economy has been launched as part of the World Bank Group’s Digital Economy for Africa (DE4A) Initiative, which leverages an integrated and foundations- based diagnostic framework to examine the present level of digital economy development across Africa. The assessment maps the current strengths and weaknesses that characterize the national digital economy ecosystem in Zimbabwe as well as identifies the challenges and opportunities for future growth. Digital transformation is rapidly re-shaping our global economy, permeating virtually every sector and aspect of daily life – changing the way we learn, work, trade, socialize, and access public and private services and information. In 2016, the global digital economy was worth some USD 11.5 trillion, equivalent to 15.5 percent of the world’s overall Gross Domestic Product (GDP). It is expected to reach 25 percent in less than a decade, quickly outpacing the growth of the overall economy. However, countries like Zimbabwe are currently capturing only a fraction of this growth potential and need to strategically invest in the foundational elements of their digital economy to keep pace, and avoid being left behind. DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 5 The overarching analytical framework that shapes this assessment is guided by the premise that five foundational digital The Digital Economy for Africa (DE4A) Initiative forms part of the World Bank Group’s support for the African Union’s Digital elements create the building blocks for unlocking digital transformation across the African continent and in Zimbabwe in transformation for Africa, which aims for every African individual, business and government to be digitally enabled by 2030. The particular, and thus determine the country’s ability to build a robust digital economy: Digital Economy for Africa initiative is underpinned by five principles: 1 2 3 4 5 1 2 3 4 5 COMPREHENSIVE TRANSFORMATIVE INCLUSIVE HOMEGROWN COLLABORATIVE DIGITAL DIGITAL DIGITAL DIGITAL FINANCIAL DIGITAL Taking an ecosystem Aiming at a very A digital economy for Based on Africa’s Dealing with the INFRASTRUCTURE SKILLS PLATFORMS SERVICES ENTREPRENEURSHIP approach that different scale of “everyone, in every realities and digital economy that provides the that support the creation that enable digital (DFS) that provide and innovation looks at supply and ambition beyond place, and at all times” unleashing the requires a different means for people, of a digitally savvy transactions and individuals and ecosystem that helps demand and defies a incremental “islands” creating equal access African spirit of flexible “mindset,” businesses, and workforce. These are exchange, support new households with bring the digital economy critical to building a digital businesses and narrow silo approach of success. to opportunities and enterprise to have collaborating among government to convenient and to life and accelerate get online, and robust and competitive service delivery models. affordable means to pay, digital transformation – in defining the digital dealing with risks of more homegrown countries, sectors, subsequently access digital economy, Related systems, as well as to save and with both young ventures economy elements exclusions. digital content and and public and local and global where innovative applications and services borrow, using digital tools and innovators helping to and foundations. solutions. private players. digital services, thus services, industries and thus have the power to and platforms. Firms can generate new products effectively embedding business-models can transform the way people, leverage DFS to transact and services that users in the global emerge. Broad-based government, businesses more easily with their leverage technologies APPLICATIONS LIKELY TO DEVELOP ONCE THE FOUNDATION ELEMENTS ARE IN PLACE: digital economy. digital literacy and and civil society interact customers and suppliers, and digitally-enabled ■ GOVTECH applications Broadly speaking, basic skills acquisition with each other in all as well as to build digital business models, as USAGE ■ E-COMMERCE digital infrastructure are instrumental to aspects of life. Digital credit histories allowing well as traditional ■ OPEN BANKING: non banks offer tailored services consists of high- supporting wide adoption platforms help create access to finance. industries adopting ■ DATA LOCKERS to access selected services quality, accessible and use of digital economies of scale and Governments can use related solutions – and affordable products and services by leverage network effects DFS to increase efficiency contributing to net connectivity services, the average consumer, to create value and and accountability employment, enhanced DIGITAL but also includes and hence critical to support productivity in various payment competitiveness and ENTREPRENEURSHIP internet of things ensuring digital inclusion. gains. streams, including for the productivity. Digital AND INNOVATION and data centers, as However, the level of disbursement of social entrepreneurship thus PLATFORMS well as institutions intermediate, advanced transfers and receipt of helps expand products SKILLS AND DIGITAL FINANCIAL LITERACY and rules that and highly specialized tax payments. Digital and services on offer SERVICES DIGITAL DIGITAL foster a competitive digital skills will payments are often but can also create new telecommunications determine Zimbabwe’s the entry point for DFS markets. market. ability to embrace digital and provide the “rails” DIGITAL innovation. through which additional INFRASTRUCTURE products and use-cases can be developed. CROSS CUTTING AREAS: ■ Strong regulatory frameworks to foster competition and MFD agenda ■ Manage risks: data privacy, cyber security ■ Opportunity to empower women and apply to FCV The DE4A Initiative forms part of the World Bank Group’s support for In addition, several cross-cutting themes or areas shape these foundational elements, which determine the the African Union’s Digital Transformation Strategy (DTS) for Africa. country’s ability of create an enabling institutional and policy environment. A clear strategy and strong leadership DE4 As part of the DTS, ambitious, high-level targets have been established are both needed to spearhead the agenda at national level. Equally, the digital economy creates new legal and regulatory for all five foundational pillars of the digital economy, articulated in challenges, such as protecting consumers and their right to privacy, supporting cybersecurity and data protection, as the DE4A assessment framework, as a way to define and measure well as effective taxation and competition, which need to be effectively addressed to ensure that innovative services Di it l Econom for Afric success against the overarching goal of ensuring that every individual, continue to emerge, and guarantee their safe and affordable access. Moreover, for all Zimbabweans to reap the digital business and government is digitally enabled by 2030. Many of these dividends associated with the digital economy, it needs to be inclusive to ensure that anyone, regardless of age, targets have in turn been embedded in the World Bank Group’s IDA19 gender, income and geography has the ability to access digital tools and services. Commitments. 6 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 7 Table of Contents About The DE4A Assessment 5 5. Digital Entrepreneurship 89 5.1 Importance of Digital Entrepreneurship 90 Acknowledgements 13 5.2 Diagnostic Findings: Current State of Digital Entrepreneurship 91 Diagnostic Methodology 15 5.2.1 Market size 93 Abbreviations 18 5.2.2 Enabling Environment 95 5.3 Challenges 101 Executive Summary 21 5.4 Recommendations & Next Steps 104 1. Introduction 29 6. Digital Skills 107 1.1 Country at a Glance 30 6.1 Importance of Digital Skills 108 1.2 Digital Economy in Zimbabwe: Key Opportunities and Barriers 33 6.2 Diagnostic Findings: Current State of Digital Skills 110 1.3 Structure of the Report 34 6.2.1 Zimbabwe’s Education System: Early Childhood, Primary, and Secondary Education 113 2. Digital Infrastructure 37 6.2.2 Post-Secondary Digital Skills Initiatives 117 2.1 Importance of Digital Infrastructure 38 6.2.3 Digital Skills Initiatives by Private Entities 119 2.2 Diagnostic Findings: Current State of High-Speed Internet Development 39 6.3 Challenges 120 2.2.1 Scale of Internet Services Available 39 6.4 Recommendations & Next Steps 123 2.2.2 Deployment of Broadband Infrastructure 42 Conclusion: A Way Forward 127 2.3 Challenges 46 References 136 2.4 Recommendations & Next Steps 47 Annexes 139 3. Digital Government Platforms 51 Annex 1: Key indicators 140 3.1 Importance of Digital Government Platforms 52 Annex 2: Table of recommendations 141 3.2 Diagnostic Findings: Current State of Digital Government Platforms 53 3.2.1 Institutional Ecosystem and Policy Frameworks 55 3.2.2 Process Digitization and Automation 57 3.2.3 Digital Services 64 3.3 Challenges 68 3.4 Recommendations & Next Steps 69 4. Digital Financial Services 73 4.1 Importance of Digital Financial Services 74 4.2 Diagnostic Findings: Current State of Digital Financial Services 76 4.2.1 Digital Payment Ecosystem 79 4.2.2 Mobile money revolution 81 4.2.3 Utilization of DFS 82 4.3 Challenges 84 4.4 Recommendations & Next Steps 86 List of Tables List of Figures Table ES.1: Summary of Zimbabwe’s current state of digital economy development 26 Figure ES.1: Summary of Zimbabwe’s current state of digital economy development 25 Table 2.1: Digital Infrastructure Recommendations 49 Figure 1.1: Zimbabwe at a Glance: A high-level summary 30 Table 3.1: EGDI: composite and disaggregated scores 53 Figure 2.1: 1 GB of Prepaid Data as a percentage of Average Monthly Income, 2019 40 Table 3.2: Freedom on the Net Scores 54 Figure 2.2: Unique Mobile Internet Subscribers 41 Table 3.3: Back-office systems in the Government of Zimbabwe 58 Figure 2.3: Mobile Subscriber and Revenue Market Share 2018 41 Table 3.4: Key e-Services 66 Figure 2.4: Fiber Optic Backbone, 2019 43 Table 3.5: Digital Government Platforms Recommendations 70 Figure 2.5: Estimated Mobile Network Coverage, 2019 43 Table 4.1: Payment Platform Ecosystem in Zimbabwe 79 Figure 2.6: Digital Infrastructure SWOT Matrix 47 Table 4.2: Active Mobile Money Subscribers 81 Figure 3.1: Current status of the policy, legal, and regulatory framework for digital platforms 56 Table 4.3: Digital Financial Services Recommendations 87 Figure 3.2: Digital Public Sector Platforms SWOT Matrix 69 Table 5.1: Consumer Market in Zimbabwe compared to Ghana, Kenya, Mali, Senegal and Zambia 93 Figure 4.1: Digital Financial Services SWOT Matrix 86 Table 5.2: Firm Use of ICT 94 Figure 5.1: Digital Entrepreneurship Defined 90 Table 5.3: Universities with Entrepreneurship Degree and/or Innovation Hub 97 Figure 5.2: Digital Entrepreneurship in Zimbabwe Across Sectors 91 Table 5.5: Zimbabwe Business Confidence Index 101 Figure 5.3: Business Life Cycle 92 Table 5.6: Digital Entrepreneurship Recommendations 105 Figure 5.4: What is the most difficult part of building your business? 92 Table 6.1: Education participation 113 Figure 5.5: Relative Market Size of Zimbabwe compared to Ghana, Kenya, Mali, Senegal and Zambia 93 Table 6.2: Digital Skills Recommendations 124 Figure 5.6: Ease of Access to Venture Capital 99 Table 7.1: Summary of Key Recommendations by Area 130 Figure 5.7: The Enabling Environment for Entrepreneurship 102 Table 7.2: Summary of Each Pillar’s Strengths, Weaknesses, Roadblocks, and Opportunities 132 Figure 5.8: Number of Tech Hubs and Active Institutional Investors 103 Figure 5.9: What is the most significant challenge for your business? 103 Figure 5.10: Digital Entrepreneurship SWOT Matrix 104 Figure 6.1: EU’s Digital Competency Framework for Citizens 108 Figure 6.2: Summary of the Zimbabwe National Critical Skills Audit (2018) 110 List of Boxes Figure 6.3: GCI 4.0: Digital Skills Among Population (Rank): Regional Comparisons Figure 6.4: Structure of Zimbabwe’s Education Sector 111 113 Figure 6.5: Zimbabwe’s Education Sector: Learning Gap 114 Figure 6.6: Government financing and revenues from school fees fell sharply 122 Box 2.1: Benchmarking Zimbabwe’s Digital Infrastructure Development 39 Figure 6.7: Digital Skills SWOT Matrix 123 Box 2.2: The Universal Service Fund 44 Box 2.3: Leveraging digital Infrastructure as part of the COVID-19 response and resilience 48 Box 3.1: Examples of Back-office systems for the response to COVID-19 60 Box 3.2: Key actions for Government Digital Platforms in response to COVID-19 61 Box 3.3: Public sector digital skills 63 Box 3.4: Community Information Centers in Post Offices 64 Box 3.5: Examples of digital services under development in response to COVID-19 67 Box 4.1: Digital money and government payments in a COVID-19 pandemic context 75 Box 4.2: Architecture of the financial sector in Zimbabwe 77 Box 4.3: The Interplay Between DFS and other Pillars of the Digital Economy 78 Box 5.1: Students’ Application of Digital Solutions 98 Box 5.2: Enabling Tech Entrepreneurship: Good practices across Africa 100 Box 6.1: Empowering girls through digital skills 115 Box 6.2: Two key policies targeting digital skills development: The National Policy for ICT and the ICT Policy for Primary and Secondary Education 2019-2023 115 Box 6.3: Learning to code in Zimbabwe 119 Box 6.4: COVID-19 and digital skills: Response, recovery, resilience 122 Acknowledgements This report was prepared by a cross-sectoral task team, led by Jana Kunicova (Task Team Leader), and consisting of: Peter Silarszky and Caroline Koech (Digital Infrastructure); Sarah Karim and George Mutowa (Digital Government Platforms); Ellen Olafsen (Digital Entrepreneurship); Crispen Mawadza (Digital Financial Services); Tapfuma Jongwe and Yoko Nagashima (Digital Skills); and Janet Chido Bvumbe (mission coordination). The report was skillfully edited by Graham Collin-Jones. The team would like to thank the World Bank Country Management Unit, including Mara Warwick (Country Director) and Mukami Kariuki (Country Manager), for helping facilitate and guide the diagnostic exercise in country. Practice managers – Nicola Smithers (Governance), Niraj Verma (Finance, Competitiveness, and Innovation), Michel Rogy (Digital Development), and Safaa El Tayeb El-Kogali (Education) – provided invaluable technical guidance and support. The report benefited from the careful reading and comments by the peer reviewers, including Aki Enkenberg, Tiago Peixoto, Koji Miyamoto, and Harish Natarajan. This report would not be possible without sustained interest, commitment, and collaboration of the Government of Zimbabwe (GoZ). The team is particularly grateful to Rtd Brigadier Wekwete (Head of the e-Government Unit in the Office of the President and Cabinet) for coordinating various ministries, departments, and agencies who contributed to this effort. The team recognizes the valuable inputs from the following stakeholders: Public Service Commission, Ministry of Finance, Ministry of Information Communication Technology and Cyber Security, Ministry of Industry and Commerce, Reserve Bank of Zimbabwe, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), Ministry of Primary and Secondary Education, Ministry of Higher and Tertiary Education, Science and Technology Development, Zimbabwe Revenue Authority (ZIMRA) and numerous private sector stakeholders. The report also benefited from consultations with development partners in Harare, including DFID, UNDP, and International Telecommunications Union (ITU). DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 13 Diagnostic Methodology 14 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 15 This report is based on the standardized methodology that the World Bank developed for DE4A diagnostics. Broadly, this includes a combination of a fact-finding mission, anchored in the existing dialogue with the authorities, and desk research, both preceding and following the mission. The preliminary results are then further consulted with a broader range of stakeholders. A fact-finding mission took place in Harare, Zimbabwe in November 2019. During this mission, the cross- sectoral team including World Bank staff from four global practices (digital development; finance, competitiveness, and innovation; governance; and education) conducted consultations and preliminary data gathering for all five pillars of this report. Besides the discussions with the relevant interlocutors, the mission built on the existing dialogue and collaboration with the Government of Zimbabwe (GoZ), covering: biometric registration of civil servants; enterprise architecture for government systems; state enterprises and parastatals in the telecommunications sector; digital financial services; and the digital entrepreneurship ecosystem. The mission met with ministries, departments and agencies (MDAs), regulators, private sector stakeholders, entrepreneur support associations, and other organizations relevant for assessing the level of digital economy development in Zimbabwe. This included: Office of the President and Cabinet, Public Service Commission, Ministry of Finance, Ministry of Information Communication Technology and Cyber Security, Ministry of Industry and Commerce, Reserve Bank of Zimbabwe, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), Ministry of Primary and Secondary Education, Ministry of Higher and Tertiary Education, Science and Technology Development, and numerous private sector stakeholders. The quantitative and qualitative data collected during the mission have been complemented by publicly available global indicators. The analysis presented in this report also draws on regional and global benchmarking, based on standardized indicators that form part of the DE4A diagnostic methodology. Additional analysis was performed using government statistics and data shared by the private sector. In light of COVID-19, additional consultations with the relevant parties were conducted remotely between March and July 2020. These included follow-up remote interviews with the stakeholders, as well as consultations on the preliminary findings of the report with the Government and development partners. The report contains the data current as of June 2020, and COVID-19 policy updates through December 2020. 16 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 17 Abbreviations ACH Automated Clearing House MDA Ministry/Department/Agency ADTM Automated Deposit Taking Machine MHTESTD Ministry of Higher and Tertiary Education, Science and Technology Development AFI Alliance for Financial Inclusion MICT Ministry of Information Communication Technology API Application Program Interface MNO Mobile Network Operator ASYCUDA Automated System for Customs Data MNP Mobile Network Portability ATM Automated Teller Machine MoFED Ministry of Finance and Economic Development B2B Business-to-Business MoICTPCS Ministry of Information Communication Technology, Postal and Courier Services B2C Business-to-Consumer MoPSE Ministry of Primary and Secondary Education BAZ Broadcasting Authority of Zimbabwe MTO Money Transfer Organization C2C Consumer-to-Consumer MWCSME Ministry of Women Affairs, Community and Small and Medium Enterprises C2G Citizen-to-Government NBFIs Non-Bank Financial Institutions CAD Computer-aided design NPS National Payment System CAPEX Capital Expense NUST National University of Science and Technology CGAP Consultative Group to Assist the Poor OPC Office of the President and Cabinet CIC Community Information Center OPEX Operational Expense COVID-19 Coronavirus Disease 2019 OSI Online Service Index CRB Credit Reference Bureau PFMS Public Finance Management Information System CZI Confederation of Zimbabwe Industries POS Point of Sale DE4A Digital Economy for Africa Initiative POTRAZ Postal and Telecommunication Regulatory Authority of Zimbabwe DFS Digital Financial Services PPP Public-Private Partnership DSL Digital Subscriber Lines PSC Public Service Commission EASSy Eastern African Submarine System PSP Payments Service Provider ECD Early Childhood Development Q4 Fourth Quarter EFT Electronic Funds Transfer R&D Research and Development eLMIS Electronic Logistics Management Information System RBZ Reserve Bank of Zimbabwe EMIS Education Management Information System RTGS Real-Time Gross Settlement FIU Financial Intelligence Unit SACU Southern Africa Customs Union FSDS Financial Sector Development Strategy SADC Southern Africa Development Community FSP Financial Service Provider SIA Special Initial Allowance FTTx Fibre to Premises SME Small and Medium Enterprise G2B Government-to-Business STEM Science, Technology, Engineering and Mathematics G2C Government-to-Citizen TDIS Teacher Development Information System G2G Government-to-Government TSP Transitional Stabilization Programme GCI Global Competitiveness Index TVET Technological and Vocational Education and Training GDP Gross Domestic Product UN United Nations GER Gross Enrolment Ratio UNDP United Nations Development Programme GISP Government Internet Service Provider USD United States Dollar GNI Gross National Income USF Universal Service Fund GoZ Government of Zimbabwe VAT Value Added Tax GSO Girls Speak Out VC Venture Capital HCI Human Capital Index WACS West African Cable System HRMIS Human Resources Management Information System WBG World Bank Group ICT Information and Communication Technology WEF World Economic Forum IFC International Finance Corporation WHO World Health Organization IMF International Monetary Fund Zim ASSET Zimbabwe Agenda for Sustainable Socio-economic Transformation ISP Internet Service Provider ZIMRA Zimbabwe Revenue Authority ITU International Telecommunications Union IXP Internet Exchange Point LTE Long-Term Evolution 18 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 19 Executive Summary DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 21 The development of the digital economy in Zimbabwe operators, and low electrification rates create obstacles to International debit cards (Visa, Mastercard) cannot be widely must be understood in the context of the interlocking the development of digital infrastructure, there are clear used due to lack of liquidity in foreign currency. Currency crises facing the nation and the world. Zimbabwe, once opportunities for the Government to improve the situation. reforms leading to de-dollarization have increased inflation known as “the jewel of Africa” for its great prosperity, has been These include a coordinated and strategic approach to and loss of value, especially for digitally stored currency. experiencing prolonged economic distress over the past two broadband, regulatory reforms, as well as collaborative The Government has an opportunity to strengthen the DFS decades due to external shocks and internal instability. The approaches to further develop rural coverage. This includes ecosystem through the new strategic approach (National COVID-19 pandemic has exacerbated the already difficult private sector participation in financing and development Fintech Strategy), mandate interoperability among mobile macroeconomic situation in the country, further worsening of infrastructure, such as ongoing discussions with money operators, and adopt a Southern Africa Development economic and social conditions. The Government of Zimbabwe telecommunication companies. Community (SADC) Model Law on payments. In the COVID-19 recognizes that sound macroeconomic management and era, DFS also provides a real opportunity to the retail sector Digital government platforms (DGP) using modern GovTech improved governance are key for setting the country back and transacting public to comply with physical distancing tools can become a potential growth area for Zimbabwe, if on the path to prosperity. The key issue going forward will be guidelines. coordination and interoperability improvements are given to combine short-term crisis management with longer-term priority. Zimbabwe has the potential to create strong digital Digital entrepreneurship (DE) is a nascent yet growing structural reforms needed for the intended transformation. government. The country has established the building blocks area in Zimbabwe, conditional on key regulatory reforms, The information and communication technology (ICT) for a digital ID system, developed core back-end systems, improved coordination with the private sector, and at least sector, lying at the core of the digital economy, is created an accessible government portal, and developed some macroeconomic stabilization. Zimbabwe has good recognized as central to turning around the Zimbabwean some innovative digital services. There are also established potential for the development of digital entrepreneurship, economy. It has a bearing on most business activities in the teams at the center of government to provide coherence given its well-educated population, positive attitude towards private and public sector and in the daily lives of individuals. and coordination. However, Zimbabwe is currently lagging entrepreneurial risks, presence of private sector actors keen to In 2019, it was the fastest growing sector in the economy in behind its international peers, with limited gains made in support entrepreneurship, and government commitment to Zimbabwe. The ongoing macroeconomic woes have provided recent years. Aging infrastructure and insufficient resourcing, improving the regulatory environment. However, challenges both a challenge for the further development of ICT, but also combined with overall macroeconomic distress, electricity and abound, including limited access to market data, onerous (if an opportunity for innovation and urgent reform. connectivity issues, are major bottlenecks. At the operational improving) regulations, limited access to start-up capital, and level, lack of interoperability limits collaboration and data a complex tax regime for entrepreneurs. The deteriorating At the same time, the foundations for the digital economy sharing; and the limited capacity to monitor compliance and macroeconomic situation affects consumer and business are broader than just the ICT sector. The Digital Economy quality of services is compounded by high ICT staff turnover demand, access to affordable finance, and access to skilled for Africa (DE4A) assessment methodology employed in this and poor skills retention. The uptake of the existing digital labor. Foreign exchange controls, unstable electricity access report relies on five foundational digital elements that create services is lagging because they are atomized and not easily and coverage and declining business confidence create the building blocks for unlocking digital transformation: accessible through a unified one-stop shop portal. Despite further obstacles for digital entrepreneurs. Despite these digital infrastructure, digital government platforms, digital the setbacks, the government has a clear opportunity to foster challenges, there are a significant number of innovative financial services, digital entrepreneurship, and digital skills. the digital government platforms by further strengthening private sector ventures in the digital space in Zimbabwe. It is These elements cut across different sectors of economy – coordination, adopting an interoperability framework, possible to do much more. The government has an opportunity telecommunications, finance, or education – and require consolidating the digital services, and investing in institutional to further foster digital entrepreneurship by: (i) clarifying participation of both public and private sectors. However, and human ICT capacity. entrepreneurship policy implementation frameworks to they must be taken holistically, with their interrelations duly improve the regulatory and financing environment; (ii) considered, to determine the country’s ability to build a robust Digital financial services (DFS) are the strongest foundation strengthening the institutional ownership and capacity digital economy. for the further development of the digital economy in in government of the entrepreneurship agenda; and (iii) Zimbabwe, even at a time of macroeconomic woes. The Digital infrastructure (DI) is one of Zimbabwe’s relative establishing a systematic dialogue between the public and country has a well-developed payment system, where 96 strengths, but regulatory roadblocks and macroeconomic private sector on how entrepreneurship can be accelerated. percent of all transactions in the country are through digital conditions hamper its growth. Zimbabwe’s international means and only 4 percent are cash-based. Government uses Zimbabwe has a good foundation upon which digital skills connectivity infrastructure is relatively well-developed, digital money almost exclusively. High-value real-time gross (DS) could be leveraged, if training for both teachers and and fiber backbone connects major cities and urban areas. settlement (RTGS) platforms run by the central bank have students is scaled up, and coordination and data flows However, large gaps remain in rural areas. The national fixed- been key in facilitating corporate payments. Zimbabwe has improved. The country boasts a high literacy rate (about 90 line infrastructure is limited, and mobile networks remain the seen a revolution in mobile money, where there are currently percent), one of the best basic education access and enrolment primary means for carrying retail data traffic in Zimbabwe. about 7.1 million mobile wallet holders, covering most adults ratios in Africa with an almost perfect gender parity, and the While the regulatory regime has significantly improved in a country of less than 15 million. However, there is still no country’s workforce is well educated by regional standards. over the past decade, POTRAZ’s regulation of retail mobile interoperability among mobile money operators and the However, the rapid pace of innovation, together with a voice and data tariffs distorts the market and is complicated cost of transactions is high. The usage of internet banking supply side failure to deliver the required digital skills, means to administer in a high inflation environment. Although in rural communities is low due to limited internet coverage. that many businesses, service providers, and organizations macroeconomic conditions, limited competition among 22 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 23 struggle to obtain employees with the right skills to own data, benchmarked against regional and international FIGURE ES.1: harness technological opportunities. Serious investment by averages. This benchmarking exercise is further bolstered SUMMARY OF ZIMBABWE’S CURRENT STATE OF DIGITAL ECONOMY DEVELOPMENT government and related players will be needed in basic and by extensive quantitative and qualitative analysis in each post-secondary education with a special focus on digital skills chapter. Despite the wealth of the underpinning analysis, development. Key challenges include: limited infrastructure numerous simplifications and generalizations are required to NASCENT GROWING ADVANCED and enabling policy environment; limited financial support construct such a figure; it is not intended as a precise ranking from central government; insufficient coordination between but rather as a relative depiction of where Zimbabwe stands government and key private players; low skill levels among in its development of each foundational digital economy Access to undersea Backbone networks, 4G/5G networks, DIGITAL teachers; and poor data. These education-specific challenges pillar. The results in the figure can be summarized as follows: cables, backbone data clouds, IXPs, rural connectivity, INFRASTRUCTURE are compounded by the economy-wide poor infrastructure networks privacy, cybersecurity internet of things ■ DIGITAL FINANCIAL SERVICES LEAD THE WAY due (electricity coverage; internet connectivity; limited devices, to the pervasive use of mobile money and digital especially in rural areas), and more generally rural exclusion transactions in the economy. DFS are further growing and urban bias. With COVID-19 a key opportunity for building Business and and approaching the advanced phase. DIGITAL Bootcamps, digital Digital-savvy digital skills has arisen, where private entities are doing more management skill ■ DIGITAL INFRASTRUCTURE IN ZIMBABWE IS ALSO SKILLS skill training workforce innovating, including digital platforms for learning. The training RELATIVELY WELL DEVELOPED and is in the growth opportunities for the government to leverage the strengths phase. DI’s further advancement will be key for and address the challenges include scaling up digital supporting the growing needs of all other pillars and will skills training for both students and teachers at all levels of Shared services, digital E-Government, open Mobile apps, artificial depend on de-bottlenecking the regulatory environment. DIGITAL education; establishing a multi-stakeholder coordinating ID, digital financial data, ecommerce intelligence, software ■ DIGITAL SKILLS ARE MOVING TO THE GROWTH PHASE PLATFORMS group for digital skills; bridging the rural-urban divide in management enabled platforms thanks to an excellent education foundation in country digital skills; and strengthening databases and information and the ability to reap the low-hanging fruit by scaling up flows. the focus on digital learning. Similar to DI, DS are crucial Figure ES.1 situates Zimbabwe’s current level of for the remaining pillars to further develop. DIGITAL Basic Digital Broad digital Digital Financial development for each digital economy pillar on the “sliding FINANCIAL payments e.g. person- payments, e.g. B2P, Services, e.g. savings, ■ BOTH DIGITAL GOVERNMENT PLATFORMS AND SERVICES to-person payments G2P credit, insurance scale,” moving from the nascent phase to the growing DIGITAL ENTREPRENEURSHIP ARE STILL NASCENT and eventually advanced phase. The underpinnings for the IN ZIMBABWE, but both have a potential to grow if figure are both quantitative and qualitative. The quantitative recommendations in this report are implemented and international benchmarking for each pillar is summarized in the macroeconomic situation allows. Angel/seed financing, Venture financing, DIGITAL Talent development Annex 1. It includes available international rankings for each innovation centers, M&A, IPOs, BPO, ENTREPRENEURSHIP business mentoring pillar (including World Economic Forum, UNDESA, Findex, regional hubs local tech industry World Bank, and others) as well as some of the POTRAZ’s 24 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 25 The report concludes that to move the digital economy forward, Zimbabwe needs to make regulatory improvements as REGULATORY well as investments in four areas: policy and regulatory framework, resource management and coordination, governance, PILLAR OBJECTIVES/RECOMMENDATIONS (R) OR and capacity building. Innovating out of the crisis is not a panacea, and much work remains to be done both on fixing the CAPEX (C) macroeconomic fundamentals and on addressing the inherent weaknesses within each foundational pillar for the digital economy. The recommendations in this report identify several interconnected areas to be addressed across all pillars. Table Governance ES.1 groups selected key recommendations of the report in these four interconnected areas, including whether they require regulatory or policy changes, and/or capital investments (Capex)1. Addressing these, along with the external environment, will Develop a National Broadband Strategy and strengthen coordination between the different R agencies that govern ICT policy and implementation. ease the binding constraints on the development of the digital economy in Zimbabwe. Accelerate the rationalization of the portfolio of Government-owned telecommunications R Infrastructure operators and privatize a substantial stake of these companies. TABLE ES.1: Encourage commercial infrastructure sharing and open access to critical infrastructure to R SUMMARY OF ZIMBABWE’S CURRENT STATE OF DIGITAL ECONOMY DEVELOPMENT allow faster deployment and greater rural push in middle and last mile connectivity. Map the existing digital systems and services and agree an interoperability and R&C REGULATORY interconnectivity framework across MDAs. PILLAR OBJECTIVES/RECOMMENDATIONS (R) OR CAPEX (C) Establish a clear coordinating mechanism across MDAs on digital platforms, under the R leadership of the MoICTPCS in close collaboration with the e-government unit of OPC. Policy and Regulatory Framework Ensure all digital services are available via the government portal. R&C Platforms Develop new and/or leverage existing information management systems to strengthen R&C Refine the regulatory framework with a view to improving tariff regulation and the licensing R evidence-based decision-making in response to the COVID-19 crisis. framework Infrastructure Identify and prioritise technical support to critical digital platforms and enhance remote R&C Review Universal Service Fund (USF) policies and strategy to accelerate infrastructure R access to the systems by critical staff who hold key responsibilities in the response to development in under-served areas COVID-19 for Business Continuity within Government. Prioritize the finalization of outstanding legal and policy frameworks critical to digital Platforms R Complete the development of a fintech strategy and establish the fintech department in platforms, in particular those relating to data protection and sharing, and cyber-security Financial Services R the central bank. Enforce mobile wallet interoperability amongst mobile money operators. R Establish a multi stakeholder coordinating group for digital skills training promotion for R Financial Services Reduce costs of remittances at SADC level through increased collaboration by authorities. R Skills improved coordination and focusing of effort. Enhance the digital options through which to receive remittances. R&C Strengthen Education Management Information System (EMIS). C Incorporate a start-up strategy for tech, service and manufacturing start-ups in the SME R policy. Capacity Building Leverage the updating of the SME Policy. R&C Strengthen the mandate and capacity of the MoICTPCS to monitor MDA compliance with R&C Initiate a regulatory review of public procurement regulation pertaining to entering joint R Platforms agreed norms and standards for digital platforms. Entrepreneurship ventures with foreign firms. Strengthen the capacity of the Government Internet Service Provider (GISP). R&C Accelerate implementation progress on starting a business and insolvency reforms. R Review how tax compliance for SMEs can be streamlined R Entrepreneurship Explore the creation of a start-up academy. R&C Review incentives for business angels (i.e. tax credits for investments in start-ups) R Scale up digital skills training at the basic level. R&C Skills Track implementation of the ICT Policy for Primary and Secondary Education 2019-2023 R&C Improve the supply of digitally literate teachers at basic and post-secondary levels. R&C Skills Implement curriculum and pedagogical reforms in the post-secondary sector to meet R&C current and future skills demand. Resource Management and Coordination Make 700 MHz spectrum available for LTE and assign sufficient spectrum to the operators. R Infrastructure Promote affordability of broadband-enabled devices and widen opportunities for individual access. Platforms Establish shared systems and responsibilities at Line Ministry level for the regular collection R&C of data about platform use and quality. Bridge the rural-urban divide in digital skills through equity-based targeting of any digital Skills R&C skills training. 