Digital infrastructure is one of Zimbabwe’s relative strengths, but regulatory roadblocks and macroeconomic conditions hamper its growth, a World Bank survey finding titled, Digital Economy for Zimbabwe Country Diagnostic Report has noted.
Compared to its regional peers, the reported noted that Zimbabwe’s international connectivity infrastructure is relatively well-developed with fiber connecting major cities and urban areas.
The report recognizes the country’s advances and the good foundation upon which digital skills could be leveraged.
As part of the World Bank’s Digital Economy for Africa Initiative, the diagnostic identifies five foundational digital elements that can create the building blocks for unlocking digital transformation in Zimbabwe that can determine the country’s ability to build a robust digital economy.
These elements are—digital infrastructure, digital government platforms, digital financial services, digital skills, and digital entrepreneurship.
“Digital financial services are the strongest foundation for the further development of the digital economy in Zimbabwe, even at a time of macroeconomic woes. The country has a well-developed payment system, where 96% of all transactions in the country are through digital means and only 4% are cash-based,” reads the report.
The emergence of mobile money platforms such as Ecocash, Telecash and One Money during the past decade has been a game-changer and put the country’s payment systems among Africa’s most advanced.
Zimbabwe has about 7.1 million mobile wallet holders in a country of less than 15 million.
“Zimbabwe has a good foundation upon which digital skills could be leveraged, if training for both teachers and students is scaled up, and coordination and data flows improved,”
“There is potential to create strong digital government, since 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,” the report stated.
However a combination of regulatory bottlenecks, high taxation of digital platforms and lack of affordability of digital tools among other challenges possess threats to the advancement of an inclusive and efficient digital economy.
The report recommends strategic investments in digital skills and infrastructure.
“Zimbabwe needs to make regulatory improvements as well as investments in four interconnected areas across all pillars: policy and regulatory framework, resource management and coordination, governance, and capacity building,”
“Zimbabwe has good potential for the development of digital entrepreneurship, yet challenges abound, including limited access to market data, limited access to start-up capital, and a complex tax regime for entrepreneurs,” the report noted.
In 2018, Zimbabwe introduced a 2 percent tax on all electronic transactions which still exist today but however increased the cost of digital payments comparable to traditional cash payments.
Aging infrastructure and insufficient resourcing combined with overall macroeconomic distress, electricity, and connectivity issues, are major bottlenecks.