Tariff increases unsettle Zimbabwe telecommunications firms

Zim telcos
feel rattled

Tariff increases will
have an impact.


Monday, Nov 11th

Telecoms could be a major revenue generator for Zimbabwe

Telecoms could be a major revenue generator for Zimbabwe

Around US$412.50-million in tax revenues from telecoms per year are at stake for the tax authorities says Suzette Plantema, Zimbabwe-based communications consultant and author.

The Zimbabwean government is currently looking at raising revenue by tackling telecoms fraud. With its economy on the verge of collapse, this could be a smart move. As a continent Africa is becoming increasingly digitised and the telecoms sector is a digital ecosystem in itself. For most countries, telecoms represents not only a leading industry, but also a major tax contributor.

However this lucrative sector requires better regulation and oversight.

While telecoms has evolved rapidly and transformed into an increasingly complex digital ecosystem, most governments and regulators have continued to rely on a self-declaratory regime to oversee it and enforce regulatory and tax compliance. As a result, the information and statements have the potential to be biased and potentially incomplete̶ - failing to provide accurate and comprehensive data to boost tax performance, control fraud, and improve overall compliance.

The market segment of international interconnectivity is only one of many examples of compliance issues like these. Each year, billions of dollars in fees and taxes across the world are lost through the illegal termination of international calls that bypass the international gateways of licensed operators.

These illegal international calls are fraudulently terminated as local calls using SIM boxes, PBX, and Internet-based methods. Telecoms operators attempt to cope with this grey telephony area individually, some with more success than others, but with limited results overall.

There is a critical need for traceability and visibility in the mobile environment of any country. In countries that lack sufficient means to control the mobile device, revenue or traffic landscape, grey markets tend to grow rapidly. In the case of mobile devices, these illegal markets are driven by parallel import and distribution channels for irregular activities carried out by companies with no connection whatsoever to the official producers and providers.

Digital tools for telecoms regulations are, therefore, vital to provide the Zimbabwean regulator with additional device and SIM information which may be related to these grey markets. Information on devices processed by these tools can also form part of the investigations related to other types of fraudulent activities (e.g, to identify equipment used to commit fraudulent bypass activities in international calls).

Overall, in Zimbabwe, around US$412.50-million in tax revenues from telecoms per year are at stake for the tax authorities. More precisely, the Zimbabwean authorities face huge issues of potential tax avoidance. Situations like these prompted the government to engage in a vast tax collection campaign in order to improve its revenues.

At the same time, Zimbabwe's Central Bank has frozen the mobile money cash-in and cash-out functionalities, under the assumption that these functions are being abused, thus compromising the national payment system. The current scenario also calls for solutions aimed at identifying and reporting the abuses within this highly strategic sector.

While telecoms have evolved rapidly transforming into an increasingly complex digital environment, most governments and regulators have continued to rely on a self-declaratory regime to oversee them and enforce regulatory and tax compliance.

In this context, nobody has the real picture, not even the telecoms operators themselves. Even industry reports are based largely on surveys and subjective self-assessments rather than on objective measurements. While the information may be fairly reliable in some cases, it is not actionable for regulatory bodies and it by no means guarantees the comprehensive collection of taxes and other levies.

For instance, many telecoms operators already have Equipment Identity Registers (EIRs) which they use for their own individual purposes. However, they do not share any information about devices or networks with other operators to ensure that non-compliant and illegal devices are duly identified and blocked in all the networks of your country.

For this reason, only a collaborative and centralised solution would enable the Zimbabwean regulator, as well as any other regulators or authorities to collect information related to devices, revenue, traffic or any other relevant parameter over all networks and send it to centralised data bases.

* By Suzette Plantema, Zimbabwe-based communications consultant and author.

About the author

Suzette Plantema is a retired communication specialist and has a lively interest in the world around her¬ - she has been a passionate writer for almost 30 years. She speaks several languages, has worked for several blue-chip companies, has BA Honours degrees in English and French as well as a mini MBA and a Certificate in French Language and Literature from the University of Aix-Marseilles, France.

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