1. Full list of all recommendations in this report, organized by pillar, can be found in Annex 2. 26 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 27 Introduction DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 29 1.1 Country at a Glance Zimbabwe, a sub-Saharan nation of about 14.5 million 2018 due to monetization of the fiscal deficits of the past, The Government of Zimbabwe recognizes that sound people and once known as “the jewel of Africa” for its great depreciation of the local currency, price distortions, poor macroeconomic management and improved governance prosperity , has been experiencing prolonged economic 2 harvests, and reductions in the subsidies on fuel and electricity. are key for setting the country back on the path to distress over the past two decades due to external shocks Zimbabwe has a relatively educated and skilled labor force, but prosperity. Since the resignation of the former president and internal instability. The share of the population in food inadequate physical infrastructure. Land and natural resources Mugabe in November 2017, the new government elected in poverty3 has reached 42 percent in 2019, up from 29 percent are in abundance, with the natural resource extraction rising July 2018 has been trying to steer the country toward a political in 2017. The number of food poor has more than doubled in the context of a decrease in manufacturing. Mining and and economic transformation. The Transitional Stabilization since 2011, to 6 million in 2019. The gross domestic product agriculture are the key drivers of the economy. Zimbabwe Programme (TSP) for October 2018–December 2020 sets a (GDP) was USD21.4 billion in 2019, when it was estimated to has the 3 largest platinum reserves in the world and is the rd bold vision of transforming Zimbabwe into a middle-income have contracted by 8.1 percent – the largest contraction in third largest producer of tobacco. Most agricultural crops are country by 2030. The TSP provides an economic transformation Africa – due to climate and economic shocks. Year-on-year produced for domestic consumption. Production of maize, blueprint that prioritizes fiscal consolidation and economic inflation as of December 2019 was estimated at 521 percent, a staple, fell by 27 percent in 2019 and is expected to decline stabilization, with a focus on stimulating growth, improving the second highest in the world, leading to significant erosion further in 2020, which is likely to exacerbate food insecurity. service delivery, and creating employment. It outlines the of disposable income. Inflation has been increasing since policies, strategies, and projects that are guiding Zimbabwe’s social and economic development. In particular, the TSP FIGURE 1.1: recognizes the information and communication technology ZIMBABWE AT A GLANCE: A HIGH-LEVEL SUMMARY (ICT) sector as one of the key pillars in the Zimbabwean economic recovery. Yet after November 2017, slow reforms, policy missteps, and devastating climate shocks led to one of the deepest 14.5 mil 21.44 bn recessions in a decade and wiped out many of the Population GDP, Current US$ improvements in social outcomes. Among the key policy (2019) (2019) missteps were the inconsistent and delayed foreign currency market reforms, including the introduction of the Zimbabwe dollar (ZWL$) as the sole legal tender, which were not 1,468.5 32.24 88.69 successful in de-dollarizing the economy. By the end of 2019, GDP Population in the Adult the currency had depreciated by 86 percent in a year and per capita, largest city as a literacy PPP $ (2019) % of urban rate (2014) inflation surged to 521 percent year-on-year. Food prices were population (2018) up by 725 percent, and this had enormous consequences for welfare overall and particularly for the urban poor. Following the currency crisis, a devastating drought, and a cyclone Idai, 41.04 84.52 75.41 the economy entered into a recession in 2019. Climate shocks Labor force Labor force exacerbated existing structural deficiencies that have led Access to electricity as participation rate participation rate, to shortages of foreign currency, fuel, and electricity. Food a % of the (2014) ages 15-24 (2014) insecurity increased, power outages reached 18 hours a day population (2018) during the dry season, and water shortages became more frequent. These challenges reduced productivity, increased cost of production and weakened economic activity across 66.54 54.4 32 the board. Coupled with volatile currency and prices, Agriculture jobs in Doing Business Digital Adoption these challenges affected the tradable sectors the most, total employment Index, score 0-100 Index, score 0-100 worsening further the shortage of foreign currency. As a (2014) (2020) (2016) result, Zimbabwe’s GDP is estimated to have contracted by 8.1 percent in 2019, after growing at 4.7 percent per year for Source: World Bank World Development Indicators (WDI), 2020. almost a decade. 2. See https://www.nybooks.com/articles/2003/04/10/the-jewel-of-africa/ also https://www.voazimbabwe.com/a/zimbabwe-economy-battered-over-the-years/2724325.html 3. The “food poor” are defined as those under the food poverty line of around USD30/person/month. 30 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 31 In 2020, the COVID-19 pandemic has exacerbated the The key issue going forward will be to combine short- 1.2 Digital Economy in Zimbabwe: Key Opportunities and Barriers already difficult situation in the country, further worsening term crisis management with the longer-term structural economic and social conditions. While its severity and reforms needed for the intended transformation. Economic duration remain uncertain, the pandemic is expected to have fundamentals and policy responses will have to be adequate The ICT sector lies at the core of the digital economy, and is sectors in Zimbabwe, the ICT sector has been affected by the dire economic consequences. Aside from the human toll, to mitigate the negative impacts on lives and livelihoods, and recognized as central to turning the Zimbabwean economy economic crisis of the past two decades, most significantly this will include further loss of output, jobs, external trade, eventually support economic recovery. At the same time, around. It has a bearing on most business activities in the by the lack of foreign currency to expand and modernize and remittances, as well as higher prices, poverty, and food the crisis presents an opportunity to set the right course for private and public sector and in the daily lives of individuals. the sector. As a result, the country has missed out on many insecurity. More than two months of lockdown in the country, the country’s development. It also creates an opportunity to In 2019, it was the fastest growing sector in the economy in benefits from harnessing ICTs, such as employment creation, with reduced working hours and increased costs to contain stimulate change faster than under normal circumstances, Zimbabwe; some estimates suggest that the ICT sector has improved business efficiencies, and access to information the spread of the virus at the workplace, have resulted in forcing a faster transformation process. Financing needs the potential of creating 40,000 jobs. The sector is viewed 4 and knowledge. unprecedented supply-side shocks that are affecting almost to prevent human suffering and further erosion of human as a serious economic driver and an important contributor all sectors. Agriculture, manufacturing, mining, trade, tourism, capital are particularly significant in the context of fewer GoZ plays an important role in the ICT sector. The ICT to the country’s revenues. In the 2018 national budget, the and transport are the hardest hit. While supply shocks are financing options, calling for bold economic and political regulatory agencies and commissions, including POTRAZ, Government of Zimbabwe (GoZ) focused on deepening the subsiding with the easing of lockdown regulations, demand- reforms to reinvigorate growth and pave the way for increased BAZ, and the Zimbabwe Media Commission, set the rules use of ICT in the economy. This was supposed to be achieved side shocks are likely to persist. Household consumption, international solidarity and reengagement. of the game. At present, regulation of the ICT sector is by targeting e-government and e-learning programs and already weakened by soaring prices and poor returns from divided between POTRAZ and BAZ, with POTRAZ reporting expanding the coverage of the fiber backbone infrastructure. subsistence agriculture, is being hit by rising unemployment to MoICTPCS, whilst BAZ reports to the Ministry of Media. and income losses due to reduced working hours, unpaid Encouraging growth in the ICT sector in Zimbabwe in The government controls some of the dominant service leave, or reduced opportunities for informal sector activities. recent years is attributable to several developments, providers on the market, including TelOne, NetOne, and ZBC, including the adoption of the National ICT Policy in 2016. all of which fall under MoICTPCS. However, the government Further positive developments include liberalization of the itself is lagging behind in e-government, ranking 126 out of telecom, postal and courier services sector, as well as the 193 countries (UN Government Development Index 2020). establishment of regulatory bodies: Postal and Regulatory Some of the root causes of the underdevelopment of digital Authority of Zimbabwe (POTRAZ), Zimbabwe Media government in the country include the failure to embrace the Commission, and Broadcasting Authority of Zimbabwe (BAZ). benefits of open source and cloud technology, inadequate In addition, a dedicated Ministry of ICT, Postal and Courier skills, and strategic leadership. Services (MoICTPCS) has been established. The government GoZ has embarked on an ambitious set of reforms to also adopted a policy that suspended duty on the importation address these challenges and foster the use of ICT of ICT equipment and launched a computerization program. technologies. In particular, GoZ has adopted a policy to Zimbabwe is among the leaders on the continent in the use encourage infrastructure sharing with a view to increasing of mobile money. Zimbabwe boasts 7.67 million subscribers efficiency in the use of national resources and reducing with mobile wallets, in a country with a population of 14.5 duplication. It is now in the process of establishing a national million including just over 7 million adults, reflecting the data center, which will centralize information storage, pervasiveness of mobile money adoption.5 Among the management and protection, as well as take advantage telecoms providing mobile wallets, Econet is the leading of cloud computing. Zimbabwe is also developing a operator with a market share of 70 percent; NetOne and national strategy and blueprint for planning, design, and Telecel, owned by the government, occupy second and third implementation of e-government infrastructure and services. place, respectively. This will reduce fragmentation and duplication in the ICT sector. In addition, GoZ has put in place a number of initiatives Yet the ICT sector faces significant challenges. The National aimed at building public interest in spurring development in ICT Policy cites the most important binding constraints on the ICT sector. In 2018, POTRAZ launched an ICT innovation the development of the sector as inadequate infrastructure; drive, which seeks to fund innovations in various sectors. In the the shortage of electricity and the limitations of the national digital finance space, GoZ has an opportunity to strengthen power grid; inadequate ICT skills and a shortage of ICT the ecosystem through the new National Fintech Strategy, skilled manpower to roll out ICT programs; fragmented mandate interoperability among mobile money operators, institutional arrangements; inadequate capital investments and strengthen the legal framework for digital payments in the country; absence of a cybersecurity framework; to prioritize safety, security, and efficiency for all its market limited local ICT innovation, research and development; and participants. underdeveloped entrepreneurship. In addition, like all other 4. See http://zimtechreview.co.zw/index-id-News-story-4160.html 5. See Government of Zimbabwe, POTRAZ “Abridged Postal and Telecommunications Services Report,” 1st quarter 2020. 32 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 33 1.3 Structure of the Report To flesh out this overview of digital economy challenges and opportunities, the chapters that follow present a summary of key diagnostic findings across the five foundational pillars of the digital economy that form part of the DE4A diagnostic methodology. The second chapter discusses the current access, quality and resilience of digital infrastructure, as well as the availability and affordability of connectivity, which are essential for bringing more people online. The third chapter looks at the presence and use of public sector digital platforms that can support greater digital exchange, transactions, and access to public services online. The fourth chapter examines the current state of the digital financial services, while the fifth chapter turns to the digital entrepreneurship ecosystem. The sixth chapter examines the current state of digital skills attainment and coverage, in relation to the basic, advanced and e-business skills needed to support further uptake of digital services and the application of digitally enabled solutions. The seventh and last chapter concludes with recommendations in four key thematic areas that cut across all pillars: policy and regulatory framework; resource management and coordination; governance; and capacity building. Each chapter describing the foundational pillars of the digital economy follows a common structure. It begins with the importance of each pillar, followed by detailed diagnostic findings and an outline of the challenges for further development of the digital economy. It then summarizes the findings in a Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis. The SWOT analysis summarizes the factors in the generic external environment, i.e., Opportunities and Threats, and the factors in the generic internal environment, i.e., the Strengths and Weaknesses, for the development of each foundational pillar of the digital economy. The SWOT summary, in turn, yields recommendations and next steps for each pillar. The recommendations are grouped by the key objectives to be achieved. Each recommendation identifies the responsible Ministry/Department/Agency (MDA), the indicative timeframe, and level of priority. 34 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 35 Digital Infrastructure Key messages Zimbabwe’s international connectivity infrastructure is relatively well developed. Fiber backbone connects major cities and urban areas, but large gaps remain in rural areas. The national fixed-line infrastructure is limited, and mobile networks remain the primary means for carrying retail data traffic in Zimbabwe. While the regulatory regime has significantly improved over the past decade, POTRAZ’s regulation of retail mobile voice and data tariffs distorts the market and is complicated to administer in a high inflation environment. Although macroeconomic conditions, limited competition among operators, and low electrification rates create obstacles to the development of digital infrastructure, there are clear opportunities for the Government to improve the situation. These include a coordinated and strategic approach to broadband, regulatory reforms, as well as collaborative approaches to further develop rural coverage. 36 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 37 2.1 Importance of Digital Infrastructure 2.2 Diagnostic Findings: Current State of High-Speed Internet Development High-speed internet, or broadband, has the potential to The Government of Zimbabwe recognizes the importance accelerate Zimbabwe’s socioeconomic development. An of ICT as a driver of social and economic development. This section provides diagnostic findings on the state of development of high-speed internet in Zimbabwe. First, the scale extensive body of research confirms the impact of increased ICT is one of the key drivers for growth and employment of internet services available in the country is reviewed, in terms of access, affordability, and institutional framework and market investment in broadband on economic growth. World Bank creation identified in the Zimbabwe Agenda for Sustainable structure. This is followed by a discussion of the deployment of broadband infrastructure in Zimbabwe. research estimates that a 10 percent increase in broadband Socio-Economic Transformation (Zim ASSET), which clearly penetration in developing countries is associated with a 1.4 spells out ICT as one of the pillars for national socio-economic percent increase in GDP (Kim, Kelly, and Raja, 2010). development. ICTs have a key role in enabling all sectors of the Connectivity can shape a country’s development path economy to leapfrog in their development. 2.2.1 SCALE OF INTERNET SERVICES AVAILABLE through several interrelated channels: The objectives of the Zimbabwe National Policy for ICT, approved in 2016 are: Bridging the information gap, alleviating asymmetry i. ACCESS AFFORDABILITY problems, and improving communication; i. Transformation. Facilitate delivery of Zim ASSET and Since national fixed-line infrastructure remains limited, Demand for broadband is held back due to poor Connecting all citizens, especially those living in remote ii. other national developmental goals; mobile networks are the primary means for connecting affordability of data plans. Zimbabwe has one of Africa’s areas, to markets and services in the fastest and most cost- ii. Growth. Enable and foster access to and increased use of to the Internet in Zimbabwe. According to the International most expensive telecommunications markets. For example, effective way; and ICTs in all spheres of life (e.g., e-Government, e-Commerce, Telecommunications Union (ITU), in June 2018, there were 41.3 TelOne increased its broadband tariffs by 199.35 percent Increasing productivity, lowering transaction costs, and iii. e-Employment, education, health, science, agriculture); active mobile broadband subscriptions per 100 inhabitants with effect from 06 November 2019 (Telecom.com, 2019). In optimizing supply chains (Aker and Blumenstock, 2015). iii. Leadership. Achieve ICT leadership in Africa; in Zimbabwe. Overall, 27.1 percent of Zimbabweans reported March 2020, POTRAZ approved an upward revision to the iv. Inclusiveness. Bridge the digital divide and provide using the Internet, above the average of 22.1 percent for Africa tariffs for voice, data and SMS by 55.64 percent, this being Development of broadband infrastructure in Zimbabwe broadband for all; (ITU, 2018). the third consecutive increase in the telecom tariff. The high is urgently needed because broadband is a key enabler v. Sustainability. Manage the challenges resulting from ICT cost is caused by a combination of many different factors, to harness the digital economy transformation. Digital Fixed broadband penetration in Zimbabwe is low. With 1.1 development; and including the macroeconomic conditions, underinvestment economies are creating unprecedented opportunities for fixed broadband subscriptions per 100 inhabitants in June Innovation and partnership. Lead, improve, and adapt to vi. in infrastructure, and the market structure. The high cost has countries to grow their economies, create jobs, and transform 2018, Zimbabwe is slightly above the African regional average the changing ICT environment. resulted in relatively low internet usage. people’s lives. Fast internet provides a platform for innovation of 0.6 percent but well below the world average of 13.6 percent that is used as a key input across sectors, reverberating The global COVID-19 pandemic is expected to seriously (ITU, 2018). Although fixed broadband is capable of delivering throughout the entire economy. It enables entrepreneurship, impact Zimbabwe’s economy, requiring a greater focus on faster internet speeds than 4G with lower latency, it remains with businesses and individuals using fast internet to create digital technologies to increase resilience. High reliance on a “niche” service used by public institutions and some new applications and services in areas such as e-commerce tourism and commodity exports makes the country vulnerable businesses, as well as a few privileged households. BOX 2.1: BENCHMARKING ZIMBABWE’S and financial services. It also enables game-changing digital to large swings in global demand. Since the pandemic is Mobile broadband has become the most common and DIGITAL INFRASTRUCTURE DEVELOPMENT service delivery in sectors critical to inclusive growth, such as demonstrating that Zimbabwe’s economic model is highly popular way through which people in Zimbabwe access the education, health and agriculture. Likewise, it allows the public vulnerable to the risks posed by global pandemics, there is Internet. According to ITU, 3G coverage reaches 78.2 percent sector to deliver services to citizens and businesses more a need for interventions that support business continuity in Zimbabwe’s 2017 ranking of 136th out of 176 countries of the population and LTE/WiMAX 34.7 percent. These figures effectively and more inclusively. For these reasons, broadband the face of related shocks. In this setting, digital technologies in the ICT Development Index (IDI) reflects its limited are above the regional average for Africa of 62.7 percent and has the potential to transform Zimbabwe’s economy and help offer a means for governments, individuals and businesses to broadband subscriptions. The ITU’s IDI is a composite 28.4 percent, respectively (ITU, 2018). the country leapfrog development stages, provided effective cope with social distancing, ensure business continuity, and index combining 11 indicators to monitor and compare policies are put in place to encourage its use as an essential prevent service interruptions. development in ICT. Measuring the country’s ICT readiness, input by all sectors of the economy. intensity, and impact, the model correlates directly to the enabling environment for a growing digital economy. Zimbabwe’s rank of 136th highlights the low number of broadband subscriptions (especially fixed) and internet users in the country. The low ranking also reflects the limited usage of the broadband infrastructure and internet in Zimbabwe. Source: Authors 38 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 39 FIGURE 2.1: FIGURE 2.2: 1 GB OF PREPAID DATA AS A PERCENTAGE OF AVERAGE MONTHLY INCOME, 2019 UNIQUE MOBILE INTERNET SUBSCRIBERS 30% 5 mln 4 mln Zimbabwe Malawi 20% 3 mln Burkina Faso Zambia 2 mln Côte d’Ivoire Ethiopia Rwanda South Africa Benin Mozambique 10% Cameroon Senegal 1 mln Nigeria 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: HIP Consult, operators Source: GSMA 2020 INSTITUTIONAL FRAMEWORK AND MARKET POTRAZ was established by the Post and Telecommuni- in Zimbabwe: one private (Econet Wireless Zimbabwe) and FIGURE 2.3: STRUCTURE cation Act of 2000 to operate as an independent regulator two government-owned (NetOne and Telecel Zimbabwe). MOBILE SUBSCRIBER AND REVENUE MARKET SHARE 2018 The Zimbabwean ICT sector operates under the Post and and licensing body. In April 2018, the Government approved The government-owned fixed-line operator TelOne focuses Telecommunications Act of 2000 and relevant amendments. plans to merge POTRAZ with BAZ in order to improve the on fixed voice and broadband. The market is complemented Its main tenets are to: (i) ensure the provision of sufficient regulation of converged ICT and media services. However, no by a few Internet Service Providers (ISPs) including Liquid Mobile Subscriber domestic and international telecoms services throughout timeframe for the merger has been given. Telecom (same corporate group as Econet) and government- Market Share owned Powertel, Zarnet, and Africom. The inefficiencies of the 2018 the country; (ii) promote fair tariffs for telecoms services; (iii) Mobile telecommunications technologies have been promote the development of telecoms services in accordance management and operation of the relatively large number of instrumental in delivering modern telecommunications state-owned companies, as well as restrictions on Telecel’s Econet with demand; and (iv) maintain and promote healthy services to Zimbabweans. Zimbabwe’s total telecommuni- 66,3% competition in the market. In 2009, the Ministry of Information investments in previous years, have enabled the emergence cations market revenues in 2018 were about $1.56 billion Communication Technology was given oversight of policy for of a private company with the largest market share of mobile NetOne (according to POTRAZ). Most of the revenues (about 74 25,2% the development of the sector. The Ministry was renamed subscribers – Econet with 66.3 percent. Econet’s 85.6 percent percent) were generated by mobile services. The number Ministry of ICT, Postal and Courier Services (MoICTPCS) in 2013. market share of mobile revenues makes it the largest operator Telecel of unique mobile subscribers has been growing since 2008 8,5% The Ministry is working on a SMART Zimbabwe 2030 Master in Africa. (Figure 2.3) despite stagnation in total mobile connections after 2013. By Plan in order to drive the digitization of the Government, the end of 2019, total mobile penetration was 90.6 percent The fixed broadband market has experienced customer economy and society. The Ministry recognizes the need to and unique mobile subscriber penetration was 49.9 percent growth; however, uptake has been relatively sluggish as develop a national broadband strategy. (according to GSMA Intelligence).6 State-owned fixed-line users opt instead for cheaper and more widely available incumbent TelOne is Zimbabwe’s sole fixed telephony 3G and 4G wireless alternatives. There were just 176,280 Mobile Revenue The Office of the President and Cabinet (OPC) governs Market Share the use of ICTs within the Government. The Government provider and operated 274,408 fixed lines in the second fixed broadband subscribers in Zimbabwe at the end of June 2018 Internet Service Provider (GISP), mandated to be the sole quarter of 2019 according to POTRAZ. 2019 compared to 8.17 million mobile broadband subscribers, provider of internet services to all government ministries, according to POTRAZ. Digital Subscriber Lines (DSL) is the Econet Apart from fixed lines, a private sector operator, most common fixed broadband technology with 101,909 85,6% departments and parastatals, reports to OPC. OPC and Econet, dominates the market, competing with several MoICTPCS appear to have overlapping authority in regard to subscriptions, followed by fiber (39,863) and CDMA (25,658). NetOne government-owned operators in various market segments. the management of government data, enterprise architecture Liquid Telecom, a subsidiary of Econet, operates the largest 10,3% The government operators compete against each other, and interoperability, and the linking of the ICT units of the fiber network in Zimbabwe and had an ISP revenue market as well as the private sector, in some of the same market Telecel different MDAs. This situation is complicated by a lack of share of 56 percent in 2018, followed by TelOne (26 percent) 4,1% segments. Three mobile operators are licensed and operating adequate coordination. and Powertel (10 percent). 6. The GSM Association (commonly referred to as ‘the GSMA’ or Global System for Mobile Communications) is an industry organization that represents the interests Source: POTRAZ of mobile network operators worldwide. 40 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 41 2.2.2 DEPLOYMENT OF BROADBAND INFRASTRUCTURE FIGURE 2.4: FIGURE 2.5: FIBER OPTIC BACKBONE, 2019 ESTIMATED MOBILE NETWORK COVERAGE, 2019 This subsection assesses the digital infrastructure value chain in Zimbabwe, from the First Mile (international connectivity), through the Middle Mile (the fiber optic backbones and inter-urban networks), to the Last Mile (local access networks reaching the end users) and the Invisible Mile (invisible elements of the chain such as access to frequencies and enabling environment). FIRST MILE directly rather than via more expensive third-party networks Zimbabwe’s international connectivity infrastructure in other countries. Several local operators have signed up to is relatively well developed, despite the country being use these IXPs, including TelOne, Liquid Telecom, Africom, landlocked and reliant on terrestrial connectivity via Dandemutande, and PowerTel. neighboring countries. Since 2010, several private and government-owned operators have rolled out cross-border MIDDLE MILE fiber optic links connecting Zimbabwe to several international Zimbabwe’s fiber backbone connects major cities and fiber-optic submarine cables via neighboring countries, urban areas, but large gaps remain in rural areas. Zimbabwe ending a long dependence on expensive and limited satellite fares averagely well on fiber deployment indicators compared bandwidth. The connections include: to its African peers. While there is decent coverage on a population basis, it ranks much lower on fiber density relative TelOne’s fiber backbone, providing indirect access to the ■ to its land mass. As of September 2019, the combined fiber Eastern Africa Submarine System (EASSy) via Mozambique deployment of all the operators is about 25,000 km (includes Completed fiber and to several submarine cables via South Africa and metropolitan networks in Harare and other cities). Liquid Botswana; In progress / proposed fiber Telecom has by far the most extensive fiber network followed Liquid Telecom’s fiber backbone connectivity to EASSy, ■ by state-owned TelOne, PowerTel, Africom, and Telecel. The Data / co-location center Source: HIP Consult, InfaNav, operators SEACOM, and the West African Cable System (WACS) via backbone provides for redundancy on the major routes due to Internet exchange point South Africa, Zambia and Botswana; the use of diverse rights of way (roads, railway, power lines, etc.) Landing Station PowerTel’s access to international fiber networks via the ■ and is a mix of trenched and aerial fiber. About 43 percent of borders with Botswana and South Africa, and to SEACOM Zimbabwe’s population lives within fiber reach (within 5 km). Urban Extent via Mozambique; Beyond major cities, Zimbabwe’s population is more evenly ■ Dandemutande’s fiber connection to SEACOM via dispersed compared to other countries, with a very sparse Population: Mozambique; and population in rural areas, resulting in large coverage gaps for Africom’s connection via Mozambique. ■ Zimbabwe’s rural population. Further investment in network deployments could bolster Zimbabwe’s digital economy and Multiple international links provide sufficient redundancy allow it to realize its full fiber potential, especially in badly and have significantly reduced constraints in terms of under-connected rural areas. Source: HIP Consult, InfaNav, HRSL, operators international bandwidth. Total available international bandwidth has been increasing rapidly, reaching a total LAST MILE equipped international incoming internet bandwidth of The national fixed-line infrastructure is limited, and Mobile operators, which have the advantage of scale and 124,995 Mbps in the third quarter of 2019 according to mobile networks remain the primary means for carrying coverage, are the main providers of broadband connections POTRAZ. Liquid Telecom has 86 percent market share of retail data traffic in Zimbabwe. Fixed broadband with high in Zimbabwe through 3G and Long-Term Evolution (LTE) equipped international internet bandwidth capacity. Based construction costs is limited to the major cities and towns technologies. At the end of 2018, the estimated combined on interviews with the operators, used incoming international (including Harare, Victoria Falls, Bulawayo, Mutare, Kwekwe, population coverage was 93.4 percent for 2G mobile networks, internet bandwidth capacity reached 107,975 Mbps in the Gweru, Marondera, Norton, Chegutu, and Kadoma). DSL and 83.9 percent for 3G networks, and 34.9 percent for LTE third quarter of 2019. The price of international bandwidth fiber-to-the-premises (FTTx) are the most commonly available networks, according to POTRAZ. There is limited LTE coverage has decreased significantly to about $100 per Mbps per fixed broadband technologies. Last-mile fixed infrastructure outside of major cities, with a significant gap between 3G and month for an STM1 circuit to London (from as high as $5000 deployments to end-user premises remain limited to around LTE coverage. There are about 3,500 base station sites/towers per Mbps). In November 2017, GoZ opened the country’s 200,000 with a focus on public institutions, some businesses, in Zimbabwe; the majority are owned and managed by the first internet exchange point (IXP), the Zimbabwe Internet and privileged households. Therefore, mobile networks mobile operators with limited sharing. About 600 sites are Exchange, with the goal to cut the cost of internet. There is remain the primary means by which most of the population connected by fiber optic cables. also a second private, not-for-profit IXP, the Harare Internet and businesses access the internet. eXchange Point. The IXPs allow local networks to interconnect 42 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 43 INVISIBLE MILE: ENABLING ENVIRONMENT While the regulatory regime has significantly improved License fee payments are delayed by most of the operators international bandwidth and network equipment in foreign over the past decade, Zimbabwe’s regulatory rankings except Econet and Liquid Telecom. It has been reported currency. Furthermore, the country was suffering chronic remain relatively weak when benchmarked with peer that POTRAZ allowed some of the telecom operators to power shortages, which meant that mobile operators had to markets. Zimbabwe ranks 99th in the ICT Regulatory Tracker renew their licenses using long-term annual payment plans. keep their infrastructure running using expensive diesel-run 2018 (https://www.itu.int/net4/itu-d/irt/#/tracker-by-country/ Administrative issues have also impeded the assignment of backup generators. regulatory-tracker/2018) out of 193 countries, with the lowest spectrum in the 700 MHz band to mobile operators. In addition POTRAZ issued a notice to all mobile network operators scores under Cluster 3: Regulatory Regime, and Cluster 4: to license fees, the operators are required to contribute to the (MNOs) in Zimbabwe in October 2013 informing them that Competition Framework. Universal Service Fund (Box 2.2). mobile number portability (MNP) would be introduced in POTRAZ proposed a new Converged Licensing Framework POTRAZ regulates retail mobile voice and data tariffs 2014. The regulator claimed that the inability of subscribers in October 2015, in an effort to break down entry barriers for based on a long-run incremental cost model, which takes to retain their respective mobile telephone numbers when new players. The new licensing framework would provide for a forward-looking approach to tariffs. This has resulted they change service providers presents an obstacle to a Unified License combining the Network Facilities License, in significant tariff cuts between 2015 and 2017. However, competition and an inconvenience to the customers. There the Network Services License and the Application Services in August 2019, in response to the