eBusiness Weekly
Tawanda Musarurwa
With the Zimbabwean Government soon to compel local telecommunications operators to ensure interoperability across the telecoms systems, Business Weekly looks into why it has taken so long.
Government this week announced that it will, if the interoperability status quo prevails, directly intervene in the local telecoms sector.
“We have noted with concern that whilst it is possible to send money to an unregistered customer on another network, the Unstructured Supplementary Service Data (USSD) platforms for operators are not yet fully integrated hence wallet to wallet funds transfer have not yet been integrated.
“The lack of interoperability of the mobile money platforms of the networks is a major barrier to effective competition and stalls further progress in the development of mobile money services.
“In the event that there is not interoperability across all networks by the set date of 1 April 2018, the Government will take the appropriate measures to enhance compliance,” said the Ministry of Information and Communication Technology and Cybersecurity.
First things first, what is interoperability?
A basic conceptualization of interoperability refers to the ability of a computer system to run application programs from different vendors, and to interact with other computers across local or wide-area networks regardless of their physical architecture.
According to the International Telecommunication Union (ITU), interoperability can refer to the condition achieved among communications-electronics systems or items of communications-electronics equipment when information or services can be exchanged directly and satisfactorily between them and/or their users.
Interoperability (or the lack thereof) in respect of Zimbabwe’s telecommunications sector has compromised the enhancement of financial inclusion in the country insofar as mobile money transfers have become significant as a payment platform.
This explains why Government is bent on stepping in at policy and/or regulatory level to compel mobile financial service (MFS) providers to adopt full interoperability.
Zimbabwe’s main MFS providers include Econet’s EcoCash, NetOne’s OneWallet, Telecel Zimbabwe’s TeleCash.
There is also the GetBucks mobile application developed by financial service firm Brainworks Capital.
But the level of interoperability, especially between the first three, is incongruent at best and at the expense of customers who have had to cope with inefficient services and higher prices for such services.
The country’s telecoms regulator, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) has since said it aspires for full-fledged interoperability whereby all platforms are interconnected across mobile money network providers and the various financial institutions.
However, currently registered users at participating MFS providers are not able to receive and send money directly to one another’s wallets.
The main problem is that under prevailing market conditions, the small actors (among MFS providers) do not command enough market power to take on those that have a market lead.
This in itself justifies the need for intervention at policy and regulatory level.
Currently several middle paths are available, such as temporary periods of exclusivity or requiring interoperability ex-ante in the regulation but not enforcing it until the market had matured.
But the question is: How long should regulators wait and how can they enforce it if the market keeps dragging its feet?
Experts are of the opinion that effectively interoperable systems can facilitate financial inclusion by allowing customers to use the infrastructure of multiple service providers to access their accounts.
But first-mover MFS providers are typically resistant to interoperate their systems without significantly re-couping the substantial investments they have made into developing services and related infrastructure.
The prevailing situation in the local telecoms sector is one whereby the mobile service provider(s) with significant market power in the provision of mobile financial services market having no real incentive to interoperate.
And interesting are EcoCash general manager Mrs Natalie Jabangwe-Morris’ comments made at a Digital Payments Conference in 2016 in Harare:
“It takes a lot to be able to grow a mobile money payments business. When you talk about over 6 million customers registered, up to 70 percent of Zimbabwe’s adult population. 47 percent of Zimbabwe’s gross domestic product (GDP) moved on EcoCash.
“It is a result of millions and millions of investment in the distribution network. Of course there will come a time when it will be inevitable for that distribution network to be shared but I think we must appreciate that a lot has gone into building that distribution network. Over 50 million dollars has gone into building the distribution network.”
So, there appears to be clear resistance to interoperability within the local telecoms sector.
But how is the situation elsewhere in Africa?
Well, Kenya is apparently the quintessential leader in the mobile money transfer sphere.
As ‘early’ as 2007, Kenyan telecoms operator Safaricom launched its mobile money service M-Pesa, and today M-Pesa is recognised as the world’s most effective money transfer platform.
But considering that Safaricom’s M-Pesa and Airtel Money last month undertook a pilot of mobile money interoperability in Kenya ahead of a cautious launch of the cross-network service countrywide this March the inevitability of mobile interoperability even in a country like in Kenya is not so clear-cut.
Maybe, just maybe, the Zimbabwean Government is right on coercing local MFS providers to be that little bit more connected.
