ICT Africa Headline News

A Case for CTC Investigation Into Econet

19 June, 2014

Source: Financial Gazette

ONE of the issues giving educational authorities sleepless nights across the globe is that of bullying. Victims of bullying are known to suffer poor self-esteem, depression, anxiety about going to school and even battling suicidal thoughts. Bullying is a huge problem in the United States where statistics show that one in four kids is bullied on a regular basis. While Zimbabwe has no data on its prevalence, bullying is quite common in some of the local schools. But an important point to be made is that it is not confined to schools alone.

There are cases worldwide where small companies have been pushed out of business because of restrictive and unfair practices; which I want to argue to be a different form of bullying that is neither physical nor verbal. It is precisely for this reason that most countries are moving towards ridding industries/commerce of those things that make the playing field uneven. Uncompetitive behaviours and monopolistic practices are therefore being considered to be an anathema deserving to be rooted out at the slightest hint.

Indications, from reports published elsewhere last week, are that not many people are happy with the way Econet is throwing its weight around. One sector that has not hidden its displeasure over what appears to be a case of bullying is banking.Banks have been up in arms with Econet, accusing it of not giving them neutral access to its subscribers via regular Unstructured Supplementary Service Data (USSD), which links them to Econet's computers.

The basis of their argument is that Econet is charging more for USSD traffic, which enables subscribers of the telecommunications giant's EcoCash mobile phone service to transfer money using the banks' systems to other mobile subscribers. Another war of words involving Econet which had ensued, and thank God it ended, was to do with the signing up of mobile money transfer agents.

Telecel, a direct competitor of Econet, had to drag regulatory authorities to deal with what it saw as sabotage of its efforts to sign up agents for Telecash, leveraging on Econet's already established agent network. The Reserve Bank of Zimbabwe had to wade in to resolve the dispute. With the growth enjoyed by Econet since its establishment in 1998 and how it is spreading its tentacles into every economic sector, there is a real danger that Econet might wipe out competition wherever it goes.

Econet has invested in Mutare Bottling Company, making it a player of note in the beverages sector. It had also invested in Meikles Africa Limited, but pulled out following the fallout between Nigel Chanakira and John Moxon in 2008. If it were not for that, Econet could have gained a foothold into banking, retail and agriculture. Econet now has a bank of its own, Steward Bank, formerly TN Bank, making them a player to watch in the financial services sector. Through its by-products, Econet is also causing waves in a number of areas. Econet Solar, for instance, is keeping suppliers and manufacturers of alternative energy sources on the edge.

Liquid Telecom, Econet's response to the provision of internet services and transaction payment solutions, has reduced TelOne to a bystander. There is also no doubt that the success of Ecofarmer will impact on insurance, agriculture extension services and to some extent banks. Ecofarmer is a mobile-based weather-indexed insurance, agricultural information and trade platform, which aims to boost agricultural productivity, help cover farmers during drought periods and inform them about markets for their crops.

While these developments are great works of innovation, the possibility that Econet might end up behaving like a bull in a China shop if left unchecked is real. It is true that competition is healthy as it results in lower prices and improved products/services. But given Econet's huge financial muscle, chances are that it may push out competition without raising a sweat and create a monopoly of some sorts. And like any monopoly, the consumer could become a price taker with no influence over quality as well. Workers will lose their bargaining strength in the process with industry's capacity to create jobs and expand the revenue base declining.

With NetOne battling capitalisation challenges and Telecel stuck with its compliance issues with regards the Indigenisation Act, Econet is on the loose. One hopes that the regulatory authorities are taking note and that they will ensure that Econet does not become a bully in the market. In as much as parents and teachers can stop bullying by taking decisive action, the Competition and Tariff Commission (CTC) should not give room to any restrictive or monopolistic behaviour.

Similarly, in as much as those at the risk of being bullied can stand together to deter their tormentors, smaller players should also get organised. The fact that CTC is reported to have started probing Econet gives us confidence that the rule of the jungle will not be allowed to apply in our case.

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