country’s worsening has since been little development on the issue, however, with License into one, allowing the holder to construct, install, economic situation, POTRAZ approved an increase in tariffs of the regulator citing cost considerations as the main reason own and maintain network facilities and provide network and more than 180 percent. At the time of the move, the value of behind the delay. No new date has been announced for the application services under the same license. Consultations the local currency had plummeted against the dollar, leading implementation of MNP. on the new licensing effort were conducted in 2015 but no to vastly increased costs for operators, which must pay for POTRAZ implemented a stand-alone Telecommunications further action has been taken. Traffic Monitoring Assurance System in August 2016. It is used to monitor the traffic and revenues of the country’s telecom operators, including their mobile money transactions, and incorporates fraud detection facilities to detect illegal re- BOX 2.2: THE UNIVERSAL SERVICE FUND routing of international calls designed to avoid payment of termination fees. The Universal Service Fund (USF) was established under The first subsidies from USF were awarded by POTRAZ in the Post and Telecommunications Act of 2000 with the 2009 to help finance network expansion in underserved intention of providing funding for extending communication areas. This was the first time that operators had received networks beyond the borders of economic viability to funds for projects from their joint contributions since the reach marginalized communities in rural areas throughout creation of the USF; due to hyperinflation and the resulting Zimbabwe. USF intends to provide everyone with basic switch to a multicurrency system, contributions prior to access to voice and postal services, irrespective of their 2009 had been rendered virtually worthless. geographical location. USF has focused on installing shared POTRAZ reported in October 2015 that several USF projects passive base station infrastructure throughout Zimbabwe. had been completed that year, including a $14 million USF also supports the provision of post buses, back-haul scheme to connect 60 schools in eight rural provinces and transmission networks to rural ICT centers at post offices, a $6 million deployment of rural communications towers. and mobile internet connectivity for rural schools. The regulator spent $7.3 million from the USF in 2017, up All operators are required to contribute to USF; at the from $4.0 million the year before. The investment went start of 2016, the Government raised the required level towards projects such as the geographic expansion of of contributions from 0.5 percent of a telecom operator’s mobile networks to more rural areas, the deployment of gross annual turnover to 1.5 percent. Econet has been the a microwave radio backhaul network to transmit traffic biggest contributor so far, contributing over $53 million between sites back to the switch, telemedicine, internet of the $67 million total payments since 2009. POTRAZ connectivity for schools, e-learning, and the building of reported in 2016 that all three mobile operators were behind Community Information Centers. Another USF-financed with their payments to USF; it is not clear if any operators project to deploy 100 base stations in remote areas was still owe to USF. announced in August 2019. Source: Authors 44 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 45 2.3 Challenges 2.4 Recommendations & Next Steps In order to further develop the country’s digital Electrification rate in rural areas. The low electrification 6. The findings from the assessment of the current state of Digital Infrastructure in Zimbabwe can be used to identify the infrastructure, the Government will need to address a rate in rural areas limits demand for broadband. Only 19 factors in the macro- and micro-environment that influence the behavior of companies and individuals. These in turn help number of challenges. These include: percent of the rural population has access to electricity, in the identification of the factors both in the generic external environment, i.e., Opportunities and Threats, and in the generic which is a major constraint on the use of broadband. internal environment, i.e., the Strengths and Weaknesses, needed to construct the final SWOT Matrix as indicated in Figure 2.6 Macroeconomic 1. conditions. Challenges in macro- Current battery technology does not allow for the below. economic management over several decades have led sustained use of broadband without access to a reliable to structural difficulties including high inflation, limited power supply. access to foreign exchange, and electricity load shedding. FIGURE 2.6: These are inhibiting growth and suppressing investments. Limited infrastructure sharing. Effective infrastructure 7. DIGITAL INFRASTRUCTURE SWOT MATRIX sharing and wholesale open access could bring broadband Institutional 2. arrangements. Overlapping mandates to rural areas more quickly by limiting duplication of within the Government in the ICT area are resulting in infrastructure and redirecting resources to under-served duplication and uncoordinated actions. communities. Optimally, infrastructure sharing should Strengths Weaknesses 3. Limited competition. Econet and Liquid Telecom with a be market based and commercially agreed between the strong market position, access to capital, and competent operators, but it can be mandated in certain situations. ■ Mobile infrastructure (2G & 3G in most ■ Limited fixed broadband management are competing against an unusually large However, infrastructure sharing should not eliminate of the country, LTE in urban areas) infrastructure and penetration number of Government-owned telecommunications infrastructure-based competition, which has been critical ■ International connectivity ■ Limited LTE coverage outside of operators, which have overlapping mandates, compete ■ Fiber optic backbone urban areas for the development of the ICT sector in recent decades. directly with each other in various market segments, and ■ Limited competition High costs, limited skills and lack of relevant internet 8. ■ High broadband prices as percent have limited access to capital. Limited competition in the content. The cost to acquire a broadband-enabled device, of GNI per capita mobile sector has contributed to high prices and low rural digital illiteracy, and lack of local content are other major ■ Limited infrastructure sharing access. barriers to the use of broadband in Zimbabwe. There is Market failure in rural areas. Zimbabwe is still a long way 4. from achieving widespread use of broadband because an urgent need to develop policy and regulation that will increase the affordability of smart devices and develop Opportunities of major infrastructure challenges and market failure, awareness of the internet as well as the skills to access and ■ Zim ASSET particularly in rural areas. High capital and operational costs, low disposable income, and the lack of a reliable use it. This is critical to achieve a significant reduction in digital inequality. Availability of locally relevant content ■ National Development Strategy (re: Threats broadband actions) grid electricity supply render services commercially could drive demand for internet services. ■ Macroeconomic conditions (especially ■ USF unviable and induce a lack of interest from operators and inflation and lack of foreign exchange) Low 9. investment. The difficult macroenvironment ■ Consolidation and privatization of ISPs in deploying infrastructure in rural areas. Accordingly, ■ Electricity load shedding has made it difficult to attract further investment for government-owned telecom operators network operators have focused on the most profitable ■ Electricity access and coverage development of digital infrastructure. The low investment geographical areas, primarily major urban areas and ■ Retail tariff regulation in digital infrastructure has resulted in limited potential intercity routes, to the disadvantage of the population that ■ Digital literacy for enhanced growth; hence Zimbabwe remains largely lives outside those areas. Significant further investments underdeveloped in comparison to other Southern Africa will be needed to provide universal and affordable access countries. Attracting further investment is critical for to broadband, especially in rural areas. Source: Authors growth of the sector and to keep up with the fast changing Regulation of retail tariffs. POTRAZ’s regulation of retail 5. digital technologies such as 4G and 5G. mobile voice and data tariffs is contrary to the principles of a competitive retail market, distorts the market, and is complicated to administer in a high inflation environment. The regulation is likely to translate into reduced investments and roll-out of infrastructure. 46 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 47 The COVID-19 emergency has illustrated the role that digital Spurring the adoption and use of broadband networks tools can play in boosting economic resilience. Box 2.3 and services by users will also require government TABLE 2.1: below illustrates how the country is utilizing digital policy and private sector investment to focus on driving DIGITAL INFRASTRUCTURE RECOMMENDATIONS infrastructure in the fight against COVID-19. During the demand for broadband services. Specific interventions RESPONSIBLE TIME FRAME PRIORITY pandemic, digital technologies have offered solutions to should be designed to carry through demand-side strategies AGENCY governments, individuals and businesses to prevent service to stimulate broadband use, e.g., by promoting the use of OBJECTIVE DI1: interruptions and allow online learning for children. In services that are attractive to potential consumers. Similarly, Improve access to existing digital infrastructure and incentivize new investments particular, access to mobile money was an advantage that it is of paramount importance to educate users about the R1. Develop a National Broadband Strategy and strengthen coordination helped Zimbabweans cope in the early days of the pandemic benefits of broadband and develop the user skills needed R1. between the different agencies that govern ICT policy and implementation to POTRAZ Short-term HIGH (see the subsequent chapter on Digital Financial Services). to use broadband services effectively, targeting women and avoid overlaps and better coordinate future interventions. Expanding connectivity will help the government to prepare vulnerable households in particular (see subsequent chapters Accelerate the rationalization of the portfolio of government-owned for similar situations and support economic resilience through on Digital Platforms and Digital Skills). R2. telecommunications operators and attract private investments to secure MoICTPCS Medium-term HIGH digital technology. policy objectives. Utilize USF funds to leverage private sector investments in broadband infrastructure through public finance mechanisms such as PPPs or R3. competitive awards of subsidies to private operators to support infrastructure POTRAZ Short-term HIGH development in areas where market forces alone are insufficient to provide BOX 2.3: LEVERAGING DIGITAL INFRASTRUCTURE adequate broadband coverage (instead of funding full CAPEX). AS PART OF THE COVID-19 RESPONSE AND RESILIENCE Consider establishing a ‘Pay or Play’ mechanism, whereby operators can choose if they want to contribute financially to the fund or invest directly R4. POTRAZ Medium-term MEDIUM in projects themselves and guarantee specific universal access targets in In the unprecedented fight against COVID-19, digital technologies offer an opportunity for governments, individuals and exchange for relief from USF-levies. businesses to access financial resources, ensure business continuity, prevent service interruptions, allow for continuous Promote transparency and accountability, through the involvement of education of children via distance learning and help cope with social distancing. With the significant increase of data traffic, R5. operators in project selection and annual reporting on accounts and POTRAZ Short-term MEDIUM financial transactions, and voice calls during the pandemic, there is a need for robust digital infrastructure and increased performance. reliance on secure online services. OBJECTIVE DI2: As social distancing measures are imposed, closing the digital divide is of paramount importance to ensure economic Refine the regulatory framework interactions continue happening, without physical interaction. Connecting government and equipping public, health and Reconsider the current practice of mobile retail tariff regulation, which should academic facilities with the right digital infrastructure and solutions would enable remote work at scale, support business R6. POTRAZ Short-term MEDIUM be used only as a last resort in markets where competition exists. continuity, and lay the foundations for digital service delivery (e.g., e-learning). Implement a modern converged licensing framework to further sector growth Short-term interventions that could be considered to aid the emergency response include the following: R7. anchored on innovation, fair competition, affordability, and good quality of POTRAZ Short-term HIGH services. ■ Supporting the telecoms sector in increasing bandwidth and managing congestion to keep the Internet from breaking, through initiatives such as a temporary reduction in spectrum fees; OBJECTIVE DI3: ■ T emporarily eliminating taxes/fees for broadband services and digital devices, to promote remote working and remote Enable faster deployment of infrastructure and greater rural push in middle and last mile connectivity learning; Address administrative issues impeding assignment of LTE in the 700 MHz R8. POTRAZ Medium-term MEDIUM ■ Pre-purchasing broadband internet access for government officials to support home-based work; band services to mobile operators. ■ I mplementing infrastructure sharing and open access to critical infrastructure to allow faster deployment of middle and Enforce harmonized rights-of-way policies between local authorities for last mile connectivity in rural areas; and accessing public infrastructure, taking advantage of future civil works ■ U pdating the rules for the use of Zimbabwe’s USF policies to accelerate development in under-served areas and in turn R9. projects for cross-sector infrastructure sharing. Implementing a “dig once, POTRAZ Medium-term MEDIUM connect more people for remote work and distance learning by easing both operational expense (OPEX) and capital build once” approach to infrastructure development will pass on savings to expense (CAPEX) constraints for service providers. operators who could in turn extend services faster. OBJECTIVE DI4: Promote affordability of broadband-enabled devices to widen opportunities for individual access Source: Authors Subsidize or offer low- or zero-interest loans for the purchase of broadband- R10. enabled devices. Subsidies could be further targeted toward women and MNOs Medium-term MEDIUM In light of the analysis in this chapter, Table 2.1 lists The table identifies responsible agencies as well as an marginalized populations to reduce digital access gaps. key recommendations. These are organized across key indicative time frame, where short-term denotes within Provide broadband equipment to educational institutions at cost or via objectives that would unblock binding constraints on further the next 12 months. Highest-priority recommendations are R11. MoICTPCS Medium-term MEDIUM subsidies. development of this digital economy pillar. highlighted. 48 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 49 Digital Government Platforms Key messages Zimbabwe has the potential to create strong digital government. The country has established the building blocks for a digital ID system, developed core back-end systems, created an accessible government portal, and developed some innovative digital services. There are also established teams at the center of government to provide coherence and coordination. However, Zimbabwe is currently lagging behind its international peers with only limited gains made in recent years. Aging infrastructure and insufficient resourcing, combined with overall macroeconomic distress and electricity and connectivity issues, are major bottlenecks. At the operational level, lack of interoperability limits collaboration and data sharing; and the limited capacity to monitor compliance and quality of services is compounded by high ICT staff turnover and poor skills retention. Despite the setbacks, the government has a clear opportunity to foster the digital government platforms by further strengthening coordination, adopting an interoperability framework, consolidating digital services, and investing in institutional and human ICT capacity. 50 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 51 3.1 Importance of Digital Government Platforms 3.2 Diagnostic Findings: Current State of Digital Government Platforms The data available to help benchmark Zimbabwe’s The development of digital government in Zimbabwe has progress in this area over time, or in comparison to its accelerated in recent years, albeit from modest levels. regional peers, is fairly limited. The two most relevant Zimbabwe is one of 8 African countries that moved from sources of data are the 2020 UN e-government development middle to high EGDI in 2020. In the UN 2020 EGDI, Zimbabwe index (EGDI), and the 2019 Freedom on the Net report. The was ranked 126th out of 193 countries, up from a rank of 146th data from these sources provides a snapshot of Zimbabwe’s in 2018 (Table 3.1).7 The index is a composite indicator that progress against relevant indicators, thus offering a sense of measures “the readiness and capacity of national institutions the country’s overall trajectory over time and as compared to to use ICTs to deliver public services”. This is based on the others. However, the data reflects a narrow thematic focus, weighted average of three indices: (1) the Telecommunications and should be interpreted in the context of the overall report. Infrastructure Index (TII), (2) the Human Capital Index (HCI), and (3) the Online Service Index (OSI). Zimbabwe is ranked fairly well when compared to its regional peers. Its overall score improved significantly from 0.37 to 0.50 between 2018 and 2020, with its ranking improving significantly by 20 places. TABLE 3.1: EGDI: COMPOSITE AND DISAGGREGATED SCORES Rank TII HCI OSI Country 2018 2020 2018 2020 2018 2020 2018 2020 Public sector digital platforms help drive efficiencies in policies – and boosting the digital economy through the g g g g core government operations and delivery of services, close GovTech eco-system. GovTech brings together Open data, Zimbabwe 146 126 0.21 0.37 0.57 0.61 0.33 0.52 down opportunities for fraud and corruption, improve civic Open Source, CivicTech, RegTech, Smart Cities, and similar engagement, and increase accountability. In Zimbabwe, approaches. This chapter assesses some of the building there are many operational digital platforms in the public blocks for strong GovTech solutions in Zimbabwe and makes h g g h sector. These include back-office systems, such as the Public recommendations on how to advance them. South Africa 68 78 0.42 0.58 0.73 0.74 0.83 0.75 Finance Management System (PFMS) and the government During the current global COVID-19 pandemic, the payroll, used to manage public finances. There are also digital relevance of digital government platforms is particularly g g g services such as company registration, e-visas, e-services in health, licensing, transport, and tax payments, among others, apparent, not only for the response and recovery period, but for building longer-term resilience. Digital government Botswana 127 115 0.40 0.56 0.67 0.69 0.21 0.36 which serve to enhance service delivery, and thereby promote platforms are critical, for example, in improving information better outcomes for the public. dissemination, enhancing accountability, maintaining g g g g Digital government platforms are part of the new GovTech approach. The first generation of e-government approaches in core systems to keep salaries paid and public spending accountable, as well as for citizens to be able to access public Nigeria 143 141 0.19 0.35 0.43 0.45 0.53 0.52 the 1990s viewed technology as a means to make government services remotely during a crisis. Improving the utility and more effective, efficient and transparent. E-Government effectiveness of existing platforms is critical. This includes g g g g was associated with foundational technologies, both for back-office systems and providing digital solutions for such foundational government infrastructure as public financial management systems, which would benefit from Kenya 122 116 0.19 0.34 0.55 0.58 0.63 0.68 service delivery. The new GovTech approach, associated with expanding their reach, ensuring their utilization across levels disruptive technologies, focuses on development problems of government, reducing inefficiency by fully deploying their and digital solutions in the public sector – data, services, and accounting functions, and linking them to other key tools. 7. UN E-Government Development Index 2020 https://publicadministration.un.org/egovkb/Portals/egovkb/Documents/un/2020-Survey/2020%20UN%20 E-Government%20Survey%20(Full%20Report).pdf 52 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 53 However, internet freedom in Zimbabwe seems to be on Thus, the available data shows a mixed picture: a country 3.2.1 INSTITUTIONAL ECOSYSTEM AND POLICY FRAMEWORKS the decline. A 2019 report by Freedom House on internet performing fairly well on digital government development, freedom scored Zimbabwe 42/100 (‘Partly Free’), a decline but not so well on internet freedom and hence the ability from the previous year’s score of 47/100 (Table 3.2).8 The decline of its citizens to benefit from digital government services. Although two government institutions are responsible for While GoZ has established central institutional coordination is attributed to a range of factors, including an increase in the The subsequent sections of the report give an up-to-date ICT coordination, many line ministries have established mechanisms on ICT, more could be done to unite all MDAs cost of living making internet less affordable, network and assessment of the current state of digital public sector their own digital platforms, leading to fragmentation behind a common vision for the future of ICT and ensure social media shutdowns in early 2019, and the Government’s platforms in Zimbabwe. They briefly describe the platforms and difficulties in sharing data. The key institutions driving its implementation. One option that the Government could consideration of new legislation to tighten regulation on and policy frameworks currently in place and provide a flavor public service digitization in Zimbabwe are the e-Government consider for achieving this would be to strengthen the social media use. Regionally, this is also a relatively low score, of the country’s ambitions and priorities in this space in the Unit in the Office of the President and Cabinet (OPC), and the leadership mandate of the MoICTPCS for ICT direction setting with neighboring countries like Malawi scoring 57, Zambia 58 coming years. Ministry of Information Communication Technology, Postal and coordination, and to clarify the areas in which OPC would (both assessed as ‘Partly Free’), and South Africa 72 (assessed and Courier Services (MoICTPCS). These two institutions play a leading role. as ‘Free’). The score is based on an assessment against three provide guidance and coordination on ICT use across the A broader challenge is how to change existing norms and primary indicators of internet freedom: obstacles to access, Government of Zimbabwe (GoZ). However, there is no incentives to promote and reward closer collaboration limits on content, and violation of user rights. uniformity in the designing, commissioning, and managing of and sharing across MDAs. This is particularly challenging digital platforms by line ministries. Whilst some line ministries as there are incentives for some MDAs to want to remain the receive technical support from the MoICTPCS, others operate gatekeepers of their own systems and data. There also seems independently. This has led to an impressive range of digital to be a tacit perception that opening up access to others platforms across MDAs, but also a quite fractured landscape TABLE 3.2: would reduce their legitimacy and value. FREEDOM ON THE NET SCORES of digital systems and services, and a culture of silo working, making interoperability and data sharing difficult. The primary policy relevant to the development of digital government platforms is the National ICT policy, which has These two institutions have clearly defined roles and served as the basis for most MDAs to develop their own Obstacles Limits Violation of responsibilities: Country internal policies. The e-Government Unit has produced a to access on content user rights ■ The e-Government Unit, established in November 2018, series of guidelines for application across government, e.g. derives its mandate from a Presidential directive. It on data standards. However, the Unit has limited capacity to coordinates e-government in the public service, which monitor compliance, so there is little information on the extent Zimbabwe 7/25 19/35 16/40 includes setting common data standards for application across government. The Unit has limited human resources to which MDAs are following these guidelines and standards. There are a few critical legal and policy gaps, which GoZ is capacity (8 officers) for the effective implementation of its currently addressing. In particular, laws are being developed mandate but has recently received approval to increase its or updated on cybersecurity, data privacy and protection, and South Africa 17/25 28/35 27/40 ■ complement to 30 officers.9 MoICTPCS is responsible for the development and data sharing. These new or revised statutes will enable the appropriate use of personal and sensitive data currently held implementation of the national ICT policy. With regard by the Government. Some of these are already highlighted as to public sector digital platforms, this largely involves priorities in the national Transitional Stabilization Programme Zambia 14/25 24/35 20/40 providing technical support and advice to line ministries in the design and management of their individual platforms. (TSP) towards achieving the Government’s Vision 2030 and in pursuit of effective e-government. The Ministry also plays a coordinating role. It facilitated the establishment of an inter-ministerial coordination Strategic planning is also underway to help deliver GoZ’s committee to provide oversight of each ministry’s ICT digital ambitions. In particular, the OPC is working on an Nigeria 17/25 26/35 21/40 portfolio, and to help troubleshoot common challenges. e-government strategy to offer a shared vision and roadmap However, the MoICTPCS reports that coordination for delivering digital reforms in the public sector. Likewise, continues to be a challenge, and the problem of MoICTPCS is developing a refreshed ICT ‘masterplan’ called uncoordinated projects and silo working remains. ‘Smart Zimbabwe,’ which outlines its ambitions for both public Kenya 17/25 28/35 23/40 sector-wide and sector-specific reforms. An interoperability In addition, the Ministry of Industry and Commerce chairs a framework and enterprise architecture strategy are also Source: Authors newly formed National Committee for the Digital Economy. envisioned. Figure 3.1 shows the current status of the policy, The committee brings together a range of ministries to make legal and regulatory framework for Digital Platforms in recommendations to the Trade Facilitation Committee. Zimbabwe. 8. Note that in this index, 100 is a perfect score, so the closer to 100, the higher the internet freedom. Freedom House, Freedom on the Net report 2019 https:// 9. At the time of the diagnostic, the Unit was headed by a Permanent Secretary supported by two engineers, two technicians and three administrative staff. www.freedomonthenet.org/country/zimbabwe/freedom-on-the-net/2019 54 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 55 3.2.2 PROCESS DIGITIZATION AND AUTOMATION FIGURE 3.1: CURRENT STATUS OF THE POLICY, LEGAL, AND REGULATORY FRAMEWORK FOR DIGITAL PLATFORMS BACK-OFFICE SYSTEMS There are, however, a few cases where back-office The most commonly used back-office system is the Public systems are interfacing and sharing relevant information. Financial Management System (PFMS) under the Ministry of For example, the vehicle registration system is connected Approved National ICT policy Finance, which has been decentralized to MDAs across the to licensing and insurance providers, which are necessary country. The World Bank-funded PFM Enhancement Project conditions for vehicle registration and licensing, though it activities are supporting the (i) expansion of PFMS capabilities is not yet connected to PFMS for declaration of revenue. (Budget Planning and Consolidation; Business Intelligence; Likewise, the Ministry of Transport’s Vehicle Registration Smart Zimbabwe Masterplan and Web Portal for providing access to all districts), (ii) database is linked to the Zimbabwe National Roads Authority In development establishment of kiosks in 63 districts (shared service centers and police vehicle theft squad, though it is also not yet linked for providing access to all district MDAs and Councils through to PFMS. The Zimbabwe Revenue Authority (ZIMRA) has a E-government strategy the government network), (iii) enhancement of data centers, series of systems for tax and revenue management for which and (iv) development of interfaces with other government they are piloting PFMS data integration to move away from systems. More recently, the PFMS system is being expanded manual daily reporting. With Attorney General’s Office E-transactions bill to allow a government conferencing platform to be added. In Table 3.3 provides a list of the most important back- addition, a .gov email address will be created for government office systems that are currently operational across the officials currently using gmail addresses. Government of Zimbabwe. The list is not exhaustive and Awaiting Presidential assent Cybersecurity and data protection bill Other commonly used systems are the Human Resources does not include the numerous systems in development. Management Information System (HRMIS), and the payroll and pensions systems under the Public Service Commission Planned Interoperability framework (PSC). The PSC is in the process of decentralizing HRMIS to provinces and districts, and decentralization of pensions and payroll is already quite advanced. Efforts are underway Not planned Open data policy / information sharing policy to interface the payroll system with the biometric national registry, with support from the World Bank Group, in order to verify the identity of employees. As a result of this effort, all government employees now have biometric IDs. Previously, Source: Authors the information was manually passed from one system to the other, which increased the risk of error and fraud. In addition to these shared systems, many MDAs also operate their own back-office systems, often resulting in duplication and a lack of collaboration. Management Information Systems (MIS) are the most common. For example, an MIS for education records a comprehensive dataset about schools; an MIS in transport records vehicle data about licensing, registration and ownership. These systems all operate largely in isolation from each other and from the center. This, in some instances, leads to duplication. For example, company, SME and cooperative, and tourism operator registration data are all held separately. It also leads to missed opportunities for collaboration; e.g. the border management database is not yet connected to the customs, tourism, or police databases. 56 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 57 TABLE 3.3: BACK-OFFICE SYSTEMS IN THE GOVERNMENT OF ZIMBABWE Year Funding Year Funding Name Description Name Description commissioned source commissioned source Public Service Commission Ministry of Home Affairs - Registrar General’s Office Human Resources Information National Identity System Biometric database for citizens 2004 GoZ Shared system for managing HR for PSC employees 2014 GoZ Management System (HRIMS) Payroll Payroll management system across GoZ 1991/92 GoZ Ministry of Home Affairs - Immigration Dept Pensions Pensions management system 1991/92 GoZ Citizen Manage Border management system 2010 GoZ and donor Office of President and Cabinet Ministry of Health and Child Care e-Cabinet system Intranet system for Cabinet Office and Ministers 2020 GoZ Electronic Patient Management Tracking HIV patients 2014 GoZ System Ministry of Finance District Health Information Aggregated district level patient data 2010 Donor System (DIHS2) Public Financial Management Shared system for managing GoZ- wide central 1999 GoZ and donor DIHS2 tracker Tracking malaria patients 2016 Donor System (PFMS) government payments and revenue LABS Tracking logistics of laboratory samples 2016 Donor Ministry of Women Affairs and SMEs Automated e-logistics management system for e-Pharmacy 2019 Donor Database on SMEs and pharmaceuticals District-level data repository on SMEs 2017 GoZ Cooperatives Ministry of Justice, Legal and Parliamentary Affairs – Department of Deeds, Companies and Intellectual Property Business linkages program Offline database to match suppliers with potential buyers 2018 GoZ Oracle Database Companies Registration 2000 GoZ Ministry of Primary and Secondary Education SAP Customer Relationship Information Management 2012 GoZ Education Information Schools database, used to produce an annual statistics Management (CRM) 2008 Donor Management System (E-MIS) report Teacher Development Information Zimbabwe Revenue Authority Record of teacher qualifications at district level 2015 Donor System (TDIS) Tax and revenue account client Internal information management and accounting system 2013 GoZ Ministry of Transport e-Cargo tracking system Tracking cargo to reduce transit fraud 2016 GoZ Tollgates managed and monitored via a central control Tollgate computerization 2013 GoZ Invoice management system center Management of VAT payments 2015 GoZ fiscalization Management system for transport bringing together data Zimbabwe Transport Information Public-private from e-services (e.g. license payments) and the vehicle 2009 Source: Authors System (ZIMTIS) partnership registration system (car details and ownership record) 58 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 59 In the face of the COVID-19 pandemic, government continuity and effective response to the crisis depends on how well back-office systems can be operated remotely and how they can harness data for evidence-based BOX 3.2: decisions. Box 3.1 highlights examples of such systems in KEY ACTIONS FOR GOVERNMENT DIGITAL Zimbabwe. Box 3.2 summarizes key recommendations for PLATFORMS IN RESPONSE TO COVID-19 the steps to be taken for continued crisis preparedness, as the pandemic ebbs and flows. Ensure business continuity within government ■ ensure internet access and airtime to key staff in the Ministry of Finance and Economic Development (MoFED) and elsewhere who hold key responsibilities in the response to COVID-19. ■ enhance remote access features/facilities for critical systems like PFMS, for example a rapid content management/workflow automation application, leveraging on the existing Zim-connect platform. ■ prepare separate financial guidelines for emergency BOX 3.1: operations that shift controls from ex-ante to ex-post; EXAMPLES OF BACK-OFFICE SYSTEMS ■ simplify fund transfer mechanisms by reducing layers FOR THE RESPONSE TO COVID-19 and making direct transfers to service delivery levels while ensuring traceability of funds; ■ adjust security features and accountability mecha- 1. Aid Tracking System nisms to respond to the increased risks that remote The platform is being developed at the Ministry of Health, access and emergency procedures can introduce to with World Bank assistance, to assist the Government in system integrity; and managing donor funding for the fight against COVID-19. ■ identify and ensure adequate technical and financial support for the critical digital services that should be 2. Electronic Logistics Management Information prioritized during the crisis, e.g. to ensure continuity of System (eLMIS) revenue streams, reporting of gender-based violence, and better tracking of cross-border movement of goods, The purpose of the system is to enhance tracking of services, and people. COVID-19 commodities distribution. The system is partially functional. It is being developed with assistance from the Clinton Health Access Initiative (CHAI) to ensure COVID-19 Develop new and/or leverage existing information material resources reach the targeted beneficiaries. The management systems to strengthen evidence- CHAI piece will be linked in to a broader eLMIS for long term based decision-making in response to the crisis management of the health sector commodities distribution ■ ensure relevant data is collected and fed to the GoZ system, supported by UNDP. There is also work ongoing to COVID-19 Task Force, including a real time dashboard track commodities using geo-tagging and tracking systems to manage the public health crisis; and being developed by the WB. ■ develop an integrated platform for aid tracking, intervention compliance and predictive analytics to 3. District Health Information System Tracker for disseminate the status of the response, financing gaps COVID-19 and progress. The system will help the MoH in tracking COVID-19 cases in all districts across the country. Resource constraints are stalling the development of the tracker. Source: Authors Source: Authors 60 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 61 INTEROPERABILITY AND INTERCONNECTIVITY Zimbabwe currently does not have an overarching interoperability or interconnectivity framework in place. However, there is a general consensus amongst key BOX 3.3: PUBLIC SECTOR DIGITAL SKILLS stakeholders about the importance of enhancing data sharing and collaboration across digital platforms. The e-Government While Chapter 6 of this report reviews digital skills for the entire digital economy, this chapter Unit is already planning work to design a more coherent public finds that ICT skills retention in the Zimbabwe public service is a critical challenge across sector enterprise architecture and strengthen interoperability almost all MDAs. After training, skilled staff often leave the service in pursuit of more competitive standards. private sector salaries. And as their knowledge and experience is rarely recorded anywhere, that Some of the key challenges facing interoperability and institutional memory also leaves with them. interconnectivity across digital public sector platforms in Zimbabwe include: Another consequence of this limited technical capacity within GoZ is that many MDAs outsource ICT development and maintenance to private providers. This is costly and poses challenges for Siloism across MDAs. Most digital platforms have been i. interoperability. developed in isolation from each other and are not set up in such a way as to enable data sharing and collaboration. Although other MDAs operate using government infrastructure and have developed their own In some instances, this has also led to duplication of platforms in-house, this has given rise to several challenges. While such platform development functions. is more cost-effective in some respects, MDAs report connectivity problems, and challenges with ii. Institutional arrangements. There is limited information receiving timely technical support. The MoICTPCS Central Computing Services (CCS) offers some sharing and collaboration among ICT staff across GoZ, support, alongside technical teams within parent ministries for certain systems, e.g. PFMS. However, so MDAs are not often aware of the platforms that these teams are limited in number, and generally not decentralized. Therefore, issues encountered their colleagues in other parts of the Government are at the local level are much slower and more costly for these teams to resolve. The impact of this is developing. There is no central registry of all public sector that the systems are not utilized as intended and, in some cases, teams stop using them altogether digital platforms held by either OPC or MoICTPCS. All out of frustration and resort to manual reporting. stakeholders agree that this is a serious constraint for interoperability and interconnectivity of systems, and for Data analysis is another common digital skills gap in the public sector. The real value of public data sharing. There is no government service bus10 that sector data collection lies in how it is used. At the MDA level, some teams do harvest data from their can be used to connect government systems through systems in order to inform policymaking and budgeting, but most do not. There is also currently no secure web services or Application Program Interfaces central system for collecting data about the use and quality of public sector platforms. This limits (APIs) to automate data exchange. the ability of GoZ to be able to monitor and strengthen the effectiveness of its ICT investment. Policy and legislative gaps around data protection iii. and sharing. At present there is no single legislation that governs data privacy and security. A data protection bill is yet to be enacted. In an effort to bridge the gap, the current Source: Authors laws on privacy and security are the only ones in force. As a result, some MDAs are nervous about sharing their data, and there are incentives for some agencies to remain the mind as the end-user. This would also communicate a clear Though most MDAs are operating back-office systems However, structural gaps persist. For example, PFMS still gate keepers of data. Data sharing remains optional and framework to donor partners, with which any future digital and e-services separately from one another, there are a relies on manual input from the public service payroll and under the control of individuals rather than institutions. projects should align. few positive examples of where linkages between systems pension systems managed by the PSC. Representing public are being established to help enhance efficiencies. The employment costs, the two systems constitute a significant Development of a shared, strategic vision across GoZ for The enhancement of the national data center in Harare and Public Financial Management System (PFMS) is one example, part of budgetary expenditure. Interfacing them with PFMS how to connect and share data between existing and backup data center in Bulawayo is anticipated by the end of which is expected to be linked to other systems, such as those would greatly enhance budgetary control. The World Bank pipeline systems will help strengthen collaboration. It 2020, further paving the way for increased interoperability. used by the Zimbabwe Revenue Authority, Debt Office, and has been providing technical support on interfacing the PFMS will also promote more strategic government-wide choices Most of the critical government systems and all databases Reserve Bank of Zimbabwe in 2020. Other interfaces with the with other systems including the payroll, but this has not on the procurement and resourcing of systems. In addition, in government will thus be hosted under one roof. These Department of Deeds, Registry of Companies and Intellectual yet been achieved. The payroll system is also expected to be it will help ensure that any data collected is both accessible data centers could also be converted to a government cloud Property, and the Immigration Department may be possible connected to the national ID database to allow for verification and relevant to the strategic decision-making needs of GoZ. with additional investments in virtualization, clustering, load in future. of employees’ identities. Ideally, such a vision would be developed with the citizen in sharing, active-active replication, shared services, and more. 10. A government service bus is the central platform of integration and services for the provision of government electronic services and transactions. 62 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 63 3.2.3 DIGITAL SERVICES A wide variety of digital services is offered by different and connectivity are available. In addition, Community MDAs. These services range from an e-visa system to online Information Centers (CICs) are being set up in Post Offices to license payments, online liquor licensing, and company provide the population in underserved areas with access to registration. online services (Box 3.4). GoZ has taken steps to improve the accessibility and use of Another challenge is that neither MoICTPCS nor OPC digital services to enhance service delivery and the ease of keeps a single registry of the e-services that are currently doing business. In particular, it has established ZimConnect, available or in development, nor do they track data on their which is a government portal managed by the Government usage. This presents challenges in terms of understanding Internet Service Provider (GISP). It serves as a central online the user experience and ease of doing business, as well as for hub, linking the user to a menu of available services. While not broader GoZ efficiencies and data sharing. all services are currently hosted on the site, it is an important step toward designing the platform architecture around the user experience. This has also been the approach of a number of MDAs. For example, ZIMRA is developing a ‘single window’ one-stop shop platform for its users to access its various services; similarly, the Ministry of Tourism brings together registration, designation and regulatory services onto one BOX 3.4: COMMUNITY INFORMATION platform. CENTERS IN POST OFFICES Much like the back-office systems, the majority of the available digital services currently operate independently of one another. This poses various challenges. For example, Another way in which GoZ is seeking to increase service almost all services that generate revenue are not connected accessibility in underserved and/or less well-connected to PFMS; yet it is recognized that manual reporting of service areas of the country is through establishing Community revenue leads to errors and increases the risk of fraud. Information Centers (CICs) through MoICTPCS. CICs are currently available in 360 post offices across the country, Online payments are also a challenge for users. eVisa is which represents about 50 percent of the total number to one of the few platforms where users can pay online using be set up. a forex bank card; most other systems require users to pay separately using mobile money or make a bank deposit and CICs are intended to serve various purposes including: upload evidence of payment online. This negatively affects ■ To provide a one-stop-shop for citizens and business the ease of doing business, as not all steps can be completed owners to access public sector services and government in one place. The wider economic challenges and currency content online and perform e-transactions. constraints in Zimbabwe make this a difficult issue to tackle, ■ To offer a space to provide digital skills training to but this is a challenge that platform providers are working to citizens and business owners to enable them to better resolve. access government services and content, and to make Unreliable power and limited connectivity remain two of the use of digital platforms for economic purposes. primary constraints to users accessing and benefiting from ■ To facilitate the collection of community-level data. digital services. Most of the MDAs report that those unable to access online systems have an opportunity to access services CICs are a new innovation by MoICTPCS, so there is offline, usually via a district office. However, this also requires currently no data about how much the centers are being the district office to have adequate power and connectivity, used, by whom, or for what purpose. It will be important to which is not always the case. In this sense, the digitization of monitor this over the longer term to determine if they are services in a country facing broader infrastructure constraints having the intended impact. may not be able to achieve its full potential in the short term. Some service providers are piloting mobile apps for service access to address this; others are experimenting with offline forms, which can then be uploaded at a time when power Source: Authors 64 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 65 Table 3.4. provides a list of key e-services currently offered by GoZ. This is not an exhaustive list as the development of e-services is not tracked centrally; it has been developed by the authors in the course of data collection for this report. Moreover, ZIMRA the services have not been tested as part of this exercise, hence their quality and accessibility has not been ascertained. In addition, specific digital services are being developed in response to COVID-19 (Box 3.5). Automated Systems for Customs Data Automated customs processes on importation/ 1991/92 GoZ (ASYCUDA) exportation Tax and Revenue Management e-services Online registration and payment of tax 2013 GoZ TABLE 3.4: KEY E-SERVICES E-Tip Payment of temporary import license online 2017 GoZ Year Funding Ministry of Home Affairs – Department of Immigration Name Description commissioned source E-visa Online visa application and payment system 2014 GoZ GISP Ministry of Justice, Legal and Parliamentary Affairs – Department of Deeds, Central government website connecting/linking Companies and Intellectual Property ZimConnect 2016 GoZ citizens to a variety of e-services Facilitates Deeds Search and Companies Name SAP Customer Relationship Management 2012 GoZ Search Ministry of Women Affairs and SMEs Ministry of Health and Child Care Online reporting tool for Gender-based Online reporting tool 2019 Donor violence e-Nurse Online recruitment tool for nurses 2019 GoZ E-Registration for Cooperatives Online registration for cooperatives 2018 GoZ Online application for technical studies SMEs apply online to access study 2018 GoZ Ministry of Local Government, Public Works and National Housing opportunities provided by the Ministry. Liquor licensing Online liquor licensing system 2016 GoZ Ministry of Primary and Secondary Education Online application system for secondary E-Map 2016 GoZ boarding school placements BOX 3.5: EXAMPLES OF DIGITAL SERVICES UNDER DEVELOPMENT IN RESPONSE TO COVID-19 Ministry of Transport SMS platform and a WhatsApp Chat BOT 1. Mobile toll payments Pre-payment for tollgates via mobile money 2016 GoZ The SMS platform utilizes a toll-free line which was donated by POTRAZ (Postal Telecommunications Regulatory Authority Zimbabwe). Members of the public can make SMS inquiries on COVID-19 and receive SMS information on their mobile phone. Vehicle licensing system Payment of road-user fees, and ZTV license 2019 GoZ In addition, the WhatsApp Chat BOT enables members of the public to receive more visual information on COVID-19. The E-payments for commercial/operator platforms were developed with funding from UNICEF. Payment of licenses 2018 GoZ licenses 2. COVID-19 Web portal E-learner driver license testing Digital testing available at district test centers 2019 GoZ The Ministry of Health is managing a web portal which provides COVID-19 information. It provides geospatial maps to the public and the Government and enables the generation of COVID-19 situational reports. The MOHCC also runs a hotline with a teledoctor service that allows people suspecting that they have COVID-19 to call in and get advice online from a registered Ministry of Industry and Commerce doctor. Over 1,500 calls are completed per day. E-licensing for import/export Online application and payment for licenses 2016 GoZ Source: Authors 66 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 67 3.3 Challenges 3.4 Recommendations & Next Steps In order to further develop the country’s public sector FIGURE 3.2: digital platforms, the Government will need to address a DIGITAL PUBLIC SECTOR PLATFORMS SWOT MATRIX number of challenges. These include: Limited or unreliable power and connectivity. Zimbabwe 1. has been experiencing significant power shortages. Some areas, especially rural areas, have limited connectivity, which Strengths Weaknesses makes access to the internet difficult. If these challenges ■ Central ICT and e-government teams ■ S ilo development of platforms, and remain unresolved, digital platforms risk excluding some promote coordination and coherence no shared space for collaboration parts of the population due to inaccessibility. ■ Core government (back end) systems ■ Reliance on costly external 2. Weak interoperability between systems. The absence ■ Good examples of digital services providers for development and maintenance. of an interoperability framework and reliable government ■ Accessible, central government portal service bus makes data sharing optional. Most digital ■ L imited capacity to monitor ■ Building blocks for digital ID system compliance and quality of services platforms operate in silos, which means that there is currently limited data sharing across systems. Technical skills retention. The ICT sector in the public 3. service competes with the private sector for technical skills, and as a result there is a high level of ICT staff turnover and the resulting loss of knowledge and skills. Although there Opportunities is a skills retention fund for the public service, it would be important that the ICT personnel are included. (Chapter 6 ■ eGovernment policy and Smart of this report outlines digital skills challenges holistically.) Zimbabwe strategy Threats ■ L egislation in development on data Duplicate mandates. There is some degree of duplication 4. ■ High ICT staff turnover, and protection and sharing of mandates between the e-Government Unit and poor skills retention ■ Interoperability framework MoICTPCS in terms of coordinating the digitization of ■ Intermittent power and connectivity ■ N ational Data Centre and Disaster public sector systems and services. In addition, no ministry Recovery Center ■ Interoperability has been appointed to oversee and monitor the quality/ ■ Aging government infrastructure ■ ICT staff in most MDAs use of digital services and back-office systems across GoZ. ■ Inadequate resourcing Unreliable government digital architecture. GISP is 5. mandated to host all ministries’ websites and provide email services. However, there are concerns about the regularity with which the websites are down or inaccessible, and many employees reported being unable to use their government email addresses. This has led to some MDAs seeking external suppliers to host their websites, and using private email accounts for doing business. Gaps in the policy and legal framework. Some critical gaps 6. remain in the policy and legal architecture underpinning digital public sector development, particularly as regards data protection, cybersecurity and access to information. 68 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 69 In light of the analysis in this chapter, Table 3.5 lists key recommendations. These are organized across key objectives that would unblock binding constraints on further development of this digital economy pillar. The table identifies responsible agencies as well as an indicative time frame, where short-term denotes within the next 12 months. Highest-priority recommendations are highlighted. TABLE 3.5: DIGITAL GOVERNMENT PLATFORMS RECOMMENDATIONS RESPONSIBLE TIME FRAME PRIORITY AGENCY OBJECTIVE DGP1: Enhance coordination, interoperability and interconnectivity across MDAs Map the existing digital systems, services and data assets first and then move towards establishing more permanent catalogues as well as MoICTPCS the interoperability and interconnectivity framework across MDAs. The R12. comprehensive mapping exercise would capture all public sector digital OPC eGovt Unit Short-term HIGH platforms and note those in development with a view to identifying opportunities for interoperability, interconnectivity, lesson learning, and resource sharing. Establish a clear coordinating mechanism across MDAs on digital platforms. MoICTPCS should work together with the e-government unit of OPC in MoICTPCS coordinating the reforms. MoICTPS has the institutional strength to drive R13. OPC eGovt Unit Medium- term MEDIUM reforms and the e- government unit, which has a small team, enjoys the institutional proximity to the center of government, which is critical in driving reforms. Establish shared systems and responsibilities at MDA level for the regular OPC eGovt Unit R14. Medium- term MEDIUM collection of data about platform use and quality. Line Ministries Strengthen the mandate and capacity of the MoICTPCS to monitor MDA R15. compliance with agreed norms and standards for digital platforms, and OPC Medium- term HIGH enable it to act where necessary. Finalize policies relating to data protection and sharing, and cybersecurity; and ensure that the laws are up-to-date and aligned to international best R16. MoICTPCS Medium- term MEDIUM practice and standards. For example, the policies should comply with the SADC-level model legislation on cybersecurity and data protection. Strengthen the capacity of the Government Internet Service Provider (GISP) MoICTPCS to ensure that government infrastructure is sufficiently reliable and cost- R17. GISP Short-term HIGH effective to incentivize MDAs to migrate their platforms onto government systems. OPC eGovt Unit OBJECTIVE DGP2: Increase citizens’ online access to services Ensure all government digital services are available via the government portal as a one-stop shop by first ensuring level 1 digitization (access to information OPC eGovt Unit R18. Medium- term MEDIUM first and services afterwards). Digitizing those services that require low MoICTPCS connectivity should be prioritized. MoICTPCS Strengthen the reliability and functionality of the government portal to R19. GISP Medium- term MEDIUM facilitate its use. OPC eGovt Unit 70 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 71 Digital Financial Services Key messages Zimbabwe has a relatively well-developed payment system, where 96 percent of all transactions in the country’s formal sector are conducted through digital means and only 4 percent are cash-based. Government uses digital money almost exclusively. High-value real-time gross settlement (RTGS) platforms run by the central bank have been key in facilitating corporate payments. Zimbabwe has seen a revolution in mobile money, resulting in about 7.1 million mobile wallet holders in a country of less than 15 million. In the COVID-19 era, Digital Financial Services (DFS) also allow the retail sector and transacting public to comply with the World Health Organization’s social distancing guidelines for COVID-19 prevention. However, the enabling environment requires significant improvements. These include closing gaps in the legal and regulatory frameworks; overhauling governance structure, ownership and access protocols for payments and financial market infrastructures; and addressing the significant inherent risks in the payment system. As an additional concern, currency reforms leading to de-dollarization have increased inflation and loss of value, especially for digitally stored currency. The government has an opportunity to strengthen the DFS ecosystem through the new National Fintech Strategy, mandate interoperability among mobile money operators, and adopt the Southern Africa Development Community (SADC) Model Law on payments. In addition, a National Payments Systems Strategy should prioritize safety, security, and efficiency for all its market participants. 72 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 73 4.1 Importance of Digital Financial Services Digital financial services (DFS) are a key enabler of the By eliminating silo payment platforms, inter-bank, bank- In the COVID-19 pandemic era, DFS are essential in digital economy ecosystem. Given Zimbabwe’s decade-old to-mobile and inter-mobile money wallet settlement can supporting the World Health Organization’s (WHO) social adoption of a dollarized financial system characterized by cash be performed seamlessly. This applies to domestic and even distancing protocols. The spread of COVID-19 can be reduced liquidity constraints, DFS, particularly the mobile payment cross-border payments for goods and services, including if transacting counterparties in economic activities maintain platforms, offered a reprieve to the transacting public. Early remittances. A modern cashless digital payment ecosystem social distance. The use of DFS reduces the need for buyers breakthroughs in facilitating payments in the digital economy rapidly integrates businesses, merchants and consumers, and sellers to be in the same physical space to complete an were enabled by card-based payments, but these have been facilitating the participation of those at the bottom of the economic transaction and for many buyers to be in the same constrained by the need to have physical point of sale (PoS) pyramid in the pervasive digital economy. It is projected that shop at the same time. In this regard, mobile money and or automated teller machines (ATMs) – all legacy systems that about a trillion objects will be connected by 2035, because of other forms of online payments are considered an essential add to overheads – to effect payments. A disruptive answer the internet of things (IoT). 11 weapon in fighting the spread of the virus (see Box 4.1). Online has come in the form of the mobile phone, which allows non- commerce is incomplete without digital payment platforms. card linked digital mobile payments to be made directly from a user’s funding source. The payment, using either a feature phone or smartphone, goes directly to a merchant to initiate purchase and instant settlement. No data is exchanged, since all customer and merchant data stays with the respective banks, and the transacting parties have their needs met. BOX 4.1: DFS allow for transactional data to be traced, analyzed, and DIGITAL MONEY AND GOVERNMENT PAYMENTS IN A COVID-19 PANDEMIC CONTEXT eventually collateralized by financial services providers. This creates opportunities for banks to provide enhanced services, such as extending credit based on algorithms COVID-19 has had severe and direct impacts on the availability and smooth provision of cash and non-cash payment services generated by consumer data. This is a trigger for deeper used by individuals, firms and governments. It has also affected payment and settlement systems, where it has triggered financial inclusion that is critically needed by individuals, operational disruptions and credit and/or liquidity events. Lessons learned from the Ebola crisis and previous humanitarian households and small and medium enterprises (SMEs), and financial crises suggest that pandemics could materially impact payment and settlement systems as well as payment which are otherwise excluded from the mainstream financial services that are extensively used by individuals, businesses and governments. services sector. Through anonymized customer payments The case for universal digital financial services has never been so urgent as in recent months due to widespread economic over digital platforms, bank-client confidentiality built over lockdowns. Digital money is largely seen as a solution to minimize interaction, particularly between retailers and customers years can be maintained. who want to make small payments. A widespread informal sector in Zimbabwe is risky in that it requires physical interaction Digital payments reduce costs and bring efficiency and between transacting parties. The World Health Organization (WHO) COVID-19 preventive social distancing protocols accountability, especially for social grants and government encourage little or no interaction between individuals, even in instances where business transactions are taking place. Digital to person (G2P) payments. DFS constitute a convenient and payments, mobile or online, are an answer to the enhancement of social distancing protocols. affordable channel through which individuals and households The closure of bank branches and of money transfer organizations, housed in banks, retail shops or standalone, has severely receive payments, make real-time payments for services, impacted the ability of users of financial services and recipients of cross-border remittances to transact. As a result, financial especially utilities, and save and borrow through platforms services have shifted from being offered over the counter to digital financial services. they can easily control and access at any time. DFS allow the e-commerce ecosystem to flourish as firms can more easily Lockdowns of businesses and schools have increased the pressure on transacting individuals, who often can only complete transact with their consumers and suppliers, resulting in a transactions remotely through digital payments. This enhances the case for an increasingly digitized and seamless DFS virtual e-commerce ecosystem. ecosystem. Under lockdown conditions, digital payment capabilities can, with few risks, enable the completion of capital market settlements, insurance and pension claims and premiums, loan repayments, tax payments by individuals and firms, and tax rebates. 11. Murray Gardiner, Hyperconnectivity and financial inclusion: Hype vs reality in Africa, 2019 74 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 75 4.2 Diagnostic Findings: Current State of Digital Financial Services Zimbabwe has a well-diversified financial sector as Zimbabwe is making progress, albeit somewhat slow, reflected in Box 4.2. While dominated by the banking towards achieving the target set out in its financial sector (13 commercial banks, 4 building societies, 1 savings inclusion strategy. Advancing inclusive financial systems BOX 4.2: ARCHITECTURE OF THE FINANCIAL SECTOR IN ZIMBABWE bank and numerous small microfinance institutions), the in Zimbabwe is largely dependent on leveraging innovative financial sector includes vibrant capital markets as well as the technologies that drive financial services, supported by strong insurance and pension sub-sectors, all of which utilize digital institutions. The National Financial Inclusion Strategy 2016– The country’s financial sector is relatively diversified. It consists of a strong banking sector, with relatively large insurance delivery channels. 2020 (NFIS) lays the foundation for the development of the and pension sub-sectors and vibrant capital markets. Financial transactions are led by mobile money providers through financial sector. The country is now at the tail end of the first mobile money wallets. Financial inclusion has expanded rapidly in Zimbabwe over phase of the National Financial Inclusion Strategy, which ends the past five years, driven by DFS. The number of adults with in 2020 and has an ambitious target of 90 percent financial ■ Banks: Of the 13 commercial banks, 5 are foreign for Authorised Dealers with Limited Authority (ADLA). transaction accounts in Zimbabwe has grown exponentially inclusion levels for the adult population. According to Findex banks. There are 4 building societies, 1 savings bank and International MTOs in the market include Western from one million in 2014 to 7.1 million as at September 30, Report 2017, the total percentage of adults with a transaction 2 development finance institutions. Union, Moneygram, Mukuru, Hellopaisa, and World 2019.12 This indicates a rapidly increasing rate of financial Remit. Retailers like OK’s Moneywave are part of the accounts had risen to 59 percent from 40 percent in 2011.16 ■ I nsurance and Pension firms: The insurance sector inclusion, which is reported to be around 59 percent by the players in the market. The authorities are planning a successor National Financial consists of life assurance, short-term insurance and Findex 2017 report.13 This impressive growth was preceded Inclusion Strategy (2021–2025) that will further strengthen the short-term insurance service providers. There is a ■ B ureaux de Change: Various bureaux de change operate by low financial inclusion for both individuals and SMEs as large public pension fund and a rapidly growing funeral in the market under ADLA guidelines. early gains in financial inclusion. recently as 2014, when 23 percent of the adult population insurance sector. ■ O ther Financial Service Providers (FSPs): Other FSPs was identified as excluded and only 30 percent of adults used Further advances in financial inclusion will be largely ■ Capital Markets: Zimbabwe has one of the oldest include some NGOs, Savings and Credit Cooperatives financial services. dependent on the ability to leverage innovative stock exchanges on the continent, the Zimbabwe (SACCOs), Village Savings and Loan Associations technologies that drive financial services. By enhancing Stock Exchange; the sector also has various asset (VSLA), Rural Savings and Credit Groups, and Rotating Usage of DFS has recently expanded from primarily efficiencies and adopting the latest technologies in financial management companies, stockbrokers and a central Savings and Credit Associations (ROSCAs). holding savings accounts to transactions, payments and services delivery, Zimbabwe will be well positioned to build securities depository company. An alternative stock receipt of domestic remittances. Although internet usage ■ F intech Companies: The emergence of fintech on the progress in financial inclusion already achieved. As exchange for SMEs, Financial Securities Exchange (Pvt) for bill payments has remained low and concentrated among companies in the DFS ecosystem has been led by MNO- (Ltd), was launched in 2016. a member of the Alliance for Financial Inclusion (AFI) since owned fintech companies. The most important one, and the elite, 11 per cent of account holders now use the internet 2012, Zimbabwe participates in various AFI working groups ■ M obile money providers, namely Econet, NetOne the 3rd largest company listed on the Zimbabwe stock to pay bills and make regular payments to merchants like and Telecel, provide mobile wallets, which facilitate exchange, is Cassava Smartech (a subsidiary of Econet including the Digital Financial Services Working Group, and utilities and municipalities. The rate of use of DFS to send and wallet-based transactions. Econet’s Ecocash wallet Wireless), which houses the fintech DFS providers thus has knowledge of such technologies. receive domestic remittances is very high, with 79 percent is the dominant player, processing 99.7 percent of all Ecocash, Steward Bank, insuretech business, Ecosure of mobile account holders having received remittances over transactions. Of the three wallet providers, only Econet and remittance services. Most fintech companies on has separately registered Ecocash as a stand-alone the market allow bill, merchant and utility payments the mobile wallet.14 Whilst participation in savings clubs is entity. to be made seamlessly and in real time. Other fintech relatively widespread at 21 percent among adults aged 15+, companies include Zimswitch, Paynow, Zapper, a migration from traditional savings clubs to mobile wallet ■ M oney Transfer Agents/Organizations (MTA/MTOs): Payserve, Ecoshash, Get-Bucks, E-tranzact. Over 25 MTAs facilitate inward remittances licensed based savings clubs is taking place. 15 by the RBZ in line with foreign exchange guidelines Source: Authors 12. Global Findex Report 2017 13. For comparison, the financial inclusion average for Sub-Saharan Africa is 43 percent (IFC 2018: Digital Access: The Future of Financial Inclusion in Africa) 14. Global Findex Report 2017 15. Ibid 16. Ibid 76 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 77 4.2.1 DIGITAL PAYMENT ECOSYSTEM BOX 4.3: THE INTERPLAY BETWEEN DFS AND OTHER PILLARS OF THE DIGITAL ECONOMY Zimbabwe has a relatively robust digital payment for business to business (B2B), business to government Apart from mobile-based financial transactions, the financial inclusion, with a traditionally higher coverage of ecosystem driven by both public and private payment (B2G), person to person (P2P), or government to person (G2P) efficiency of DFS delivery is largely dependent on a high rate financial services delivery infrastructure in urban areas platforms. The most widely used public payment platform payments. Most banks in Zimbabwe are now trail blazers in of penetration of internet service provision. Currently, the through branch networks in urban and peri-urban service is the Reserve Bank of Zimbabwe (RBZ) Real-Time Gross retail payments. Innovations in real-time payments such as internet penetration rate is 58.9 percent against a mobile centers. Settlement System (RTGS), which is predominantly used the ZIMSWITCH Instant Payment Interchange Technology penetration rate of 84.8 percent. The rate is lower in rural by the corporate world for interbank transfers. The RTGS (ZIPIT) have created immense value for market participants. Deployment of mobile base stations across the three mobile system is by far the biggest value mover. However, in terms Fourteen payment platforms are summarized in Table 4.1 areas due to lower connectivity and limited deployment of network operators (MNOs) is shown below. of volumes transacted, it is dwarfed by privately-run platforms below. 3G and LTE coverage in remote areas. This militates against TABLE 4.1: PAYMENT PLATFORM ECOSYSTEM IN ZIMBABWE 2G 3G LTE Q4 Q4 Net Q4 Q4 Net Q4 Q4 Net 2019 2020 Addition 2019 2020 Addition 2019 2020 Addition PAYMENT PLATFORM SERVICES OFFERED Total 4,970 4,971 1 2,886 2,893 7 1,033 1,032 -1 Real-Time Gross Settlement System (RTGS) Local interbank funds transfer - mainly large value Source: POTRAZ, 2020 Central Securities Depository (CSD) Holding and transferring of securities through electronic book entry for Government Securities Fixed telephone density remains very low at 1.9 percent of communication. The growth trends of fixed teledensity Zimswitch Holdings (Pvt) Ltd Local card switching facilities and electronic funds transfer of the population, as more business and individual are shown below. consumers adopt mobile telephony as the principal means MasterCard International card switching services 3,5% 3,1% 3,0% Visa International and local card switching facilities 2,9% 3,0% 2,8% 2,8% 2,8% 2,8% 2,7% 2,6% 2,5% 2,6% Union Pay International (UPI) International card switching facilities 2,4% 2,5% 2,3% 2,3% 2,1% 2,2% 2,2% MyCash Mobile payment and funds transfer linked to bank and card account 1,9% 1,9% 1,9% 2,0% Payserv Zimbabwe (Pvt) Ltd (Paynet) Electronic processing of payment instructions – electronic funds transfer 1,5% Ecocash Mobile financial services/ mobile money 1,0% Getcash Mobile financial services/ mobile money 0,5% One -Money Mobile financial services/ mobile money 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: POTRAZ, 2020 Telecash Mobile financial services/ mobile money Cheque Cheque clearing DFS are a key enabler of digital entrepreneurship and a key online payments. The more conversant the population is pillar of the digital economy, as innovations around digital with the use of internet and DFS, the easier it is to broaden IceCash Electronic payment solutions businesses are significantly reliant on the ability to make the digital economy Source: Authors 78 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 79 Due to a well-developed payment system and lack of RBZ recently constituted a Fintech Working Group with 4.2.2 MOBILE MONEY REVOLUTION cash as a medium of exchange, digital financial services the National Payment Systems Department (NPSD) as a are pervasive in Zimbabwe. According to MoFED, already key member. Within the NPSD, a Digital Financial Services in 2018, 96 percent of all transactions in the country were & Licensing (DFSL) section assesses and approves new The digital financial services sector is being driven, in part, Interoperability, which involves money transfers across through digital means and only 4 percent were cash-based.17 initiatives related to payment systems. The plan is to establish by a revolution in mobile money, as reflected in the number different mobile money platforms, is about to become a Five means are at the disposal of consumers to effect digital a full-fledged Fintech Department as a distinct unit in the of mobile wallet holders. As of end-October 2019, there were reality. This will reduce costs and improve the efficiency of financial transactions: card-based, mobile, cheque, internet, RBZ, which would be at par with other units such as the about 7.2 million mobile wallet holders in Zimbabwe. Table 19 transacting. Since the inception of mobile money, there has and electronic funds payments. Card payments make use Bank Supervision, Foreign Exchange, and National Payments 4.2. shows the distribution of mobile money subscribers been no interoperability between the mobile money wallets of bank-owned point of purchase machines (POS) and Departments. A National Fintech Steering Committee across the three networks. Three MNOs rapidly promoted provided by the three MNOs, even though bank platforms automated teller machines (ATM), with Zimswitch, a national comprising Government line ministries, departments and “mobile wallets” due to a perennial shortage of cash in a then- are interoperable. However, this is set to change with the switch, being a vital platform that enables interoperability regulatory agencies was set up during the last quarter dollarized economy. Apart from the three MNO-based mobile new SI 80 of 2020.20 A central infrastructure supports retail among banks. of 2019 to provide strategic policy direction in the fintech money providers (Ecocash, Telecash and OneWallet), a fourth payments interoperability amongst commercial banks and space. A National Fintech Strategy will be developed under e-money wallet is MyCash, which uses both a card and a USSD across different types of financial service providers; this has One key enabler of digital payments has been the almost the auspices of the National Fintech Steering Committee code over the mobile phone. spurred the growth in DFS to almost universal coverage exclusive use of digital money by the government. and will include strategic guidelines for public and private throughout the country. Since the inception of mobile money, Government Ministries, Departments and Agencies (MDAs) Apart from banks, who were the early entrants in the digital stakeholders. The NPSD has taken a very proactive approach exclusivity arrangements are not permitted in the provision of have moved fully away from cash and cheque payments financial services arena, Zimbabwe has largely adopted to supervising mobile money operators and fintech operators financial services and selection of mobile money agents; this to solely digital means of making and receiving payments. a free-market approach to the participation of multiple and has banned cryptocurrencies. The high-level fintech is a progressive policy position which can help in broadening Cash is a very scarce means of payment in Zimbabwe. The players. The proliferation of agent bank networks and mobile friendly regulatory environment directly linked to payments access to and usage of financial services. ZimSwitch has been government is trying to increase the volume of cash payments money agents has seen an explosion of financial service reflects a dethroning of the ‘cash is king’ tradition in Zimbabwe designated as the mobile interoperable switch for all mobile from 4 per cent to about 10 percent by injecting more money provision for the lower end of the market. The regular reviews and the entrenchment of digital financial services. money providers with effect from August 15, 2020. into the market. The ZWL$1.1 billion of notes and coins in of the regulations have aimed at removing remaining gaps circulation represents only 3.2 percent of total banking sector RBZ considers cybersecurity to be a critical component in in the payment ecosystem. Consumer protection regulations The high uptake of digital financial services, especially deposits of ZWL$34.5 billion as at December 31, 2019. The 18 the provision of financial services. The Financial Intelligence are embedded in bank supervision, payment regulations, and mobile money, attests to the relatively high level of user RTGS systems (Zimswitch, ZIPIT, and the Electronic Funds Unit (FIU) and Bank Supervision Department oversee the other departments of the RBZ. The newly enacted Consumer skills in adults (15 years or older). Although high usage is also Transfer (EFT) system) constitute the main retail payments recently developed cybersecurity framework. The RBZ has Protection Act has no specific focus on the financial sector. attributable to the low cash in the system, there is still a gap infrastructure in Zimbabwe. This is complemented by the identified the need for continuous improvement in the The Consumer Council of Zimbabwe (CCZ), a consumer in accessing financial services through the internet, as shown Chengetedzai Securities Depository (CSD), which covers the cybersecurity and anti-money laundering aspects of the watchdog, mainly focuses on the retail and manufacturing by the Findex Report (2017). Usage of digital financial services securities sector. financial sector. The FIU oversees efforts to detect, report and sectors and leaves the financial sector largely market-driven, by government MDAs is high as a result of the relatively investigate instances involving suspected money laundering leaving a gap that can be filled by a fully-fledged financial well-developed digital skills of public sector users of digital At the heart of this robust payment system is modern and financial transactions that are considered by the RBZ to sector ombudsman. financial services. legislation. The principal legislation includes the National be above the set thresholds within the banking sector and Payments Act (Ch 24:23), the Reserve Bank of Zimbabwe mobile money space and thus could be viewed as suspicious. Act, the Bank Use Promotion and Suppression of Money Laundering Act, and the Exchange Control Act, all overseen by TABLE 4.2: the RBZ. In addition, RBZ ensures adherence to international ACTIVE MOBILE MONEY SUBSCRIBERS best practices on payment systems, issuing guidelines and directives from time to time. Operator 2nd Quarter 2019 3rd Quarter 2019 4th Quarter 2019 1st Quarter 2020 Ecocash 6,643,008 6,707,225 6,812,368 7,065,382 Telechash 54,190 54,399 53, 311 52,564 OneMoney 335,132 428,529 468,960 555, 255 Total 7,032,330 7,190,153 7,334,639 7,673,201 Source: POTRAZ, Sector Performance Report, Fourth Quarter 2019 & First Quarter 2020 Report 17. Newsday, February 23, 2018. This number, however, refers only to the formal economy and public sector, while cash prevails in the informal sector. 19. Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), Third Quarter Sector Performance Report, 2019 18. Reserve Bank of Zimbabwe Monetary Policy Committee, January 2020. 20. SI 80 of 2020 promulgated new rules for mobile money and designated Zimswitch as the switch that mobile payments should go through, just like banking sector payments. 80 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 81 4.2.3 UTILIZATION OF DFS Card-based retail payments, credit infrastructure platforms High-value RTGS platforms run by the central bank have Innovations in capital markets have seen the trading of DFS comes with its own potential risks, especially those like the central credit registry, and private credit bureaus been key in facilitating corporate payments. The RTGS securities online using a private sector provided platform. related to money laundering and customer due diligence form a formidable basis for DFS growth. ATM and POS system offers convenience to corporates and individuals A private player, Escrow Group, has developed a platform (C (CDD). The know your customer (KYC) requirements placed enabled card-based payments still dominate the retail sector, as it can be accessed through internet banking. The facility Trade) to allow shares on the Zimbabwe Stock Exchange (ZSE) on fintech companies by regulators are more lenient than and this is integrated into a large network of bank and, until is used widely to make payments to government, mainly to be bought, sold and settled using mobile money. This has those that are mandatory for banks, yet fintech companies recently, MNO agents. The extensive network has allowed tax payments to the Zimbabwe Revenue Authority (ZIMRA) revolutionized securities trading and allowed new, low-value are often accused of offering shadow banking products. both first mile and last mile delivery of financial services. and business to business (B2B) payments. As banker to traders to participate on the stock market. However, the Commercial banks feel that, to a large extent, the regulations The central credit registry housed in the RBZ and the three government, the central bank has shifted from the use of ZSE predominantly serves large firms, leaving SMEs’ capital applying to them are more burdensome compared to those private sector players in the credit information space provide cheques to digital payments made on behalf of government. requirements unmet. A recent innovation is the launching of that apply to non-bank FSPs, and thus it is more costly for more digital footprints for financial services users, leading to a the Victoria Falls Stock Exchange, a subsidiary of ZSE, to raise banks to onboard customers than for mobile money providers. buildup of usable information to improve product and service funds in forex for local companies. However, banks have been allowed to offer no frills low-value offerings by financial service providers (FSPs). Data sharing transactional accounts for the lower end of the market to through the credit registry is a regulatory requirement, cater for financially excluded segments of the population. hence FSPs can easily upload and access information on the platform. 82 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 83 4.3 Challenges In order to further develop the country’s DFS, the turn, has reduced competition and increased the costs of is also lower in rural areas where access to financial services authorities at bay, is holding the country back from being the government will need to address a number of challenges. transacting over platforms. Whilst transactions among banks is even lower, the need for internet is greater. However, this first universally cashless economy on the African continent. These include: are interoperable, the MNOs have not been able to facilitate can be addressed by the use of USSD codes through which Foreign exchange shortages. Forex shortages are hampering transfers among the three different wallets. This is set to feature phones can access FSPs’ platforms. USSD codes do Making digital financial transactions more affordable. the payment of fees for platforms, thus reversing early gains change with the designation of ZimSwitch to run a switch not require internet connection but simple mobile network In October 2018, the Ministry of Finance and Economic in developing a robust DFS ecosystem. Since de-dollarization to interoperate mobile financial services and other service availability to access a bank account. Development promulgated a law that imposes an in June 2019, FSPs, mainly banks, have failed to access foreign providers. This will not only increase efficiency as transfers obligatory 2 percent tax on all financial transactions carried Legacy banking systems. Legacy banking systems are acting currency to pay for IT licenses to foreign vendors, whose IT across mobile and bank-based accounts will be possible, but out on all digital platforms including mobile money. This as a drag to the development of DFS. The banking sector is systems they are using to run their core banking platforms. also result in lower transaction costs and faster payments. law significantly increased the cost of digital financial slowly moving away from brick and mortar-based service Also, transferring money out of Zimbabwe is subject to a transactions and sparked uproar since the country was Safety of consumers’ funds. The authorities are concerned delivery models and legacy infrastructure like ATMs and POS cumbersome RBZ approval, adding another challenge to FSPs inadvertently cashless. Consumers felt hard done by, because about the trust accounts kept at banks by mobile money machines, which are expensive to roll out. Abruptly leaving in paying for IT systems that are billed in foreign currency. the government had essentially created a “payments tollgate” service providers, because, in their view, the safety of these behind is expensive for FSPs, and so they are holding on COVID-19. The COVID-19 lockdown has induced a severe strain without any alternative route. The government’s rationale consumers’ funds is not currently guaranteed. The regulatory a little longer in order to get the profits from their investments. on the payments system, especially in receiving cross-border was that the economy was largely informal, and the informal authorities have argued that mobile wallet service providers Unfortunately, this has led to a delay in the rapid adoption remittances. Country lockdowns have limited the access that sector was not paying tax; hence, a mechanism was needed have not been keeping amounts in trust accounts at banks of digital financial technology and a reluctance to allow regular remittance recipients previously had, but this has so that the informal sector would become taxpayers. The law that correspond to the amounts floating on mobile wallets. nimble-footed fintech companies to access bank databases. been largely addressed by allowing FSPs to open for longer did not encourage digital payments. This raises concern about the safety of consumers’ funds. One exception is an international bank that is closing all its hours. branches except two and migrating all customers to digital Fostering interoperability. Lack of interoperability among Low internet access. Internet access is low throughout the platforms that are efficient, cheaper and allow for instant Compliance with AML/CFT requirements. Zimbabwe has mobile wallets has helped fuel the perception that the country, but especially in rural areas, which works against the settlement of transactions. been gray-listed by the Financial Action Taskforce (FATF) for dominant mobile money provider is monopolistic. This, in expansion of DFS. Since the provision of 3G and LTE networks non-compliance in some aspects of AML/CFT. Although most Currency reforms and inflation. Currency reforms over of the FATF recommendations have been complied with, the the past decade have left many consumers and corporates authorities are still working on full compliance, a move aimed distrusting the financial services sector. Zimbabwe at getting the country off the FATF gray-list. abandoned its own currency in January 2009 to adopt the US dollar and a basket of other foreign currencies as legal tender. Mobile payment systems reforms. The authorities have The multicurrency regime was unexpectedly discontinued on identified mobile money as a source of destabilization to the June 24, 2019 with the official introduction of the Zimbabwean exchange rate. To stabilize the exchange rate, some aspects Local Dollar (ZWL) as the official legal tender. The new local of mobile money, particularly mobile money agents and currency has lost over 90 percent of its value within less than a merchant payments, were halted in order to reduce opaque year. Since Zimbabwe is cashless, depositors and lenders have transactions, which had been identified as the hallmark of a lost value as assets have been beaten down by inflation and parallel foreign exchange market. This restriction on aspects rapid foreign exchange depreciation. The negative impact of of mobile money was largely viewed as heavy-handed, in this development has been loss of trust in storing monetary that it reduced the financial inclusion gains that had been value in digital form over holding cash in US dollars. Although made since 2012. Therefore, the authorities urgently need to: the US dollar is now legal tender again due to a special (i) review and revise the legal and regulatory frameworks for COVID-19 dispensation to cushion consumers, the USD had the national payment system, e-money and mobile financial remained a store of value. Development partners with cash services, agent networks, banking supervision and AML/CFT; transfer programs are hesitant to actively promote use of DFS (ii) revise the oversight policy framework and strengthen the because of high inflation oversight capacity of the RBZ and develop system based tools for RBZ to have higher visibility on mobile money Size of the informal sector. High levels of informalization of operations; and (iii) further develop the national switch and the economy militate against both the development of DFS achieve full interoperability. In addition to strengthening the and the universal rollout of plastic money. Cash is still king to national payment system, reducing the cost of cross-border the informal sector, which constitutes over 60 percent of the remittances in the medium term would also be beneficial. economy. The desire to stay under the radar by using cash to leave no traceability in transactions, thereby keeping the 84 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 85 4.4 Recommendations & Next Steps In light of the analysis in this chapter, Table 4.3 lists key recommendations. These are organized across key objectives that would unblock binding constraints on further development of this digital economy pillar. The table identifies responsible agencies as well as an indicative time frame, where short-term denotes within the next 12 months. Highest-priority recommendations are highlighted. FIGURE 4.1: DIGITAL FINANCIAL SERVICES SWOT MATRIX TABLE 4.3: DIGITAL FINANCIAL SERVICES RECOMMENDATIONS RESPONSIBLE TIME FRAME PRIORITY AGENCY Strengths Weaknesses OBJECTIVE DFS1: Enhance strategic underpinning for DFS ■ Digital Financial Services widespread ■ Low usage of internet banking in rural Complete the development of the National Fintech Strategy and establish across the country communities due to limited internet the fintech department in the Central Bank. The process could include coverage R20. RBZ Medium- term HIGH ■ Efficient payment systems owned and establishment of a regulatory sandbox to experiment with more innovations operated by the private banking systems ■ No interoperability among mobile money to deepen DFS in the financial services sector. and mobile money operators (e.g. operators Enhance the DFS ecosystem through expanding the credit infrastructure: RBZ and Zimswitch, ZIPIT) ■ International debit cards like Visa and R21. Finalize the establishment of the movable collateral registry and facilitate Ministry of Short-term MEDIUM ■ Widespread interoperability among bank Mastercard not easily usable due to lack the establishment of the Warehouse Receipt System. Agriculture accounts of liquidity in foreign currency and limited outreach of Visa enabled PoS and ATMs Collaborate at the regional level (SADC) to reduce the cost of sending ■ Availability of a robust large value R22. RBZ Medium- term HIGH remittances, thus fostering further development of DFS across borders. payments system (RTGS; ZETSS) operated ■ High cost of transactions especially the 2 by the central bank percent mobile money mandatory tax on OBJECTIVE DFS2: ■ Capital markets digitized and settlements all transactions Reform the payment system infrastructure seamlessly linked through a central ■ National payments law follows the depository older model of focusing on systems not products and services Ensure low cost interoperability of ATMs, POSs and mobile money, and ■ Strong and broad legislative and regulatory R23. RBZ, ZimSwitch Short term MEDIUM encourage wider distribution of POS terminals. provisions around payment systems, ■ Local nostro bank accounts not covered especially the National Payments Act by the deposit protection scheme, raising the risk of loss in case of a bank failure Review the 2 percent tax on mobile money transfers. Consider concessions/ ■ No unified consumer protection R24. exemptions of the intermediary money transaction tax for small transactions ZIMRA Medium- term MEDIUM framework for the financial services to encourage digital payments. sector Consider incorporating the mobile money operations of Mobile Network R25. Operators into separate entities to improve governance and avoid regulatory RBZ Medium- term HIGH Opportunities arbitrage. Review the NPS Act in line with the SADC model law in order to strengthen the regulatory framework for e-money issuance, licensing of payment service Ministry of ■ The upcoming National Fintech Strategy could strengthen the DFS ecosystem Threats R26. providers and oversight of payment systems and other financial market Finance; RBZ Short term MEDIUM infrastructures. ■ The fintech industry is at its inception stage ■ High ICT staff turnover, and ■ There are regulatory prospects to mandate poor skills retention Revive the National Payments Council and establish a sub-committee of R27 RBZ, ZimSwitch Medium- Term MEDIUM interoperability among mobile money ■ Intermittent power and connectivity. private and public sector stakeholders. operators ■ Interoperability Encourage the use of payments systems to limit human interaction during ■ The delivery of international remittances on ■ Aging government infrastructure R28. economic transactions, such as remote on-boarding of new mobile accounts RBZ Short term HIGH mobile money wallets can be broadened to ■ Inadequate resourcing and transmitting social payments over mobile wallets. include recipients across the whole country ■ DFS provides a real opportunity for the retail OBJECTIVE DFS3: sector and transacting public to comply Improve regulation and consumer protection with WHO social distancing protocols Introduce mobile financial services regulation, agent regulation, and a ■ Zimbabwe can adopt the SADC R29. risk-based approach to AML/CFT. Regulation should encourage innovation RBZ Short term MEDIUM Model Law on payments without compromising the safety and soundness of the system. Introduce a unified financial consumer protection framework to allow for R30. effective recourse and dispute resolution mechanisms, transparency of all RBZ Medium- term MEDIUM fees and adequate deposit protection for trust accounts. 86 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 87 Digital Entrepreneurship Key messages Zimbabwe has good potential for the development of digital entrepreneurship, given its well-educated population and positive attitude towards entrepreneurial risks, the presence of private sector actors keen to support entrepreneurship, and government commitment to improving the regulatory environment. However, challenges abound, including limited access to market data, onerous (if improving) regulations, limited access to start-up capital, and a complex tax regime for entrepreneurs. The deteriorating macro-economic situation affects consumer and business demand, access to affordable finance, and access to skilled labor. Foreign exchange controls, unstable electricity access and limited coverage, and declining business confidence create further obstacles for digital entrepreneurs. Despite these challenges, the government has an opportunity to further foster digital entrepreneurship by: (i) clarifying entrepreneurship policy implementation frameworks to improve the regulatory and financing environment; (ii) strengthening the institutional ownership and capacity in government of the entrepreneurship agenda; and (iii) establishing a systematic dialogue between the public and private sector on how entrepreneurship can be accelerated. 88 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 89 5.1 Importance of Digital Entrepreneurship 5.2 Diagnostic Findings: Current State of Digital Entrepreneurship Entrepreneurship is an important driver of productivity Digital entrepreneurship in this diagnostic is defined as It is difficult to establish how many firms currently and competitiveness. For the purpose of this diagnostic, the process of designing, launching and running a new operate as digital entrepreneurs in Zimbabwe. One of FIGURE 5.2: entrepreneurship is defined as “the process of designing, business, wherein creating and/or using novel digital the key challenges with measuring the number of digital DIGITAL ENTREPRENEURSHIP IN ZIMBABWE ACROSS SECTORS launching and running a new business” (Hsieh and Wu, technologies is a driver of new value creation. Digital enterprises in an economy is that most digital enterprises High Tech 2018). New or improved ways of doing things introduced by entrepreneurship is thus characterized by a high intensity of resolve a problem in a “conventional” sector, such as transport entrepreneurs exert pressure on older businesses to improve; utilization of new digital technologies to improve business or finance. Therefore, these enterprises could in principle in addition, entrepreneurs identify problems that need operations, invent new digital business models, sharpen be registered under transport or finance, even if digital resolving and develop solutions to resolve them. They can thus business intelligence, and engage with customers and technology is core to their value proposition. Discussions Jobs & Gig be an important force for resolving productivity challenges in stakeholders through new digital channels. Figure 5.1 below with startup support organizations suggest an increasing the private sector and efficiency and effectiveness challenges provides an illustration of the wide range of businesses interest in digital entrepreneurship, and outreach to these in the public sector. The advent of the COVID-19 pandemic has involved in digital entrepreneurship. When the term digital organizations to build a list of digital enterprises currently Fintech & Blockchain also demonstrated the critical role of digital tools to enable entrepreneurship is used in this chapter, it generally refers to trading yielded a list of 50+ enterprises. business continuity – and thus business resilience – when platform companies and providers of technology solutions Digital entrepreneurship in Zimbabwe spans all sectors. physical movements are restricted. as referenced in the figure. As the illustration makes clear, There is no apparent pattern in terms of the sector in which digital entrepreneurship includes a wide range of businesses, the entrepreneurs work. This is also evident from the data from those entrepreneurs that are primarily users of simple collected by Briter Bridges in collaboration with TechZim off-the-shelf technology to those that develop sophisticated Health Tech and Impact Hub, which illustrates that Zimbabwean digital technology tools. enterprises are facilitating the matching of job seekers with employers, providing financial products, offering health, education and logistics services, and supporting agricultural Software & Development markets (Figure 5.2). FIGURE 5.1: DIGITAL ENTREPRENEURSHIP DEFINED Entrepreneurship can be regarded as a process that requires supportive policies at each stage. For market Clean Tech & Utilities opportunities to materialize into market entry and growth, Users Platform Providers entrepreneurs must recognize the opportunities, possess the of technology solutions companies of technology solutions ability and resources to pursue them, and be willing to follow this path instead of other potentially rewarding options, such Logistics as present or alternative employment. An entrepreneur’s willingness is closely tied to perceived risk and reward. It is thus critical to think of entrepreneurship policies as a means not only to enable the entrepreneur’s entry into the market E-Commerce (i.e. registering a business or making the first sales), but also Businesses that Businesses that Services Providers of Sellers of Designers and Businesses who use digital tools use digital tools providers made digital products hardware, manufacturers provide artificial to foster a young firm’s growth. This is important because the for business for transactions possible due to i.e. games, software, devices, of hardware and intelligence, needs of entrepreneurs change as they move from idea to communication or precision digital platforms edutech and connectivity software robotics, Big Agri Tech and market manufacturing/ (i,e, Uber, AirBnB) Data mining prototype, to engaging with customers (start-up), and finally information production to earning revenue, making a profit and investing in growth (Figure 5.3). Digital entrepreneurs in Zimbabwe find the “early growth” Ed Tech Source: Authors stage most challenging. A survey of 20 digital entrepreneurs, carried out as an input to this report, suggests that digital entrepreneurs in Zimbabwe experience the most significant challenge at the “early growth” stage. Growing the business Media & Leisure to scale, acquiring customers and building a team emerge as the top challenges, whereas the more technical aspects of building a product is found less challenging, though still difficult (Figure 5.4). Source: Briter Bridges, 2019 https://briterbridges.com/ecosystem-maps 90 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 91 5.2.1 MARKET SIZE FIGURE 5.3: BUSINESS LIFE CYCLE The consumer market for digital enterprises in Zimbabwe The size of the addressable consumer market in Zimbabwe is relatively small. The Global Competitiveness Index provides also appears to be most similar to Mali, Senegal and Zambia. a composite indicator for market size. Zimbabwe’s market While the population above the poverty line is somewhat COMPANY A PROFIT size is most similar to that of Mali, Senegal and Zambia within higher in Zimbabwe, mobile subscriptions per 100 population Sub-Saharan Africa (see Figure 5.5). are higher in Senegal and Mali (Table 5.1). Start-up COMPANY B Idea Prototype Engaging with customers COMPANY C Time FIGURE 5.5: BREAK-EVEN RELATIVE MARKET SIZE OF ZIMBABWE COMPARED TO GHANA, KENYA, MALI, SENEGAL AND ZAMBIA COMPANY D Early Expansion Growth Sub-Saharan Africa Median Steady State LOSS ZIMBABWE GHANA KENYA FIGURE 5.4: WHAT IS THE MOST DIFFICULT PART OF BUILDING YOUR BUSINESS? MALI SENEGAL Defining a minimum viable product ZAMBIA 0 Not a challenge Building a product 5 Very difficult 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Staying focused and disciplined Source: Global Competitiveness Index 2017-2018 Business model TABLE 5.1: CONSUMER MARKET IN ZIMBABWE COMPARED TO GHANA, KENYA, MALI, SENEGAL AND ZAMBIA Product-market fit Building a team Size of Population Mobile Cellular Telephone Population Size Customer acqusition above poverty line per 100 population Scaling Zimbabwe: 14.4m Zambia: 7.2m Zambia: 74.3 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 Senegal: 15.9m Mali: 8.8m Zimbabwe: 74.5 Zambia: 17m Senegal: 9.9m Kenya: 80.3 Source: Authors Mali: 17.5m Zimbabwe: 11.3m Senegal: 87 The extent to which one observes the entry and growth of (ii) the enabling environment for digital entrepreneurship, digital enterprises in an economy is a function of several which includes the policy and regulatory environment, as well Ghana: 28.8m Ghana: 25m Mali: 95.9 factors. These include: (i) the market size of the country, as access to capacity building and financial services, and a including the extent to which citizens, government, and skilled labor force. This chapter considers both in turn. Kenya: 49.7m Kenya: 31m Ghana: 100 businesses have purchasing power and access to ICT; and Source: Authors 92 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 93 5.2.2 ENABLING ENVIRONMENT The creation of an enabling environment is crucial for of the new SME Policy may also be a good opportunity for successful digital entrepreneurship. This section reviews the Ministry of Women Affairs, Community and Small and the current policies, regulations and availability of support in Medium Enterprises (MWCSME) to outline the specific roles terms of entrepreneurship and financial capital, with a view to and responsibilities of the Ministry of ICT, Postal & Courier assessing the extent to which Zimbabwe can be considered Services (MoICTPCS) and MWCSME in terms of the planning to have an enabling environment. and execution of the initiatives envisioned. The 2016-2020 ICT Policy22 offers the most ambitious POLICIES digital entrepreneurship vision of all the relevant policy Zimbabwe has four core policy documents that outline documents: “to develop Zimbabwe into a regional ICT the policy and regulatory priorities affecting digital innovation hub modelled around the acclaimed success entrepreneurship. These include the Transitional Stabilization models from India, Russia, Malaysia and other technologically While data on the number and size of firms in Zimbabwe Government can also be a significant market for digital Programme (TSP), the Small and Medium Enterprise (SME) advanced friendly states.” Further, the policy envisions is scarce, the formal business community appears to be entrepreneurs, but this requires deliberate government Policy, the Information Communication Technology (ICT) making Zimbabwe the regional hub for knowledge intensive relatively advanced in terms of ICT use. There does not effort to engage the entrepreneurship community. This Policy and the Smart Zimbabwe Master Plan. Additionally, ICT manufacturing and service activities. It is recognized appear to be any reliable data on the number and size of firms applies to identifying innovative solutions to public sector the Ministry of Higher and Tertiary Education, Science and that (i) a broad-based innovation policy is needed to enable in Zimbabwe. According to the IMF, Zimbabwe has the second challenges and to availing of data and platforms to enable Technology Development (MHTESTD) has recently adopted this vision; (ii) government will need to work with the private largest “shadow economy” in the world (IMF, 2018), with an such collaboration. The Smart Zimbabwe Master Plan, a new strategy that seeks to improve market relevance and sector to provide the needed infrastructure and financing estimated 60 percent of all firms operating outside the formal currently under implementation, outlines targets for smart promote innovation (see Digital Skills chapter). The extent to enable ICT innovation; and (iii) incentives are needed to economy. Data on firm-level use of digital technologies is government, smart agriculture, smart health, smart trade to which digital entrepreneurship specifically is emphasized attract international talent. The policy also assigns significant scarce and outdated. The 2016 Enterprise Survey (targeting and commerce, smart education, smart transport and smart varies between the documents. emphasis to digital entrepreneurship in the context of registered firms only) indicates that in 2016 75 percent of firms cities. These are all areas in which the government can use used e-mail to interact with customers and suppliers, and 38.7 local entrepreneurial talent to develop innovative solutions Although the TSP provides important guidance for the promoting increased domestic, regional and international percent of firms had a website. Use of e-mail to interact with that leverage digital technologies. It is important that the development of micro, small and medium-sized enterprises commerce, as well as to innovative solutions to private and customers was thus relatively high amongst firms even a few government does so in the roll-out process of the Smart (MSMEs), it fails to clarify how digital entrepreneurship public sector challenges. Suggested policy instruments years ago, and is likely to have increased since then (Table Zimbabwe Master Plan. 21 should be promoted. The TSP suggests that MSMEs be include a much broader range than the TSP, including 5.2). The business segment could therefore represent a viable promoted through business linkages, market access, cluster expanding “access to credit for young ICT entrepreneurs,” market segment for digital entrepreneurs in Zimbabwe. development, business incubation and support services. developing an ICT Growth Opportunities Fund, and Start-ups – including digital start-ups – could also benefit providing mentorship and networking platforms and ICT from such programs if tailored to them. The discussion innovation hubs. However, details are not provided on TABLE 5.2: who will implement these nor how or by when they will of how digital entrepreneurship should be promoted is, FIRM USE OF ICT however, limited and narrow in scope, given the weaknesses be implemented. Implementation of the vision for digital of the enabling environment. It is not clear from the TSP innovation and entrepreneurship outlined in the ICT Policy % of firms with % of firms using e-mail to interact which MDAs have the ownership of the digital economy and will require collaboration between MoICTPCS, MWCSME, Economy Year Ministry of Industry and Commerce and Ministry of Higher and a website with customers and suppliers digital entrepreneurship agenda. In June 2019, H. E. President Manangwa re-aligned the Cabinet Committees with the TSP Tertiary Education, Science and Technology Development. Ghana 2013 33.2 64,9 clusters, but it is not clear which cabinet committee has the The existing tech hubs in Zimbabwe are uniquely positioned ownership of this agenda. to help design and implement some of the interventions Kenya 2018 47.3 n.a required. The new SME Policy, scheduled for completion in 2020, Mali 2016 42.2 69,6 provides a good opportunity to ensure that the needs The SMART Zimbabwe 2030 Master Plan also includes of start-ups and early-stage enterprises are adequately important policy initiatives to promote digital Senegal 2015 34.6 64,7 addressed. The 2014-2018 SME policy did not have a strong entrepreneurship. These include the establishment of a emphasis on entrepreneurship. Given the strong emphasis of coding and programming academy, as well as co-working Zambia 2013 20.2 53,1 the ICT policy on digital entrepreneurship, the development and co-creation spaces for the youth and start-ups.23 Zimbabwe 2016 38.7 75,1 Source: World Bank Enterprise Surveys 22. Zimbabwe National Policy for Information and Communication Technology (ICT) (2016-2020) http://www.veritaszim.net/sites/veritas_d/files/Zimbabwe%20National%20Policy%20for%20ICT%202016.pdf 21. Interview with the Permanent Secretary for the Ministry of ICT, Postal & Courier Services. Hon. Dr. Eng. Kundishora 23. Telephone Interview with the Permanent Secretary for the Ministry of ICT, Postal & Courier Services. Hon. Dr. Eng. Kundishora 94 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 95 REGULATIONS ENTREPRENEURSHIP SUPPORT evaluate the business skills and commitment necessary development; and (iii) connect Zimbabwean enterprises with In terms of starting a business, Zimbabwe has demonstrated Digital enterprises need the requisite startup and technical to successfully operate an entrepreneurial venture and the “global innovation industry”. The hubs are also envisioned significant improvement over the last three years, albeit skills to initiate and build their companies. As indicated in review the challenges and rewards of entrepreneurship. In to offer financial support for innovative technological R&D from a lower base than comparator countries. Zimbabwe Figure 5.4, digital enterprises in Zimbabwe find that “building their last year, the students have to complete a capstone and facilitating seed capital for start-ups. Additionally, it moved up in the World Bank’s Doing Business rankings from a team” is one of the most significant challenges associated project addressing a problem they would like to solve. A new is envisioned that industrial parks will be established in 10 180 out of 190 countries in 2018 to 167 in 2020. According to with scaling their business. Conversations with digital program has also been initiated to support start-ups formed provinces of Zimbabwe as “production centers” for successfully the 2020 rankings, the time required to register a business enterprises indicate that they are having difficulty finding by professors and/or students. So far, this has generated 12 incubated goods and services from the innovation hubs. and the cost of doing so have decreased in this period (it now skilled employees. Many of the highly skilled Zimbaweans start-ups. The institute is still developing a workable business These are largely envisioned as industrial zones, licensed for takes an average of 26 days and costs 77 percent of per capita have left the country in pursuit of what they perceive as model to balance ownership rights and profit sharing. Box 5.1 commercial use, that may offer additional benefits. According income), but the cost and time to register a business still better opportunities. Given the employment possibilities both provides examples of these start-ups. to a statement by the Secretary for Higher and Tertiary remain well above the sub-Saharan Africa regional average. domestically and abroad, the youth, in particular, are keen Education, Science and Technology Development, the vision The MHTESTD announced plans to introduce “innovation to take advantage of opportunities to develop the required is that the innovation hubs will “act as incubation centers Zimbabwe has also made important strides in improving hubs” and “industrial parks” at higher and tertiary technical skills. For example, a program that teaches coding through which research results and innovations from Higher the ease of resolving insolvency, improving from a institutions. The impetus for this initiative is to encourage and entrepreneurship skills to youth offered by Impact Hub and Tertiary Institutions (HTEIs), techno-entrepreneurs and ranking of 155 out of 190 countries in 2018 to 142 in 2020. The the start-up and growth of knowledge-based enterprises, started with 15 youth in 2018 and received more than 500 business will be transformed into commercial goods and improvement in the ranking (and the absolute score) is due to inspired by the experiences of Singapore, South Korea and applications in 2019. As indicated in the digital skills chapter, services.” The industrial parks in turn are intended to “facilitate a new reorganization procedure, allowing creditors to vote on Malaysia. The innovation hubs will be based at each of the several initiatives are promoting such coding skills, including clustering of businesses by supplying locations equipped the reorganization plan, and granting debtors the possibility state universities; the goals of these hubs are to (i) provide those offered by Cassava SmartTech and Sprout Coding. with quality infrastructure to the areas lacking industrial of obtaining post commencement finance. That said, the entrepreneurs with access to innovation support and advice; locations.” recovery rate continues to decline, from 19.7 cents to a dollar Various approaches can be used to build startup skills (ii) encourage public-private collaboration in technology in 2018 to 17.5 cents in 2020. and support start-ups in the early stages of starting and growing a business. These include conventional group While GoZ offers tax incentives for SMEs,24 entrepreneurship training, as well as more tailored support delivered through support organizations often mention that compliance mentoring, incubation and acceleration. Additionally, startup TABLE 5.3: with tax regulations is difficult and time-consuming for costs can be defrayed and networks bolstered through co- UNIVERSITIES WITH ENTREPRENEURSHIP DEGREE AND/OR INNOVATION HUB entrepreneurs. The 2020 Doing Business Report reports that working spaces and tech hubs. In Zimbabwe, government- while the tax rates are not high in comparison to many other funded entrepreneurship support services are delivered countries, it takes 242 hours per year to comply with the tax Innovation primarily through MWCSME and the MHTESTD. University City Entrepreneurship Degree regulations and 51 payments are needed. Simplification of the Hub tax filing system could likely be beneficial to entrepreneurs Entrepreneurs are generally not receiving the support they and government alike; with a simpler system, SMEs are more need. Although MWCSME has business development officers Africa University (Private) Mutare Master of Science in Entrepreneurship, Innovation and Creativity likely to file taxes. in each district, continuous support is rarely available. Most programs offered to support SMEs are project based with a Midlands State University Gweru Bachelor of Commerce in Entrepreneurship Honours Degree In light of the visions of the SMART Zimbabwe Master Plan start and end date in line with the development partner’s and ICT Policy, GoZ may want to re-assess the process for Chinhoyi University of Bachelor of Science (Hons) degree in Business Management and project cycle. In addition, no programs have yet targeted Chinhoyi obtaining approval for a joint venture or partnership with Technology (Public) Entrepreneurship digital entrepreneurs specifically. a foreign entity. In a market where the capacity and scale Zimbabwe Ezekiel Guti of local digital enterprises are limited, joint ventures with Seven universities in Zimbabwe offer Bachelor or Master’s Bindura Bachelor of Commerce Honours Degree in Entrepreneurship University (Private) foreign firms can provide smaller firms with the opportunity degrees in entrepreneurship (see Table 5.3). However, it is Bindura University of Science to participate in larger contracts that they would not have not clear to what extent these curricula include a practical Bindura Masters in Entrepreneurship and Innovation. Education (Public) the capacity to win on their own. While GoZ procurement component where students are actively pursuing a business regulations allow joint ventures between local and foreign idea. Harare Institute of Technology (HIT), on the other Lupane State University Bulawayo Bachelor of Commerce Honours Degree in Entrepreneurship firms, local firms repeatedly mention that it is a very long hand, which does not have a degree in entrepreneurship, Women’s University in Africa Bachelor of Science (Honours) in Management and process to get permission, and they therefore lose out on has introduced a requirement that all students take a Harare (Private) Entrepreneurial Development Studies bidding opportunities. The process for the registration of “technopreneurship” development course during their first joint ventures is only made available on a quarterly basis and year and develop a “technopreneurship” project in their University of Zimbabwe Harare requires a minimum of 30 days for vetting and “gazetting.” second year. The program is designed to help students No entrepreneurship degree, but “technopreneurship” requirement Harare Institute of Technology Harare across degrees. National University of Science Bulawayo and Technology Source: Authors 24. In Zimbabwe, SMEs can benefit from the Special Initial Allowance (SIA), which enables SMEs to deduct 50 percent of qualifying capital assets during the first year and 25 percent in each of the next two years. 96 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 97 FINANCIAL CAPITAL a continuous basis, and entrepreneurs as well as innovation As digital entrepreneurs make the journey from idea to hubs can apply for financing. POTRAZ, which administers the expansion, their financing needs also evolve. Typically, these fund, has embarked on a workshop program for start-ups BOX 5.1: can range from US$5,000 to US$10,000 at the prototype stage because most of the applications from start-ups were not as STUDENTS’ APPLICATION OF DIGITAL to a few million US dollars at the expansion stage. Various strong as anticipated. This could therefore be a good area of collaboration between the public and private innovation hubs SOLUTIONS financial instruments are also needed, ranging from grants at the seed stage, to equity and patient capital at later stages. and POTRAZ. GoZ currently has two funds to which digital entrepreneurs In the 2020 budget, the government announced the Nhume is an environmental, water and energy management can apply for funding: the ICT Innovation Fund, managed creation of a ZWL$500 million National Venture Capital Fund system, which, through real-time messaging and analysis, by the MoICTPCS, and the National Venture Capital Fund, targeting youth entrepreneurs. The government is seeking helps regulatory authorities and city councils to monitor managed by the Ministry of Finance and Economic co-financing for the fund from banks, insurance and pension pollution levels from anywhere in the country. The system Development (MoFED). Previous funds available included funds, as well as international development institutions. It is was developed to monitor and detect any unsafe levels the Innovation and Commercialization Fund administered envisioned that the fund will provide equity and loans. It is not of pollution in treated water, effluent discharges and air by MHTESTD, and the ICT Achievers’ Awards administered clear when the fund will open for applications. around industrial and mining areas. by MoICTPCS. However, no information is available on the No known local private funds are currently investing in NHAKA is an e-learning platform that gives students access outcomes or lessons from these funds. digital enterprise in Zimbabwe. Given the volatile economic to recommended video based-educational content that The ICT Innovation Fund is a revolving fund initiated by environment, it is no surprise that venture capital availability is created to give the learner a localized and personalized the government through MoICTPCS and the Postal and in Zimbabwe is low; according to the World Economic Forum, learning experience. NHAKA e-learning offers video-based Telecommunications Regulatory Authority of Zimbabwe Zimbabwe is currently ranked 133rd in the world on ease learning content for each topic and real-life lab-based (POTRAZ). Through this fund, GoZ hopes to stimulate of access to venture capital (see Figure 5.6). A new angel science experiments and gives updates on student progress innovation that brings solutions to Zimbabwean communities, network was founded in 2019, comprising 10 angels. However, and a continuous assessment report. NHAKA e- learning industry and the economy. The fund is financed through a one the highly inflationary environment has made meaningful can also be used as a school management system to help percent tax levied on the telecommunications companies. investment difficult, and no regulatory incentives exist for improve the management of a school’s academic processes In 2019, the size of the fund was US$7 million. 188 applicants angel investment. That said, all the private entrepreneurship and administration. applied, and six beneficiaries received funding.27 Financing support organizations say they have been approached by is provided in the form of a loan, for which a “guarantor” is investors (mostly foreign) that are looking to source ideas. This required. There is no minimum or maximum loan amount and is not surprising given the significant uptick in funds looking interest rates are variable. Applications are now accepted on to invest across the continent in recent years. Support from the private sector for digital start-ups B2C to initiate its programs. Similarly, several ministries and FIGURE 5.6: and ongoing public-private collaboration constitute an government institutions have engaged in partnerships with EASE OF ACCESS TO VENTURE CAPITAL important step towards strengthening the entrepre- private organizations. This bodes well for further collaboration neurship ecosystem. Six privately-driven entrepreneurship to strengthen the entrepreneurship ecosystem. The private South support organizations include support for digital start-ups, entrepreneurship support organizations offer a wide range Zimbabwe Kenya Ghana Africa though they are not exclusively focused on any one sector. of services, including competitions, investment pitches, Additionally, Old Mutual 25 is starting an innovation hub to mentoring, networking and shared facilities in the form of spur internal innovation while also supporting independent co-working spaces. Some of these organizations also have technology entrepreneurs through the provision of co- plans to create marketspaces.26 This aligns well with the vision Ranking working spaces and capacity building services. Old Mutual put forward by the MHTESTD for industrial parks associated 2016 137 1.7 64 2.9 105 2.4 53 3.0 Out of 141 countries is partnering with more established entrepreneurship with the universities and could offer another opportunity for support organizations, including Impact Hub, Stimulus and public-private collaboration. 2017 130 1.8 59 3.0 110 3.2 66 2.9 Value 1 = Worst / 7 = Best 2018 133 1.9 64 3.0 75 2.8 63 3.0 25. Old Mutual Zimbabwe is a financial services company that provides a wide range of services, including life assurance, asset management, property Source: Authors development and management, and banking services. The company has been present in Zimbabwe for more than 100 years. 26. Maketspaces allow people with new ideas to collaboratively design, prototype and manufacture items using tools that would otherwise be inaccessible or unaffordable such as 3-D printers, digital fabrication machines and computer-aided design (CAD) software. 27. The beneficiaries were Oyos Music, Purple Signs, Shift Organics Technologies, Nativ Project, Red Pen and Afrimom. 98 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 99 5.3 Challenges BOX 5.2: ENABLING TECH ENTREPRENEURSHIP: GOOD PRACTICES ACROSS AFRICA In order to further develop the country’s digital Declining business confidence. The Confederation of 3. entrepreneurship, the government will need to address a Zimbabwe Industries conducts business confidence There is no one-size-fits all recipe for creating an enabling environment for tech entrepreneurship. That said, continuous number of challenges. These include: surveys in the manufacturing sector. The results of these dialogue and connectivity between public and private sector actors in the entrepreneurship ecosystem are critical to success. surveys are in Table 5.4. Negative points indicate the lack Two good examples across the continent of government playing a catalytic role in this regard are: Difficult 1. macroeconomic developments, including of confidence and pessimism of business leaders, while COVID-19. Such developments have a negative impact on 1. Creating an enabling environment: In December 2019, Senegal’s National Assembly passed a law best known as the positive points indicate their confidence and optimism. all entrepreneurs operating in Zimbabwe, including digital Senegal Startup Act. Alongside the act, provisions amending the general tax code were introduced in the 2020 Finance The table shows that business confidence in Q4 of 2018 entrepreneurs. The advent of COVID-19 has exacerbated Law. These provisions allow for the exemption of startups from certain taxes for the first three years and the reduction was the worst rating in the period measured. these challenges for entrepreneurs, in particular those in registration fees for the creation of companies. The lesson to be learned from this example is not necessarily that reliant upon the physical movement of goods. However, Zimbabwe and other countries should rush to create a Startup Act. Rather, lessons should be drawn from the process it has perhaps created a new opportunity for digital through which these regulatory improvements were achieved. The regulatory reform was achieved through a bottom-up entrepreneurs, who can derive creative solutions to process whereby 60 members from nine Senegalese innovation hubs and 20 partner organizations identified the core business continuity in the face of COVID-19 restrictions. challenges for startups in the country and began to engage a number of government representatives, including the tax As indicated in the Digital Financial Services chapter, authority and the education and finance ministries. The country’s digital economy minister helped drive this process, on Zimbabwe is also quite advanced in the use of digital behalf of the government, and the World Bank and i4Policy supported government in conducting a policy hack as input financial services, which lessens the COVID-19 impact to the regulatory reform process. The Democratic Republic of Congo and Rwanda are amongst other countries that have on Zimbabwean businesses compared to neighboring recently embarked on similar processes. countries where reliance on cash is the norm and creates a good basis upon which to advance Fintech solutions. 2. Strengthening entrepreneurship support services: The Kenya Industry and Entrepreneurship Project (KIEP) is a US$50 million project that is being implemented by the Ministry of Industry, Trade and Cooperatives of Kenya, with support Ongoing economic difficulties. Zimbabwe has continued 2. from the World Bank Group. The KIEP was launched in June 2019 and will run until 2024. KIEP aims to strengthen the to experience economic difficulties throughout 2019, innovation and entrepreneurship ecosystem in Kenya by building the capacity of incubators, accelerators, and rapid exacerbated by severe weather. According to the IMF, the technology skills providers through performance-based grant funding extended to private and public service providers. It growth prospects for Zimbabwe are “steeply negative” also seeks to connect the Kenyan ecosystem to international networks of talent and support infrastructure, and foster due to the effects of drought on agricultural production links between start-ups and traditional industry. In addition, the KIEP aims to bridge the technical skills gaps in the and electricity generation, the impact of cyclone Idai, and market by linking young talent and academia to the private sector. A similar program is also under implementation in the significant fiscal consolidation. The negative growth Ghana. Key to the design and implementation of both programs is the role of government in availing of the resources is accompanied by declining currency value and a rapid provided through initiatives driven by the private sector, thus leveraging the expertise and traction obtained by these increase in inflation.28 actors to achieve impact at a larger scale. TABLE 5.4: Source: Authors ZIMBABWE BUSINESS CONFIDENCE INDEX Points 2017 Points 2018 1st Quarter n.a -14.4 Kenya n.a n.a South Africa -29.6 -33 Zimbabwe 5.8 -38 Source: Confederation of Zimbabwe Industries Business Confidence Index 28. IMF. 2019. Press Release No. 19/355. https://www.imf.org/en/News/Articles/2019/09/26/pr19355-zimbabwe-imf-staff-concludes-visit-art-consult-discuss-1st-rev-staff- mon-program 100 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 101 4. Access to funding. While a range of factors affect growth- in Zimbabwe vis-à-vis the benchmark countries (Figure oriented entrepreneurs’ ability and motivation to start 5.8). Similarly, a survey carried out amongst 20 early-stage FIGURE 5.8: NUMBER OF TECH HUBS AND ACTIVE INSTITUTIONAL INVESTORS and grow, the primary one in Zimbabwe is the lack of digital enterprises for the purpose of this assessment access to funding. As illustrated in Figure 5.7, Zimbabwe indicates that access to funding is viewed as a more does relatively well in terms of “attitudes towards significant challenge than other factors (Figure 5.9). entrepreneurial risk”, and rates in the middle of the 5. Compliance with regulatory requirements. Digital Tech Hubs Institutional Investors 50 pack on “ease of finding skilled employees”, “companies entrepreneurs in Zimbabwe find compliance with embracing disruptive ideas”, and “growth of innovative regulatory requirements particularly difficult. Preliminary companies.” However, Zimbabwe performs less well in discussions with entrepreneurship organizations and terms of the “cost of starting a business”, “time to start a private sector establishments indicate that entrepreneurs 27 business”, “insolvency” (particularly insolvency recovery 25 feel they spend too much time and money on complying 23 rates), “multi-stakeholder collaboration”, “financing with regulatory requirements and that it is difficult to 17 of SMEs” and “venture capital availability.” The ratings 15 understand how to comply. The foreign exchange controls show that Zimbabwe performs relatively well in terms introduced by the government are also negatively 6 6 8 of embracing innovation and entrepreneurship, but 3 affecting digital entrepreneurs, who now have difficulty 1 low in access to finance, and this is also reflected when 0 in purchasing the necessary ICT devices and software comparing the number of tech hubs and tech financiers licenses needed to operate effectively. ZIMBABWE ZAMBIA SENEGAL GHANA KENYA MALI Source: Ecosystem Support Hubs across Africa as of Q4 2019. Briter Bridges. FIGURE 5.7: Draft of Startup Investment Landscape in Africa presented at AESIS 2019 - Q4 2019. Briter Bridges THE ENABLING ENVIRONMENT FOR ENTREPRENEURSHIP Cost of starting a business FIGURE 5.9: 100% WHAT IS THE MOST SIGNIFICANT CHALLENGE FOR YOUR BUSINESS? Venture capital 90% Time to start a business availability 80% 70% 60% 50% 0 Not a challenge Financing of SMEs 40% Insolvency recovery rate Entrepreneurship education and skills 5 Very difficult 30% 20% Government regulation 10% 0.0% Business support Multistakeholder Insolvency regulatory collaboration framework Revenue generation Funding Ease of finding skilled Attitudes towards employees entrepreneurial risk 0 1 2 3 4 5 Companies embracing Growth of innovative disruptive ideas companies Source: Survey carried out for the purpose of this report. Zimbabwe Ghana Kenya Mali Senegal Zambia Source: Global Competitiveness Index 2019 102 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 103 5.4 RECOMMENDATIONS & NEXT STEPS In light of the analysis in this chapter, Table 5.5 lists key recommendations. These are organized across key objectives that would unblock binding constraints on further development of this digital economy pillar. The table identifies responsible agencies as well as an indicative time frame, where short-term denotes within the next 12 months. Highest-priority recommendations are highlighted. FIGURE 5.10: DIGITAL ENTREPRENEURSHIP SWOT MATRIX TABLE 5.5: DIGITAL ENTREPRENEURSHIP RECOMMENDATIONS Strengths Weaknesses RESPONSIBLE TIME FRAME PRIORITY AGENCY ■ P ositive attitude towards entrepreneurial ■ L imited access to market data makes it risks and history of solid education difficult for entrepreneurs to assess market size OBJECTIVE DE1: ■ P resence of private sector actors keen to ■ I mproving, but low performance in ease and Improve the strategic and policy underpinning for digital entrepreneurship support entrepreneurship cost of starting a business and recovery from Leverage the updating of the SME Policy currently in progress to incorporate ■ G overnment commitment and progress insolvency a start-up strategy for tech, service and manufacturing start-ups. Develop R31. MWACSME Short-term MEDIUM made to improve ease and cost of starting ■ L imited access to start-up capital i.e. no grant a clear implementation matrix and results framework with joint ownership a business and recovery from insolvency funding and no collaboration with private between the public and private sector for implementation and monitoring. ■ G overnment commitment to improve financiers to leverage public funds OBJECTIVE DE2: entrepreneurial and innovation skills at the ■ L imited systematic dialogue between the public Engage entrepreneurs as solution-providers higher education level and private sector on how entrepreneurship can ■ G overnment creation of funds to support be accelerated Open the Smart Zimbabwe 2030 Master Plan to ideas from the entrepreneurship ■ U nclear institutional ownership and capacity in entrepreneurship community as to what needs to be put in place to realize government of the entrepreneurship agenda the government’s vision for smart government, smart agriculture, smart MICTPCS, R32. Short-term HIGH ■ D igital entrepreneurship policy implementation health, smart trade and commerce, smart education, smart transport and MWACSME frameworks are unclear smart cities. Identify which Cabinet committee should champion the digital innovation and entrepreneurship agenda. ■ Complex tax regime for entrepreneurs ■ Complex public procurement regulations for Share the vision of the university-based innovation hubs with the private entering into a partnership or joint venture with R33. innovation and entrepreneurship hubs to explore areas for potential MHTESTD Short-term MEDIUM a foreign firm partnership. Opportunities Share the lessons from the ICT Innovation Fund and the aspirations for the National Venture Capital Fund with the early-stage investment community in Zimbabwe and the region. Explore how public sector finance could be MICTPCS, ■ A mbitious vision and government R34. Short-term MEDIUM structured such that private finance is likely to follow. Explore partnerships MWACSME commitment, i.e. TSP makes an explicit commitment to digital entrepreneurship; Threats with private entrepreneurship hubs to support start-ups with viable business proposals. Smart Zimbabwe Master Plan can provide ■ T he deteriorating macro-economic market opportunities for Zimbabwe’s OBJECTIVE DE3: situation affects consumer and business digital entrepreneurs; ICT Policy envisions Improve the regulatory environment demand for new products and services, Zimbabwe becoming an ICT hub for the access to affordable finance and access POTRAZ, region. to skilled labor. Initiate a regulatory review of public procurement regulations for entering Competitions ■ T he new SME Policy can provide an ■ F oreign exchange controls affect into joint ventures with foreign firms. Joint ventures with larger enterprises and Tariffs opportunity to include provisions for start- R35. Medium-term HIGH entrepreneurs’ ability to import needed can offer smaller enterprises an opportunity to learn and scale and can thus Commission, ups, including those in technology. equipment and software licenses. contribute to enhancing the competitiveness of local industry. RBZ, ZIA, ■ C onsumer and business market segments MWACSME ■ U nstable electricity access and coverage are bolstered by strong familiarity with limits uptime (or cost of uptime) for Reduce the regulatory burden on start-ups by accelerating implementation digital transactions, relatively high levels of ZIMRA, MoFED, digital enterprises. R36. of the reforms on starting a business and insolvency and reviewing how tax Medium-term HIGH ICT penetration, and fluency in English. MoJ ■ D eclining business confidence affects compliance for SMEs can be streamlined. ■ T he relative maturity of mobile money entrepreneurs’ and investors’ level of services can be leveraged to accelerate Review incentives for business angels to incentivize investments by wealthy MoFED, ZIMRA, investments in new ventures. R37. Short-term MEDIUM Fintech solutions. domestic or diaspora individuals (i.e. tax credits for investments in start-ups). ZIA, MIOC, MFA 104 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 105 Digital Skills Key messages Zimbabwe has a good foundation upon which digital skills training could be leveraged. The country boasts a high literacy rate (about 90 percent), one of the best basic education access and enrolment ratios in Africa with an almost perfect gender parity, and its workforce is well educated by regional standards. In addition, the country has one of the highest mobile penetration rates in Africa. However, the rapid pace of innovation, together with a supply side failure to deliver the required digital skills, means that many businesses, service providers, and organizations struggle to obtain employees with the right skills to manipulate technological opportunities. Serious investment by government and related players will be needed in basic and post-secondary education with a special focus on digital skills development. Key challenges include: a limited infrastructure and enabling policy environment; limited financial support from central government; insufficient coordination between government and key private players; low skill levels among teachers; and poor data. These education-specific challenges are compounded by the economy-wide poor infrastructure (electricity coverage; internet connectivity; limited devices, especially in rural areas), and more generally rural exclusion and urban bias. The opportunities for the government to leverage the strengths and address the challenges include scaling up digital skills training for both students and teachers at all levels of education; establishing a multi-stakeholder coordinating group for digital skills; bridging the rural-urban divide in digital skills; and strengthening databases and information flows. 106 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 107 6.1 Importance of Digital Skills Digital skills are a central foundation for a digital economy Interaction with technology takes place via different as they relate to the skills and knowledge of the country’s platforms, and for different purposes, which requires citizens and its workforce to implement, manipulate, and different levels of skills. Digital skills range from those innovate digital technologies for national development. that enable basic social interaction (e.g., communication There is growing evidence that digital skills are key to skills, literacy, smartphone usage), to skills that enable sustainable growth in today’s economies as they lead to job interaction with systems and services (e.g., e-commerce and creation and increased incomes. Demand for digital skills in 29 e-government services), and skills that enable Information and jobs in Sub-Saharan Africa is also rapidly increasing, with over Communication Technology (ICT) professionals to develop 230 million jobs estimated to require digital skills by 2030. 30 software and produce technologies.31 Another description FIGURE 6.1: EU’S DIGITAL COMPETENCY FRAMEWORK FOR CITIZENS Learning to swim in the Digital Ocean: THE DIGITAL COMPETENCE FRAMEWORK FOR CITIZENS (V. 2.1) Foundation Intermediate Advanced Highly-specialised Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 of digital skills, the EU’s Digital Competency Framework for skilled workers. This means that the speedy rate of digital WELL-DEFINED AND DIFFERENT TASKS R E S O LVE C O M PL E X PRO B L E M S Citizens (DigComp2.1), is depicted in Figure 6.1. This identifies 32 innovations will require the current workforce to frequently SIMPLE TASKS ROUTINE TASKS, AND AND PROBLEMS WI T H L I M I T E D S O LU T I O N S STRAIGHTFORWARD PROBLEMS I N T EG R AT E TO C O N T R I B U T E TO four main ‘layers’ of digital skills, namely, Foundation, update their skills so that they are equipped for the emerging WITH GUIDANCE GUIDING OTHERS T H E PRO F E S S I O N A L PR ACT I C E REMEMBERING ON MY OWN A N D TO G U I DE OT H E R S Intermediate, Advanced, and Highly Specialised; with a roles in their sectors, which in turn will influence new APPLYING UNDERSTANDING CREATING further eight proficiency levels that are pivotal in digital skills innovations and technologies. This also has implications for development among citizens. The DigComp2.1 framework is education systems, which will need to be reformed in order to particularly important in understanding and defining digital catch up with technological innovations, thus ensuring that skills as it provides broader and more elaborate proficiency schools and institutions of higher learning are readied for the levels and can be used to support the development of 4th industrial revolution. relevant digital skills’ instruction and learning materials at Along with having the necessary infrastructure, access any level of the education and training spectrum. It also helps to devices, and affordability, the acquisition of digital in the design of instruments for assessing the development skills across the whole population is a pre-condition for of citizens’ competence, providing career guidance and Zimbabwe to fully engage in and optimize the benefits determining promotion at work. of a digital economy. For digital technologies to impact The increasing demand for digitally skilled workers has economic development, people need the necessary skills for implications for education systems. The World Economic engagement with technology. Zimbabwe has a largely young Forum (WEF) estimates that, by 2022, 75 million current job population, with about 62 percent of the population below roles will be displaced by the shift in the division of labor the age of 25.34 The majority of these young people reside between humans, machines, and algorithms, while 133 million in rural areas where the digital skills deficit is largest due to new job roles may emerge at the same time. In cementing entrenched challenges, such as poorly resourced schools, RESOLVE COMPLEX the changing nature of work and the rise in demand for a limited incomes, and limited electricity coverage. As indicated TAS KS , A N D WE L L- DE F I N E D & in previous chapters, digital infrastructure is also limited in ILLUSTRATION: EL RUBENCIO workforce that is digitally and technologically savvy, the WEF SIMPLE TASKS MOST APPROPRIATE TASKS PROBLEMS WITH MANY N O N - ROUTINE PROBLEMS INTERACTING FACTORS AU TO N O M Y A N D A B L E TO A D A P T W I T H G U I DA N C E WHERE NEEDED IN DE PE N DE N T A N D AC C O R DI N G TO M Y N E E DS TO OT H E R S I N A COMPLEX CONTEXT P ROP OS E N E W I D E AS A N D P ROC E S S E S TO T H E F I E L D expects increasing demand for Data Analysts, Data Scientists, the rural areas, thus limiting access to internet. This situation REMEMBERING UNDERSTANDING E VA LUAT I N G CREATING Software and Applications Developers, as well as E-commerce is compounded by a general urban bias in development COMPLEXITY OF TASKS AUTONOMY COGNITIVE DOMAIN DigComp 2.1 is a collaboration between the Joint Research Centre and DG Em- and Social Media Specialists; all roles that are dependent on initiatives. In the absence of these skills, efforts to develop a ployment Social Affairs and Inclusion engagement with technology.33 The anticipated surge in new digital economy in Zimbabwe will have little impact. Source: Fn 31 - EU digital competency framwork for citizens digitally linked roles implies a greater demand for digitally 29. Sharafat & Lehr. 2017 32. EU Digital Competency Framework for Citizens, 2017 30. International Finance Corporation, 2019 33. WEF, 2018a 31. ECORYS UK, 2016 34. UNFPA, 2020 108 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 109 6.2 Diagnostic Findings: Current State of Digital Skills A skilled workforce would support the modernization the agricultural workforce and help to stimulate innovations of agriculture. Agriculture is the mainstay of Zimbabwe’s that boost agricultural productivity. economy as a significant percentage (67.7 percent) of the Despite the significant deficits outlined above, Zimbabwe country’s population depends on agricultural activities for Similar to many employers in Sub-Saharan Africa who cite has a good educational foundation upon which digital FIGURE 6.2: employment and income. The sector supplies the industrial an inadequately skilled labor force as a major constraint skills training could be leveraged. The country boasts a SUMMARY OF THE ZIMBABWE NATIONAL and processing sector with about 60 percent of its required on doing business, Zimbabwe has recorded a significant 35 high literacy rate of about 90 percent39, and one of the best CRITICAL SKILLS AUDIT (2018) raw materials while contributing approximately 17 percent skills deficit in science and technology-linked job roles. A basic education access and enrolment ratios in Africa, with a to Zimbabwe’s GDP.38   While agriculture remains the most growing share of ICT-intensive jobs in the region appears to gender parity index of almost 1.00 at all levels of education. The 6.43% 3.09% dominant sector for employment, the skills deficit as be outstripping the supply of workers with the requisite skills. country’s workforce is well educated by regional standards. As -93.57% -96.91% highlighted in Figure 6.2 is significantly high at -88 percent, The WEF predicts that, over the medium term, automation of 2014, most Zimbabweans between the ages of 15 and 64 signaling an urgent need to invest in a skilled workforce in will affect around 50 percent of all work activities in Kenya, had completed primary education as well as some secondary agriculture. The Ministry of Primary and Secondary Education’s South Africa, and Nigeria. education, and roughly 10 percent had at least some tertiary (MoPSE) updated curriculum of 2017 introduced agriculture education.40 The World Bank’s higher education sector analysis report as a core subject in primary and secondary education, while Engineering and Natural and for Zimbabwe noted that at first glance, Zimbabwe’s Technology Applied Sciences the education 5.0 reforms in the post-secondary education On the other hand, indicators pointing to the extent of human-capital endowment appears adequate relative to subsector also identify agriculture as one of the training Zimbabweans’ digital skills show mixed results. These the demands of its economy, but a deeper analysis reveals courses that should be prioritized for reform processes. include: (i) nine out of ten have mobile phone subscriptions; 121% 12% (ii) around 20 percent use the internet; (iii) only around 8 critical gaps in workforce skills. 36 For example, a critical Such reform processes are anticipated to gradually increase 21% -88% skills audit, which was commissioned by the government to the number of skilled workers in agriculture. The country percent of households have computers and 6 percent internet assess Zimbabwe’s skills deficits and surpluses, confirmed the also needs to explore opportunities to improve agricultural access; (iv) only one person out of every 100 has a fixed existence of large gaps between the supply and demand for productivity through digital skills development. Modernizing broadband internet subscription; and (v) four out of ten have skills in several key sectors. The most prominent skills deficits the curricula for agriculture studies in both basic and post- mobile broadband subscriptions.41 In contrast, the national relate to qualified specialists and technicians especially in Business and Agriculture secondary education will raise the digital skills levels among ICT policy reports active mobile penetration reaching 95.4 Commerce the natural and applied sciences, engineering, technology, the medical and health sciences, and agriculture (Figure 6.2). In 2014, over 80 percent of employed workers were 5% 82% FIGURE 6.3: unskilled, and just 5 percent were skilled professionals, with -95% -18% GCI 4.0: DIGITAL SKILLS AMONG POPULATION (RANK): REGIONAL COMPARISONS the remaining 15 percent distributed in other elementary and semi-skilled categories. The ICT sector comprised only 0.4 percent of national employment, compared to 67 percent of people employed in agriculture, forestry, fishing, mining Medical and Applied Arts and quarrying. In addition, while 43 percent of graduates Health Sciences and Humanities were employed in the education sector, only 2.4 percent of graduates were employed in ICT, the highest proportion of all education levels employed in ICT.37 Average Availability 38.25 percent In Zimbabwe, the rapid pace of innovation, together with a supply side failure to deliver the required digital skills, Average Surplus/Deficit - 61.75 percent means that many businesses, service providers, and organizations struggle to obtain employees with the right skills to take advantage of technological opportunities. The 121% -93.57% Surplus/deficit Availability skills audit also makes explicit recommendations to develop ICT within sectors, such as agriculture, medical healthcare, and business sciences, which could stimulate innovation and Source: Min of Higher & Tertiary Education, Innovation, Science & Technology Development 2018 growth within these sectors. Government and related players will therefore need to make a serious investment in basic and Source: WEF, 2018b post-secondary education with a special focus on digital skills development. 38. World Bank Development Indicators, 2019 39. World Bank, 2014 35. WEF, 2018a 40. Ibid 36. World Bank, 2020 41. WEF, 2016 37. Zimstat, 2014 110 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 111 percent and internet penetration surpassing 45 percent as at of-school children and youth and provides lifelong learning 6.2.1 ZIMBABWE’S EDUCATION SYSTEM: EARLY CHILDHOOD, PRIMARY, AND SECONDARY EDUCATION 31 December 2015.42 Worryingly, data from the WEF’s Global opportunities for adults; integrating digital skills training and Competitiveness Index (GCI)43 shows that, while Zimbabwe development into the MoPSE’s non-formal program activities outperforms its regional neighbors in ‘digital skills among might be a viable option to ensure the inclusion of out-of- Since achieving independence in 1980, Zimbabwe has population’ rankings, digital skills in the country are not school youth in digital skills training. implemented an Education for All policy to ensure TABLE 6.1: progressing as quickly as in its regional peers. For example, that all school-aged children have access to affordable EDUCATION PARTICIPATION Digital skills development needs to be rooted in the education. Zimbabwe invests about 25 percent to 30 percent between 2017 and 2018 Zimbabwe went down 11 places in the country’s education systems. At a basic education level, of its national budget in education (both basic and post- GCI rankings (Figure 6.3). literacy and numeracy form the foundation for any further secondary). This is among the largest shares in Africa, and its Percentage It is important to include all youth in digital skills training skills development, including digital skills. The advancement emphasis on basic education has helped push Zimbabwe’s programs, and not just those still at school. The General and promotion of digital skills education will help to Net enrolment rate: literacy rate to being one of the highest on the continent. In 32 Certificate of Education Ordinary level (O-level) pass rate for meet the ever-increasing labor market demands that are Pre-primary (2019) 2014, the literacy rate of children under 15 years of age was 89 the country has barely gone above 30 percent over the last 10 primarily being driven by the digitization and automation percent.46 Demand for education is high in Zimbabwe, and Net enrolment rate: Primary (2019) 93.61 years, implying that only 3 in every 10 students are meeting of almost all sectors of the economy and society, as well as households bear the largest share of the nonwage education the benchmark of 5 O-level passes, which is the minimum by the expected economic growth that will ensue from such Primary completion rate (2019) 75.65 budget in the form of school fees and tuition. The MoPSE requirement for further education or employment. In the digitization. Developing digital skills also extends to lifelong oversees the basic education subsector, which extends from Net enrolment rate: 54.25 same vein, the MoPSE estimates that about 1.1 million (19.2 learning. The International Finance Corporation (IFC) argues early childhood development (ECD) to upper-secondary Secondary (2013) percent)44 of school-age children are not attending school. that technological disruption requires more complex skills school, while the Ministry of Higher and Tertiary Education, Gross enrolment rate: Tertiary (2018) 8.5 This means that the number of out-of-school youths is even and workforce retraining on a large scale, both for blue- Science and Technology Development (MHTESTD) oversees higher when you combine youths not attending school and collar and white-collar jobs.45 Given the rapid pace at which the post-secondary sector, which includes teachers’ colleges, Source: MoPSE 2019 EMIS Report those youths who have completed school but without the digital transformation is occurring, new approaches for universities, Technological and Vocational Education and minimum academic requirement for further education and learning are needed, with the reform of education systems Training (TVET) institutions, and polytechnics. Figure 6.4 or employment. In coming up with a digital skills framework, becoming paramount. Against this backdrop, the following below depicts the structure of Zimbabwe’s education sector. the country will need to consider this special group so that section assesses Zimbabwe’s education system in relation to the youths are not left out of any digital skills initiatives that digital skills: first basic education, and then post-secondary may be benefiting those within the school system. The MoPSE education. has a department that caters to non-formal activities of out- FIGURE 6.4: STRUCTURE OF ZIMBABWE’S EDUCATION SECTOR Tertiary Universities 2-year Upper Teachers’ Polytechnics Secondary Colleges 4-year Lower secondary education with an FORMAL LIFELONG academic/technical-vocational and practical subject focus EDUCATION EDUCATION Junior Education Grade 3 - 7 Infant Education (2-year Early Childhood Development and Grade 1 - 2) Source: MoPSE, 2016 42. Republic of Zimbabwe, 2016 43. WEF, 2018b 44. MoPSE Education Sector Analysis, 2020 46. UNESCO Institute for Statistics, n.d 45. IFC, 2019 112 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 113 Although enrolment in primary and secondary education in Zimbabwe is high, the learning gap is still significant. FIGURE 6.5: ZIMBABWE’S EDUCATION SECTOR: LEARNING GAP Children in Zimbabwe can expect to complete 10 years of pre- primary, primary and secondary school by age 18. However, BOX 6.1: EMPOWERING GIRLS THROUGH DIGITAL SKILLS when years of schooling are adjusted for quality of learning, 15 Learning-adjusted this is equivalent to only 6.3 years: a learning gap of 3.7 years expected years of school While around 24,000 schoolchildren received digital skills training during the 2018 African Code Week initiative, some (Figure 6.5).47 specific initiatives focused on girls. These include Nduna Girls and Girls Speak Out (GSO). Over the years, the GoZ has undertaken many initiatives 10 Nduna Girls form part of a non-governmental organization aimed at empowering girls and young women between the ages of aimed at introducing and strengthening digital skills 13 and 30. Along with other focus areas, such as providing scholarships and career mentorship, girls are introduced to basic training in Zimbabwean schools. Most of these initiatives ICT skills; science, technology, engineering and mathematics (STEM) fields they can pursue; as well as related workshops in have focused on digital user skills with an emphasis on the 5 robotics, coding and gaming. skills required for the use and manipulation of basic ICT tools, devices, and systems. The MoPSE has also introduced The Girls Speak Out (GSO) works among young women in under-served communities to develop coding skills, with the aim of digital platforms aimed at improved service delivery on the moving users into becoming producers of technology. The GSO’s reach is gradually growing. What started as 25 girls evolved management and administration side. 0 into reaching an additional 160 girls by 2017. The organization has found that in districts such as Mufakose, Dzivarasekwa and 5 10 15 Mabvuku, only one out of every 10 girls aged 14–24 knew what coding was, and only four could use Microsoft Word. Several The MoPSE has introduced integrated digital skills training Expected years of school alumni from GSO have landed jobs in media as content creators for national publications, some have founded community into basic education through a new curriculum that was platforms addressing public needs, and others have entered into media platforms. The GSO does not have external non- rolled out in January 2017. This curriculum introduced new Source: World Bank, 2018 profit funding and relies on donations. Other non-profit technology hubs around Harare are donating physical spaces and learning areas in ICT and mandates the integration of ICT computers for the girls to use. into day-to-day instruction and learning across all subject areas to promote basic digital skills among both teachers Although the MoPSE has been promoting the development and learners. ICT, with a focus on digital skills, has also been and use of e-learning in schools, few schools have been introduced as a learning area at all levels from ECD up to able to integrate it into the curriculum. Due to limited Source: https://en.unesco.org/news/24-000-students-trained-during-zimbabwe-africa-code-week; secondary level, with options to specialize in Computer financing, e-learning content development and deployment http://ndunagirls.org/our-work/; Science and Software Engineering at Ordinary and Advanced has mostly been between individual schools and private https://www.one.org/us/blog/code-girls-education-zimbabwe/ level (upper secondary). The new curriculum identifies five players, with schools footing all related costs from their own exit profiles for each learner; ‘Skills’ is one of the exit profiles, funding. Private players, such as E-learning Solutions,48 have with technological skills being identified as a key sub-skill been allowed to work with schools to provide technology- under this profile. enhanced solutions for teaching and learning by designing, developing, and deploying technology-enhanced curriculum BOX 6.2: With support from the World Bank, the MoPSE recently content, teacher professional development, and learning completed development of the National ICT Policy for TWO KEY POLICIES TARGETING DIGITAL SKILLS DEVELOPMENT: THE NATIONAL POLICY environments. Uptake of e-learning programs is, however, Primary and Secondary Education. This is the first time low due to the limited financial capacity of most schools FOR ICT AND THE ICT POLICY FOR PRIMARY AND SECONDARY EDUCATION 2019-2023 that the Ministry has developed an overarching policy to to meet the high costs involved in setting up and running guide the use and development of ICT and digital skills in school-based e-learning programs. As such, of the almost education. The integrated National ICT Policy for Primary and The 2016 National ICT policy lists a lack of ICT infrastructure, skills, and unsatisfactory institutional arrangements as key 9,100 schools in Zimbabwe, as at December 2017, only 650 Secondary Education seeks to guide the deployment and use impediments to ICT growth in the country. According to the Policy, the skills shortage relates directly to digitall iteracy and (303 primary and 347 secondary) had integrated e-learning of ICT resources both for administration, and for teaching and the skills needed to roll out ICTprograms. The Policy further stresses the need to integrate ICTs throughout the education programs into day-to-day teaching and learning.49 learning purposes, with the aim of integrating ICT into day- curricula, commencing from early childhood, as well as to promote ICT uptake within communities. There is also a call to to-day teaching and learning for improved learner outcomes support ICT skills provision through the private sector. and improved efficiency in education administration in In response to the national policy, the recent ICT policy for primary and secondary education aims to advance ICT in four Zimbabwe (see Box 6.2). key areas: improving infrastructure and access to technology and devices; enabling access to digital learning resources and integrating ICTs across curricula; developing human capacity to effectively teach, manage and maintain ICTs; and investing in the development of digitized operational activities and public-private partnerships that could extend the benefits of ICTs beyond schools. 47. World Bank, 2018 Source: Republic of Zimbabwe, 2016. Zimbabwe National Policy for ICT. 48. E-Learning Solutions is a private company that works with schools to deliver digital content 49. MoPSE, 2019 114 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 115 6.2.2 POST-SECONDARY DIGITAL SKILLS INITIATIVES Post-secondary education is a key driver of economic growth and poverty reduction as it plays a critical role in training a qualified and adaptable labor force, as well as in generating new knowledge. Currently, the gross enrolment rate for tertiary education in Zimbabwe is 8.5 percent, which is higher than some neighboring countries such as Rwanda (7.6 percent) or Zambia (4 percent), but lower than others, such as South Africa (20.5 percent) or Botswana (23.4 percent).51 While access to computers and reliable internet at universities is generally good, there are challenges pertaining to a shortage of academic staff in STEM programs, inadequate laboratories or other specialized facilities, a lack of funding, and limited innovation and technology transfer compared to similar countries.52 Development of a tech-savvy workforce that is adaptable to the changing nature of work is largely reliant on the country’s post-secondary education system. Unfortunately, unlike the school system that recently took part in a regional peer review project to upgrade its EMIS,53 the post-school system does not have a transparent data management system. Consequently, very little information about the post-school sector is available to add to discussions on digital skills development. This section reviews initiatives taking place in post-secondary education with a focus on digital skills development. As a way of improving efficiency in service delivery, the While these commendable innovations and policy options MoPSE has introduced a range of digital platforms. For are being introduced, persistent challenges inhibit The MHTESTD has recently adopted a new higher education example, the Electronic Ministry Application Platform (e-MAP) successful integration of digital skills training at a basic development strategy called the Education 5.0 Doctrine. is an online system that was introduced in 2016 and is used level. These relate to a lack of adequate infrastructure, lack The strategy seeks to improve the market relevance of tertiary to apply for boarding places for Form 1 and 5 learners. The of equipment, limited skills on the part of teachers, and little education and enhance its contribution to the country’s platform is mandatory for all boarding applications for entry fiscal support for ICT-related programs in education. For economic recovery by refocusing the tertiary education into those Forms. In December 2019, the MoPSE indicated example, in relation to infrastructure, as at December 2017 subsector on five priorities: (i) teaching; (ii) research; (iii) that more than 100,000 applications had been made through only 48 percent of schools in the country were connected community service; (iv) innovation; and (v) industrialization. In the platform for Form 1 places only. E-recruitment has also to the national grid, with an additional 6 percent accessing the past, the tertiary education strategy for Zimbabwe largely been introduced as an online system used by the MoPSE’s power from alternative sources such as solar energy. For the focused on the first three areas. The strategy’s emphasis human resources department to recruit new teachers as well same period, only 11 percent of primary schools and 30 percent on innovation and industrialization is new. They encourage as a database for unemployed qualified teachers waiting to of secondary schools had an internet connection, while the universities and colleges to promote innovation in their join the teaching service. The Zimbabwe School Examinations national functional computer-to-learner ratio was 1:134 and curricula and to link their academic work to industrialization Council has also adopted e-registration and e-marking as 1:39 for primary and secondary schools, respectively. Analysis 50 so that initiatives within the academia seek to address a way of increasing efficiency in the overall examination data from the Education Management Information System industry’s needs and contribute to producing goods and administration. (EMIS) also suggests very low digital skill levels amongst services. The MHTESTD posits that the Education 5.0 Doctrine teachers, with only about 15 percent of primary school provides a pathway from knowledge production that is teachers having basic computer skills. gained by research and teaching, to industrialization via the innovation route and vice versa.54 The Education 5.0 Doctrine 51. World Bank, 2020 52. Ibid 53. Association for the Development of Education in Africa, 2019 50. MoPSE, 2019 54. Ministry of Higher & Tertiary Education, 2019 116 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 117 is also rooted in a heritage-based philosophy, which focuses 6.2.3 DIGITAL SKILLS INITIATIVES BY PRIVATE ENTITIES on the universality of science but with local application, in which cutting-edge competitive knowledge from anywhere in the world will be applied, modified, and adapted to the Digital skills training in the private sector focuses mainly on specialized skills, such as coding and programming. There local environment for the purposes of producing relevant is, however, no coordinated effort either among private players themselves or with the government, as most private initiatives goods and services. 55 are run on a for-profit basis, with some charities also offering digital skills training to schoolchildren through a non-profit arrangement. While Zim Code is an example of a start-up company (see Box 6.3), two of the most prominent companies are As Zimbabwe seeks to rapidly transform and modernize Muzinda Hub and Sprout Coding. the economy through technology-based interventions in light of its Vision 2030, it plans to establish innovation hubs at all state universities, as well as industrial parks in all ten provinces of the country. The innovation hubs will provide the necessary infrastructure to nurture translation BOX 6.3: LEARNING TO CODE IN ZIMBABWE of knowledge generated by universities through research and development into goods and services, contributing to sustained socio-economic transformation and accelerated Zimbabwean ‘techpreneur,’ Alvin Chitena founded Zim Code in his first year of study. Grant funding helped him to provide low- growth. To date, institutions such as the University of income schools and youth access to computers, the internet, and tutors. He has trained 50 tutors, consisting of university Zimbabwe, Midlands State University, and the National students or alumni of the program, who teach learners how to code in the Python programming language. Zim Code is University of Science and Technology (NUST) have built state- also equity-conscious, recruiting girls to boys on a 3:2 ratio. Zim Code is completely reliant on international funding, and of-the-art innovation hubs that are meant to strengthen ties Zimbabwe’s bureaucracy regarding imports and cyber laws makes growth difficult. between universities and the private sector, while serving as Coding communities are also increasing in popularity. Techzim, an information technology publication platform lists seven incubators for innovations created by students, faculty, and coding communities, four of which are free, spread over Zimbabwe for coding enthusiasts to join. researchers. These hubs are anticipated to strengthen digital skills training and incubation among university graduates by scaling up digital and innovative development currently underserved in higher education in Zimbabwe. For example, Source: https://zimcode.org/zim-code-africa-is-rising/ the innovation hub at the NUST houses software developers https://www.techzim.co.zw/2017/06/here-is-the-list-of-coding-initiatives-in-zimbabwe/ and the Applied Genetics Testing Centre laboratory. Recently, the Zimbabwean government has disbursed over $40 million MUZINDA HUB SPROUT CODING to innovation hubs at tertiary institutions and $500 million Muzinda Hub is a popular private tech-hub that offers Sprout Coding offers digital skills training on a private was set aside in the 2020 national budget to encourage digital skills training. The hub is part of the Cassava basis, albeit through a non-profit arrangement. Sprout entrepreneurship and support innovations flowing from Smartech Group, the third largest listed company on the Coding focuses on imparting high-end digital skills, mostly to small and medium-sized enterprises.56 Zimbabwe Stock exchange. Muzinda Hub notes that it is children of school-going age, through a 12-week curriculum A key priority for Zimbabwe is the development of a committed to building and supporting an engaged and that teaches coding and other life skills that learners will digital skills framework. Despite the above innovations and talented community of tech enthusiasts and ICT professionals need to become hireable candidates in any industry.58 The initiatives that the country has embarked on to strengthen through tailor-made, specialized digital skills training in organization seeks to serve communities that have limited digital skills, there is still no overarching framework to guide e-learning coding modules, Google certification, business and access to ICT tools and devices and whose schools do not digital skills training in the country, particularly one that cuts entrepreneurship skills training, and practical group project offer computer science. Hence, Sprout Coding creates across all education sector levels. Building on the current development experience. 57 The hub offers a five-month opportunities for children from disadvantaged communities initiatives, it is imperative for the country to move towards training course at a cost of $ZWL3,500 (about USD200), with to be creators of digital innovations, not only consumers of a robust and comprehensive digital skills framework that trainees expected to have gained a firm understanding of technology. will guide digital skills development and policy formulation. coding, project development, project management, and All these platforms are pivotal in strengthening digital skills The EU’s DIgComp2.1 provides a good framework upon business skills training upon completion of the program. training as they expose learners to digital content that which Zimbabwe can build to develop its own digital skills Besides the digital skills training under Muzinda Hub, Cassava accelerates their understanding of new learning concepts framework, as it is pivoted on the key competences required Smartech also has other digital platforms that are linked to and improves digital skills appreciation. at different levels of education, thus linking the framework education and training, by offering digitalized curriculum and to teaching and learning and curriculum development at all e-learning content through other platforms such as Ruzivo levels of education and training. Digital Learning, Simba Education Platform, and Akello Books. 55. Ministry of Higher & Tertiary Education, 2020 57. Muzinda Hub (2020) www.muzindahub.com Accessed 18 January 2020 56. Matabvu, 2020 58. Sprout Code (2020) www.sproutcoding.org Accessed 17 January 2020 118 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 119 6.3 Challenges In order to further develop the country’s digital skills, the primary schools, where only around 15 percent of teachers technologies across different sectors.62 Zimbabwe’s digital on programs on offer, such as the scope of the training Government will need to address a number of challenges. have minimum basic computer skills. Thus, Zimbabwe transformation will require both a digitally competent and their impact in addressing the critical digital skills These include: will need significant investment in teacher education and workforce and digitally literate citizens, yet the skills gap, is not readily available or has not been scientifically continuous professional development to meet the rising training supply side at college, TVET, and university levels ascertained. Given the gaps that exist in digital skills Enabling environment. The enabling environment for 1. demand for teachers who are able to facilitate meaningful has not kept pace with changing trends (as highlighted training, there is an urgent need for improved coordination full implementation of the National ICT in Primary and digital skills training. in Table 6.1). The tertiary education sector has been between the Government and private players offering Secondary Education Policy is lacking. While adoption of negatively affected by several challenges, including lack of digital skills training, so that ongoing efforts in both the policy by the MoPSE is highly commendable, some Underinvestment in Early Child Development (ECD). 3. qualified faculty to teach the required digital skills, lack of private and public spaces inform policy formulation and entrenched challenges may inhibit successful integration Underinvestment in ECD has resulted in limited modern equipment, underfunding, and poor connectivity, guide private initiatives by different players. The intention of digital skills training at a basic education level. They development of foundational skills. Zimbabwe introduced among others. These and other factors have impaired the to empower the private sector has been set in the 2016 ICT include limited infrastructure and equipment to support an ECD program in 2004, with subsequent statutory strengthening of digital skills training in the country’s policy but there is little evidence of implementation yet. digital skills training, limited skills on the part of teachers, reforms that have mandated the full integration of ECD as post-secondary institutions. and low fiscal support for ICT-related programs in part of the primary school system. As such, 99 percent of all Limited government funding. Government funding for 6. education. As noted above, as at December 2017, only 48 primary schools now have ECD classes, but participation is Lack of coordination. Several programs in the private 5. the digital economy pillars is limited in general, and for the percent of schools in the country were connected to the lower with a Gross Enrolment Ratio (GER) of 55.9 percent sector are aimed at promoting digital skills, particularly digital skills pillar in particular. While the GoZ invests over 7 national grid while the national functional computer-to- and a Net Enrolment Ratio (NER) of 32.0 percent as at among young people, but there are no coordinated efforts percent of GDP in education, funding is not allocated in a learner ratio was 1:134 and 1:39 for primary and secondary December 2017. 61 Furthermore, the lowest number of between the Government and private players on how the consistent, objective and transparent way. This influences schools respectively, with only about 11 percent and 30 qualified teachers in Zimbabwe are in ECD as only around two could complement each other to enable a wider reach prospective students’ access to higher education, percent of primary and secondary schools, respectively, 53 percent of ECD teachers are qualified. The country’s ECD and additional value. Furthermore, critical information constrains budgets for research, scholarships, and having an internet connection.59 Considering that digital program also faces other constraints, including limited skills training depends on learners having access to prioritization (on matters such as resource allocation) at relevant hardware and software, the current situation will the school level with preference being given to senior require significant investments to reduce the highlighted grades, and lack of age-appropriate furniture, materials, shortages. Both the national and educational ICT policies infrastructure, and equipment (including IT equipment). BOX 6.4: COVID-19 AND DIGITAL SKILLS: RESPONSE, RECOVERY, RESILIENCE recognize the importance of investing significantly in These challenges ultimately mean that learners at this infrastructure and human capital to create such an critical foundational level are not acquiring adequate Lack of reliable infrastructure and access to devices has made it difficult for educational institutions to conduct learning enabling environment, and the COVID-19 response digital skills. For the country to equip future generations online during COVID-19. As a result, the Ministry of Primary and Secondary Education launched a response plan, costing more affirmed the importance of these factors. However, with the requisite digital skills required to build a robust than USD16 million, with interventions that make use of radio programming as well as digital and online learning. In higher the broader than expected impact of COVID-19 on the digital economy, Zimbabwe will need to strengthen its education, blended learning programs have been implemented from 1 June 2020, with the sector reaching agreements with socioeconomic situation in Zimbabwe will probably mean ECD program to build critical foundational skills from the telecommunications companies to provide free educational websites. that funding originally dedicated to these initiatives may earliest years of education. COVID-19 is both a threat and an opportunity for the development of digital skills. Zimbabwe’s macroeconomic situation be redirected to meet more urgent needs. Box 6.4 provides Skills mismatch. There is a skills mismatch between 4. is likely to worsen in the wake of COVID-19, which implies fewer opportunities for innovation and funding, and exacerbated further details on the response to COVID-19. tertiary education and training and the requirements of inequalities. However, reflecting on the COVID-19 responses could awaken an urgency to address infrastructure challenges, Shortage of teachers able to teach digital skills. The 2. industry and commerce. The country’s post-secondary and strengthen its resolve to implement the ICT in primary and secondary education policy. Further, it provides a valuable supply of trained teachers to facilitate digital skills training education and training sector has not fully adjusted opportunity for public-private relationships forged during the pandemic to extend beyond the crisis. Even though digital is inadequate. Zimbabwe has a good supply of qualified curricula and programs to meet the required digital inequalities were more evident during the pandemic, they existed before the pandemic and will remain after. Building on the teachers, with 99 percent of teachers in primary schools skills demands and the general changing nature of experiences and challenges of moving to remote learning spaces could inform new innovations in developing digital skills and being qualified (excluding ECD) and 83 percent in work, resulting in a significant deficit of digitally skilled ensure that everyone has access to ICT so that they can actively participate in a digital economy. secondary schools.60 However, further analysis of EMIS data personnel in Zimbabwe, particularly given projected job shows that only 1.4 percent of secondary school teachers in developments. Digital economies are enabled when a 2018 were qualified to teach computer science, pointing to sizeable percentage of the population has basic digital significant shortages of trained computer science teachers skills and a critical mass of tech-savvy skilled personnel Source: in secondary schools. The situation is even worse in and advanced specialists exists to adapt and diffuse digital MOPSE, 2020: http://mopse.co.zw/blog/ministry-launches-covid-19-response-plan https://www.thezimbabwemail.com/education/econet-liquid-telecom-arrange-e-learning-deal-for-varsity-students/ UNDP, 2020: https://www.undp.org/content/dam/rba/docs/COVID-19-CO-Response/UNDP_ZW_Brief_Socioeconomic_impact_of_COVID-19.pdf 59. MoPSE, 2018 60. MoPSE, 2017 62. World Bank, 2020 61. Ibid 120 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 121 training, and weakens strategic planning.63 Furthermore, the loss of value in teachers’ incomes (which have lost over 6.4 RECOMMENDATIONS & NEXT STEPS challenges in the basic and tertiary education sectors 75 percent of their value in real terms compared to 2018),65 outlined above bear testimony to the limited resources is likely to affect recruitment and retention of teachers that the government has committed to improve digital with digital expertise; this, in turn, will hamper digital skills FIGURE 6.7: skills over the years. Nevertheless, the introduction of development considering the critical role that teachers DIGITAL SKILLS SWOT MATRIX innovation hubs in selected universities is a significant step play in digital skills development. Strengthening teacher as it promotes an enabling environment for incubation and capacity in digital skills at both pre- and in-service levels upscaling of innovative technologies that could positively becomes even more difficult under such circumstances. impact the digital skills landscape in the country. Furthermore, private financing  for both basic and post- Macroeconomic environment. Even if the Government 7. secondary education through tuition fees  has fallen Strengths Weaknesses sharply as many households could not afford to pay higher recognizes the importance of addressing the above ■ High literacy rates ■ Lack of coordination between fees, depriving schools and institutions of critical resources, challenges, its efforts are likely to be affected by the ■ One of the highest HCIs in SSA government and key players including financial resources, which are pertinent in country’s macroeconomic environment. The economic ■ L imited financial support from fostering digital skills development and training. ■ R elatively high access rates to basic challenges in 2019, together with the COVID-19 pandemic education in comparison to the region central government in 2020, have negatively affected the quality of education in 8. Data concerns. Lack of updated, reliable, and transparent ■ O ne of the highest mobile penetration ■ L imited infrastructure and enabling public schools  and public institutions and increased data for the post-secondary education sector further rates in Africa policy environment inequalities.  Inflation has significantly reduced the impedes progress. Current data sources are outdated and ■ Low skill levels among teachers amount of public  financing for  education (Figure 6.6); 64 sometimes conflicting, and for some valuable data, no ■ Poor data with more than 94 percent of the education budget going sources may be available. Yet informed decisions cannot ■ Rural exclusion and urban bias towards teachers’ salaries, this leaves very limited room be made in the absence of evidence. The sector needs an for other non-salary expenditure including expenditure effective and transparent data sharing system, which can Opportunities towards digital skills development. In addition, the both track progress and enhance accountability. prevailing low teacher morale and demotivation due to ■ I nnovation Hubs and dedicated funding for innovations and SMEs ■ Young population Threats FIGURE 6.6: ■ Implementation of the National ICT and ■ Poor infrastructure (electricity GOVERNMENT FINANCING AND REVENUES FROM SCHOOL FEES FELL SHARPLY ICT in Education policy (curriculum and coverage; internet; devices) other initiatives implemented in schools) ■ High level of attrition/migration of ■ Private sector skills development digitally skilled population Education spending, percent of GDP 9.0 8.0 7.0 Revenues from school fees 6.0 Government budget 3.6 5.0 3.7 4.0 3.0 2.0 4.2 3.0 1.0 1.3 1.0 0.0 0.7 0.3 2017 2018 2019e 2020p Source: World Bank: Zimbabwe Economic Update, 2020. 63. World Bank, 2020 64. Ministry of Primary & Secondary Education & World Bank 65. World Bank, Zimbabwe Economic Update, 2020 122 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 123 In light of the analysis in this chapter, Table 6.2 lists key recommendations. These are organized across key objectives that would unblock binding constraints on further development of this digital economy pillar. The table identifies responsible agencies as well as an indicative time frame, where short-term denotes within the next 12 months. The highest-priority recommendations are highlighted. TABLE 6.2: DIGITAL SKILLS RECOMMENDATIONS RESPONSIBLE TIME FRAME PRIORITY AGENCY OBJECTIVE DS1: Build a technologically savvy and digitally literate work force Scale up digital skills training at the basic education level by investing in MoPSE R38. implementation of the ICT in Education policy, as well as full implementation Short-term HIGH of the updated curriculum. MoFED Implement curriculum and pedagogical reforms in the post-secondary sector R39. MHTEISTD Short-term HIGH to meet current and future skills demand. MoPSE Introduce equity-based targeting of digital skills training to ensure that rural R40. MHTEISTD Medium-term MEDIUM people, particularly the rural youth, benefit equally from such programs. MYSAR OBJECTIVE DS2: Improve the supply of digitally literate teachers at basic and post-secondary levels Reform teacher education to integrate digital literacy as part of the pre- service curriculum while focusing on continuous professional development of MHTEISTD R41. Short-term MEDIUM in-service teachers to build their competency in facilitating basic digital skills MoPSE training. Improve the qualifications of academics in the STEM areas for post-secondary R42. MHTEISTD Short-term MEDIUM education. OBJECTIVE DS3: Improve the regulatory environment Establish a multi stakeholder coordinating group for digital skills training MHTEISTD promotion by bringing together relevant government departments, tertiary R43. institutions, private sector, social partners, and non-profit organizations, MoPSE Short-term HIGH among others, which have an interest in tackling the lack of digital skills in MoICTPCS Zimbabwe. Strengthen the EMIS system to provide up-to-date, reliable, and transparent MHTEISTD R44. data about the entire education system to enable better tracking of policy Medium-term MEDIUM implementation, inform decisions, and enhance accountability. MoPSE 124 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 125 Conclusion: A Way Forward 126 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 127 As the findings of this report make clear, the Government The deleterious macroeconomic environment is a major The macroeconomic crisis, compounded by the effects Aside from addressing and leveraging the overarching of Zimbabwe recognizes the potential of digital roadblock for the digital economy in the country. Digital of the COVID-19 pandemic, also presents an opportunity crisis, the key to moving the digital economy forward technologies to help pave the way out of the crisis and economy cannot be discussed in a vacuum. Table 7. 1 presents for pushing the frontiers of the digital capabilities in the includes improvements in four areas: policy and regulatory toward greater prosperity. There is a strong push for stronger a consolidated summary of the SWOT analyses across all country. Zimbabwe’s experience with digital financial services framework, resource management and coordination, strategic and policy underpinnings for the development of chapters, outlining both internal weaknesses for each pillar in general and mobile money in particular is a case in point. governance, and capacity building. Innovation is not the digital economy. These include the implementation of and the economy-wide roadblocks. As is clear from this As many have argued, the persistent cash crisis has led to the a panacea that will provide Zimbabwe with a quick exit the existing national ICT policy, the formulation of the SMART summary, the development of every pillar is stifled by the widespread use of mobile money: “Currency depends on trust from the crisis. As a prerequisite, much work remains to be Zimbabwe Masterplan, and the ongoing effort to include the macroeconomic situation, including inflation and shortages and confidence. Years of economic crises in Zimbabwe have done both on fixing the macroeconomic fundamentals digital economy as one of the key results areas for the National of foreign currency required to purchase equipment and left all three in short supply, spurring a boom in mobile money and on addressing the inherent weaknesses within each Development Strategy under preparation. software. Other external factors include declining business – an industry that is revolutionizing banking in Africa.” In this 66 pillar. The recommendations in this report identify several confidence in the economy as a roadblock for investment and example, the crisis led to an innovation that in turn led to a interconnected areas to be addressed across all pillars. Table This report points to the existence of the key building digital entrepreneurship. Intermittent electricity coverage transformation. The COVID-19 pandemic and its economic 7.2 groups key recommendations of the report in these blocks for further development of the digital economy and access is also an oft-cited constraint, although there effects may present a similar opportunity for innovative four interconnected areas, including whether they require in Zimbabwe. These include a relatively solid and growing have been recent improvements through load shedding and solutions that can lead to leapfrogging. Physical distancing regulatory or policy changes, and/or capital investments infrastructure, an educated workforce that can be upskilled expansion of solar systems. In addition, the development requirements will mean that more transactions will need to (Capex). Annex 2 summarizes all recommendations by pillar. quickly, and government commitment to supporting digital of the foundational pillars is interconnected. Better digital be processed digitally, more goods bought and sold remotely, Addressing these, along with the external environment, will entrepreneurship that is already taking root. Particularly infrastructure will mean better connectivity required for all and more public services delivered digitally. Each chapter in ease the binding constraints on the development of the noteworthy are the strides in digital financial inclusion other pillars. More developed digital skills in the economy will this report provides further suggestions on what can be done digital economy in Zimbabwe. and the pervasive use of mobile money. In addition, the translate into higher digital literacy, use, and development to use the existing digital capabilities to address the current overwhelming share of government financial transactions skills needed for digital entrepreneurship, finance, and situation, and enhance those capabilities to create a more takes place digitally, and the core government systems have government platforms. vibrant economy and more inclusive growth. been digitized. The foundations exist for digital ID and a number of public services are accessible digitally to citizens and businesses. 66. https://www.csmonitor.com/World/Africa/2018/0813/A-nearly-cashless-Zimbabwe-tests-the-limits-of-mobile-money 128 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 129 TABLE 7.1: SUMMARY OF KEY RECOMMENDATIONS BY AREA REGULATORY REGULATORY PILLAR OBJECTIVES/RECOMMENDATIONS (R) OR PILLAR OBJECTIVES/RECOMMENDATIONS (R) OR CAPEX (C) CAPEX (C) Policy and Regulatory Framework Governance Refine the regulatory framework with a view to improving tariff regulation and the licensing R Develop a National Broadband Strategy and strengthen coordination between the different R framework agencies that govern ICT policy and implementation. Infrastructure Review USF policies and strategy to accelerate infrastructure development in under-served R Accelerate the rationalization of the portfolio of Government-owned telecommunications R Infrastructure areas operators and privatize a substantial stake of these companies. Prioritize the finalization of outstanding legal and policy frameworks critical to digital Encourage commercial infrastructure sharing and open access to critical infrastructure to R Platforms R allow faster deployment and greater rural push in middle and last mile connectivity. platforms, in particular those relating to data protection and sharing, and cyber-security Enforce mobile wallet interoperability amongst mobile money operators. R Map the existing digital systems and services and agree an interoperability and R&C interconnectivity framework across MDAs. Financial Services Reduce costs of remittances at SADC level through increased collaboration by authorities. R Establish a clear coordinating mechanism across MDAs on digital platforms, under the R Enhance the digital options through which to receive remittances. R&C leadership of the MoICTPCS in close collaboration with the e-government unit of OPC. Incorporate a start-up strategy for tech, service and manufacturing start-ups in the SME R Ensure all digital services are available via the government portal. R&C policy. Platforms Develop new and/or leverage existing information management systems to strengthen R&C Leverage the updating of the SME Policy. R&C evidence-based decision-making in response to the COVID-19 crisis. Initiate a regulatory review of public procurement regulation pertaining to entering joint R Identify and prioritise technical support to critical digital platforms and enhance remote R&C Entrepreneurship ventures with foreign firms. access to the systems by critical staff who hold key responsibilities in the response to Accelerate implementation progress on starting a business and insolvency reforms. R COVID-19 for Business Continuity within Government. Review how tax compliance for SMEs can be streamlined R Complete the development of a fintech strategy and establish the fintech department in R Financial Services the central bank. Review incentives for business angels (i.e. tax credits for investments in start-ups) R Establish a multi stakeholder coordinating group for digital skills training promotion for R Skills Track implementation of the ICT Policy for Primary and Secondary Education 2019-2023 R&C Skills improved coordination and focusing of effort. Strengthen Education Management Information System (EMIS). C Resource Management and Coordination Capacity Building Make 700 MHz spectrum available for LTE and assign sufficient spectrum to the operators. R Strengthen the mandate and capacity of the MoICTPCS to monitor MDA compliance with R&C Infrastructure Promote affordability of broadband-enabled devices and widen opportunities for individual Platforms agreed norms and standards for digital platforms. access. Strengthen the capacity of the Government Internet Service Provider (GISP). R&C Establish shared systems and responsibilities at Line Ministry level for the regular collection Platforms R&C R&C of data about platform use and quality. Entrepreneurship Explore the creation of a start-up academy. Bridge the rural-urban divide in digital skills through equity-based targeting of any digital Skills R&C Scale up digital skills training at the basic level. R&C skills training. Improve the supply of digitally literate teachers at basic and post-secondary levels. R&C Skills Implement curriculum and pedagogical reforms in the post-secondary sector to meet R&C current and future skills demand. 130 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 131 TABLE 7.2: SUMMARY OF EACH PILLAR’S STRENGTHS, WEAKNESSES, ROADBLOCKS, AND OPPORTUNITIES KEY WEAKNESSES AND ROADBLOCKS KEY WEAKNESSES AND ROADBLOCKS KEY STRENGTHS OPPORTUNITIES KEY STRENGTHS OPPORTUNITIES PILLAR SPECIFIC ECONOMY WIDE PILLAR SPECIFIC ECONOMY WIDE DIGITAL INFRASTRUCTURE DIGITAL FINANCIAL SERVICES ■ Mobile infrastructure ■ Fixed broadband ■ Macroeconomic conditions ■ Z im ASSET ■ Efficient payment ■ N o interoperability among ■ I ntermittent power and ■ Upcoming National Fintech (2G & 3G in most of the infrastructure and (especially inflation and lack ■ N ational Broadband systems owned and mobile money operators connectivity Strategy could strengthen country, LTE in urban penetration of foreign exchange) Strategy operated by the private ■ High costs of transactions, ■ Currency reforms leading the DFS ecosystem areas) ■ LTE coverage outside of ■ Electricity access and ■ Universal Service Fund banking systems and especially the 2 percent to de-dollarization have ■ Regulatory prospects to ■ International urban areas coverage ■ Consolidation and mobile money operators mobile money mandatory tax increased the inflation and connectivity on all transactions loss of value mandate interoperability ■ Limited infrastructure ■ Digital literacy privatization of Government- ■ Widespread ■ Fiber-optic backbone sharing interoperability among ■ Low usage of internet ■ International payments still among mobile money owned telecom operators ■ Broadband prices as percent bank accounts banking in rural communities difficult since Zimbabwe is operators of GNI per capita ■ A vailability of a robust due to limited internet a jurisdiction with entities ■ Prospects to broaden ■ Retail tariff regulation large value payment coverage under OFC surveillance receiving of international ■ Limited competition systems (RTGS; ZETSS) ■ International debit cards ■ Difficulties in payment remittances on mobile operated by the central (Visa, Mastercard) not usable of international licenses money wallets bank due to lack of liquidity in in foreign currency has DIGITAL PLATFORMS ■ C apital markets digitized foreign currency curtailed access to world ■ DFS provides a real and settlements ■ National payments law class fintech solutions opportunity to the retail ■ C entral government ICT ■ I nteroperability ■ I ntermittent power and ■ E-Government policy seamlessly linked follows the older model of sector and transacting and e-government teams ■ S ilo development of connectivity and Smart Zimbabwe through a central focusing on systems not public to comply to WHO promote coordination platforms, and no shared ■ Aging government masterplan depository products and services social distancing protocol and coherence space for collaboration infrastructure ■ Foreign currency bank ■ Legislation in development ■ S trong and broad ■ SADC Model Law on ■ Core government (back ■ Reliance on costly external ■ Inadequate resourcing accounts are not covered on data protection and legislative and regulatory payments end) systems developed providers for development by the deposit protection provisions around ■ Good examples of digital and maintenance sharing scheme payment systems services ■ Limited capacity to monitor ■ Interoperability framework ■ Accessible, central compliance and quality of ■ National Data Centre and government portal services Disaster Recovery Center ■ Building blocks for a ■ High ICT staff turnover and ■ ICT staff in most MDAs digital ID system poor skills retention 132 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 133 KEY WEAKNESSES AND ROADBLOCKS KEY STRENGTHS OPPORTUNITIES PILLAR SPECIFIC ECONOMY WIDE DIGITAL ENTREPRENEURSHIP ■ Positive attitude towards ■ L imited access to market ■ Deteriorating macro- ■ Ambitious vision and entrepreneurial risks and data makes it difficult for economic situation affects government commitment, history of solid education entrepreneurs to assess consumer and business i.e. TSP makes explicit ■ Presence of private market size demand, access to affordable commitment to digital sector actors keen to ■ Improving, but low finance, and access to skilled labor entrepreneurship; Smart support entrepreneurship performance in ease and cost of starting a business and ■ Foreign exchange controls Zimbabwe Master Plan can ■ Government commitment and recovery from insolvency ■ Unstable electricity access provide market opportunities progress made to ■ Limited access to start-up and coverage limits uptime for Zimbabwe’s digital improve ease and cost of capital, i.e. no grant funding ■ Declining business confidence entrepreneurs; ICT Policy starting a business and and no collaboration with envisions Zimbabwe recovery from insolvency private financiers to leverage becoming an ICT hub for the ■ Government public funds region. commitment to improve ■ Limited systematic entrepreneurial and dialogue between public ■ The new SME Policy can innovation skills at and private sector on how provide an opportunity higher education level entrepreneurship can be to include provisions for ■ Government creation accelerated start-ups, including those in of funds to support ■ Unclear institutional technology entrepreneurship ownership and capacity ■ Consumer and business in government of the entrepreneurship agenda market segments are ■ Unclear policy bolstered by strong implementation frameworks familiarity with digital for digital entrepreneurship transactions, relatively high ■ Complex tax regime for levels of ICT penetration, and entrepreneurs fluency in English. ■ Complex public procurement regulations pertaining to entering a partnership or join venture with a foreign firm DIGITAL SKILLS ■ H igh literacy rates ■ L ack of coordination between ■ Poor infrastructure ■ Innovation Hubs and ■ One of the highest HCIs government and key players (electricity coverage; internet dedicated funding for in SSA ■ Limited financial support connectivity; limited devices, innovations and SMEs ■ Relatively high access from central government especially in rural areas) ■ Young population rates to basic education ■ Limited infrastructure and ■ Rural exclusion and urban in comparison to the enabling policy environment bias ■ Implementation of the region (primary and ■ Low skill levels among National ICT and ICT in secondary GER of 105.6% teachers Education policy (curriculum and 76.9% respectively) ■ Poor data and other initiatives ■ One of the highest mobile implemented in schools) penetration rates in ■ Private sector skills Africa development 134 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 135 International Monetary Fund. 2018. 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Labour Force Survey. web.pdf?MOD=AJPERES&CVID=mHwcBU8 http://www.zimstat.co.zw/sites/default/files/img/publications/Employment/Labour_Force_Report_201 4.pdf 136 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 137 Annexes 138 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 139 Annex 1: Key indicators Annex 2: Table of recommendations Source Indicator ZIMBABWE SSA average and date DIGITAL INFRASTRUCTURE Overall Performance DIGITAL INFRASTRUCTURE OBJECTIVE DI1: Improve access to existing digital infrastructure and incentivize new investments Internet users, percent of adult ppn WEF, 2019 27.1 (115 out of 141 countries) R1. Develop a National Broadband Strategy and strengthen coordination R1. between the different agencies that govern ICT policy and implementation to POTRAZ Short-term HIGH Mobile Cell. Subscriptions per 100 pp WEF, 2019 37.4 (114 out of 141 countries) avoid overlaps and better coordinate future interventions. Mobile broadband Subscriptions per 100 pp WEF, 2018 102 out of 141 countries Accelerate the rationalization of the portfolio of government-owned Price of mobile broadband 1GB, percent of GNIPC A4AI, 2019 26.2 7.8 R2. telecommunications operators and attract private investments to secure MoICTPCS Medium-term HIGH policy objectives. Overall Performance Utilize USF funds to leverage private sector investments in broadband DIGITAL GOVERNMENT PLATFORMS infrastructure through public finance mechanisms such as PPPs or R3. competitive awards of subsidies to private operators to support infrastructure POTRAZ Short-term HIGH Digital Adoption Index, Government cluster, (scale 0-1) WB, 2016 0.34 0.395 development in areas where market forces alone are insufficient to provide adequate broadband coverage (instead of funding full CAPEX). E-government Development Index, /100 UNDESA, 2018 0.37 0.345 Consider establishing a ‘Pay or Play’ mechanism, whereby operators can Secure internet servers (per 1 mil people) WB, 2019 68 84.1 choose if they want to contribute financially to the fund or invest directly R4. POTRAZ Medium-term MEDIUM in projects themselves and guarantee specific universal access targets in Percent of adults who used digital payments in the past year Findex, 2017 49.2 3.6 exchange for relief from USF-levies. Overall Performance Promote transparency and accountability, through the involvement of operators DIGITAL FINANCIAL SERVICES R5. in project selection and annual reporting on accounts and performance. POTRAZ Short-term MEDIUM OBJECTIVE DI2: Adults with a bank account, percent WB, 2017 55.29 32.8 Refine the regulatory framework Adults using a mobile phone or internet to access their account, percent WB, 2017 45.55 20.8 Reconsider the current practice of mobile retail tariff regulation, which should R6. POTRAZ Short-term MEDIUM Adults using digital payment, percent WB, 2017 49.2 34.4 be used only as a last resort in markets where competition exists. Mobile money account, percent WB, 2017 48.58 21 Implement a modern converged licensing framework to further sector growth R7. anchored on innovation, fair competition, affordability, and good quality of POTRAZ Short-term HIGH Mobile money account, percent adult population POTRAZ, 2020 102% services. Overall Performance OBJECTIVE DI3: DIGITAL ENTREPRENEURSHIP Enable faster deployment of infrastructure and greater rural push in middle and last mile connectivity Address administrative issues impeding assignment of LTE in the 700 MHz Ease of doing business score, /100 WB, 2020 54.5 (140 out of 190 countries) 51.8 R8. POTRAZ Medium-term MEDIUM band services to mobile operators. Global Competitiveness Index, Enforce harmonized rights-of-way policies between local authorities for WEF, 2018 121 out of 137 Technological readiness accessing public infrastructure, taking advantage of future civil works Global Competitiveness Index, Innovation WEF, 2018 132 out of 137 R9. projects for cross-sector infrastructure sharing. Implementing a “dig once, POTRAZ Medium-term MEDIUM build once” approach to infrastructure development will pass on savings to Overall Performance operators who could in turn extend services faster. DIGITAL SKILLS OBJECTIVE DI4: Enable faster deployment of infrastructure and greater rural push in middle and last mile connectivity Human Capital Index, /100 WB, 2018 .44 (114 out of 157 countries) 44.5 Subsidize or offer low- or zero-interest loans for the purchase of broadband- Digital skills among population 1-7 (best) WEF, 2018 3.8 (93 out of 140 countries) R10. enabled devices. Subsidies could be further targeted toward women and MNOs Medium-term MEDIUM Trained teachers in secondary education (percent of all teachers) UNESCO, 2017 72.9 51.66 marginalized populations to reduce digital access gaps. Provide broadband equipment to educational institutions at cost or via School enrolment, secondary (percent gross) UNESCO, 2018 52 43 R11. MoICTPCS Medium-term MEDIUM subsidies. 140 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 141 DIGITAL GOVERNMENT PLATFORMS DIGITAL FINANCIAL SERVICES OBJECTIVE DGP1: OBJECTIVE DFS1: Enhance coordination, interoperability and interconnectivity across MDAs Enhance strategic underpinning for DFS Map the existing digital systems, services and data assets first and Complete the development of the National Fintech Strategy and establish then move towards establishing more permanent catalogues as well as the fintech department in the Central Bank. The process could include MoICTPCS R20. RBZ Medium- term MEDIUM the interoperability and interconnectivity framework across MDAs. The establishment of a regulatory sandbox to experiment with more innovations R12. comprehensive mapping exercise would capture all public sector digital OPC eGovt Unit Short-term HIGH to deepen DFS in the financial services sector. platforms and note those in development with a view to identifying Enhance the DFS ecosystem through expanding the credit infrastructure: RBZ and opportunities for interoperability, interconnectivity, lesson learning, and R21. Finalize the establishment of the movable collateral registry and facilitate Ministry of Short-term MEDIUM resource sharing. the establishment of the Warehouse Receipt System. Agriculture Establish a clear coordinating mechanism across MDAs on digital platforms. MoICTPCS should work together with the e-government unit of OPC in MoICTPCS Collaborate at the regional level (SADC) to reduce the cost of sending R22. RBZ Medium- term MEDIUM coordinating the reforms. MoICTPS has the institutional strength to drive remittances, thus fostering further development of DFS across borders. R13. OPC eGovt Unit Medium- term MEDIUM reforms and the e- government unit, which has a small team, enjoys the OBJECTIVE DFS2: institutional proximity to the center of government, which is critical in driving Reform the payment system infrastructure reforms. Establish shared systems and responsibilities at MDA level for the regular OPC eGovt Unit R14. Medium- term MEDIUM Ensure low cost interoperability of ATMs, POSs and mobile money, and collection of data about platform use and quality. Line Ministries R23. RBZ, ZimSwitch Short term MEDIUM encourage wider distribution of POS terminals. Strengthen the mandate and capacity of the MoICTPCS to monitor MDA R15. compliance with agreed norms and standards for digital platforms, and OPC Medium- term HIGH Review the 2 percent tax on mobile money transfers. Consider concessions/ enable it to act where necessary. R24. exemptions of the intermediary money transaction tax for small transactions ZIMRA Medium- term MEDIUM Finalize policies relating to data protection and sharing, and cybersecurity; to encourage digital payments. and ensure that the laws are up-to-date and aligned to international best Consider incorporating the mobile money operations of Mobile Network R16. MoICTPCS Medium- term MEDIUM practice and standards. For example, the policies should comply with the R25. Operators into separate entities to improve governance and avoid regulatory RBZ Medium- term HIGH SADC-level model legislation on cybersecurity and data protection. arbitrage. Strengthen the capacity of the Government Internet Service Provider (GISP) MoICTPCS Review the NPS Act in line with the SADC model law in order to strengthen to ensure that government infrastructure is sufficiently reliable and cost- the regulatory framework for e-money issuance, licensing of payment service Ministry of R17. GISP Short-term HIGH R26. Short term MEDIUM effective to incentivize MDAs to migrate their platforms onto government providers and oversight of payment systems and other financial market Finance; RBZ systems. OPC eGovt Unit infrastructures. OBJECTIVE DGP2: Revive the National Payments Council and establish a sub-committee of Increase citizens’ online access to services R27 RBZ, ZimSwitch Medium- Term MEDIUM private and public sector stakeholders. Ensure all government digital services are available via the government portal Encourage the use of payments systems to limit human interaction during as a one-stop shop by first ensuring level 1 digitization (access to information OPC eGovt Unit R18. Medium- term MEDIUM R28. economic transactions, such as remote on-boarding of new mobile accounts RBZ Short term HIGH first and services afterwards). Digitizing those services that require low MoICTPCS and transmitting social payments over mobile wallets. connectivity should be prioritized. OBJECTIVE DFS3: MoICTPCS Improve regulation and consumer protection Strengthen the reliability and functionality of the government portal to R19. GISP Medium- term MEDIUM facilitate its use. Introduce mobile financial services regulation, agent regulation, and a OPC eGovt Unit R29. risk-based approach to AML/CFT. Regulation should encourage innovation RBZ Short term MEDIUM without compromising the safety and soundness of the system. Introduce a unified financial consumer protection framework to allow for R30. effective recourse and dispute resolution mechanisms, transparency of all RBZ Medium- term MEDIUM fees and adequate deposit protection for trust accounts. 142 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 143 DIGITAL ENTREPRENEURSHIP DIGITAL SKILLS OBJECTIVE DE1: OBJECTIVE DS1: Improve the strategic and policy underpinning for digital entrepreneurship Build a technologically savvy and digitally literate work force Leverage the updating of the SME Policy currently in progress to incorporate Scale up digital skills training at the basic education level by investing in MoPSE a start-up strategy for tech, service and manufacturing start-ups. Develop R38. implementation of the ICT in Education policy, as well as full implementation Short-term HIGH R31. MWACSME Short-term MEDIUM MoFED a clear implementation matrix and results framework with joint ownership of the updated curriculum. between the public and private sector for implementation and monitoring. Implement curriculum and pedagogical reforms in the post-secondary sector R39. MHTEISTD Short-term HIGH OBJECTIVE DE2: to meet current and future skills demand. Engage entrepreneurs as solution-providers MoPSE Open the Smart Zimbabwe 2030 Master Plan to ideas from the Introduce equity-based targeting of digital skills training to ensure that rural R40. MHTEISTD Medium-term MEDIUM entrepreneurship community as to what needs to be put in place to realize people, particularly the rural youth, benefit equally from such programs. the government’s vision for smart government, smart agriculture, smart MICTPCS, MYSAR R32. Short-term HIGH health, smart trade and commerce, smart education, smart transport and MWACSME OBJECTIVE DS2: smart cities. Identify which Cabinet committee should champion the digital Improve the supply of digitally literate teachers at basic and post-secondary levels innovation and entrepreneurship agenda. Share the vision of the university-based innovation hubs with the private Reform teacher education to integrate digital literacy as part of the pre- service curriculum while focusing on continuous professional development of MHTEISTD R33. innovation and entrepreneurship hubs to explore areas for potential MHTESTD Short-term MEDIUM R41. Short-term MEDIUM partnership. in-service teachers to build their competency in facilitating basic digital skills MoPSE training. Share the lessons from the ICT Innovation Fund and the aspirations for the National Venture Capital Fund with the early-stage investment community Improve the qualifications of academics in the STEM areas for post-secondary R42. MHTEISTD Short-term MEDIUM in Zimbabwe and the region. Explore how public sector finance could be MICTPCS, education. R34. Short-term MEDIUM structured such that private finance is likely to follow. Explore partnerships MWACSME with private entrepreneurship hubs to support start-ups with viable business OBJECTIVE DS3: proposals. Improve the regulatory environment OBJECTIVE DE3: Establish a multi stakeholder coordinating group for digital skills training MHTEISTD Improve regulatory environment promotion by bringing together relevant government departments, tertiary R43. institutions, private sector, social partners, and non-profit organizations, MoPSE Short-term HIGH POTRAZ, among others, which have an interest in tackling the lack of digital skills in MoICTPCS Initiate a regulatory review of public procurement regulations for entering Competitions Zimbabwe. into joint ventures with foreign firms. Joint ventures with larger enterprises and Tariffs R35. Medium-term HIGH Strengthen the EMIS system to provide up-to-date, reliable, and transparent MHTEISTD can offer smaller enterprises an opportunity to learn and scale and can thus Commission, R44. data about the entire education system to enable better tracking of policy Medium-term MEDIUM contribute to enhancing the competitiveness of local industry. RBZ, ZIA, MoPSE implementation, inform decisions, and enhance accountability. MWACSME Reduce the regulatory burden on start-ups by accelerating implementation ZIMRA, MoFED, R36. of the reforms on starting a business and insolvency and reviewing how tax Medium-term HIGH MoJ compliance for SMEs can be streamlined. Review incentives for business angels to incentivize investments by wealthy MoFED, ZIMRA, R37. Short-term MEDIUM domestic or diaspora individuals (i.e. tax credits for investments in start-ups). ZIA, MIOC, MFA 144 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 145 Ranking** Value* Ranking** Value* Ranking** Value* Economy Zimbabwe Kenya Ghana South Africa 2016 2017 2018 Ghana 105 2.4 110 3.2 75 2.8 Kenya 64 2.9 59 3.0 64 3.0 Ranking 2016 137 1.7 64 2.9 105 2.4 53 3.0 Out of 141 countries South Africa 53 3.0 66 2.9 63 3.0 2017 130 1.8 59 3.0 110 3.2 66 2.9 Value Zimbabwe 137 1.7 130 1.8 133 1.9 1 = Worst / 7 = Best 2018 133 1.9 64 3.0 75 2.8 63 3.0 Source: Authors TABLE 5.4: EASE OF ACCESS TO VENTURE CAPITAL 146 >>> DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT DIGITAL ECONOMY FOR ZIMBABWE COUNTRY DIAGNOSTIC REPORT <<< 147 Copyright © 2021 International Bank for Reconstruction and Development / The World Bank. Some rights reserved. World Bank, 1818 H Street NW, Washington, DC 20433. Telephone: +1 202-473-1000; Internet: www.worldbank.org