Zimbabwe’s internet crackdown shows the ‘economic sabotage’ of shutdowns

Last month, Zimbabwe President Emmerson Mnangagwa’s government imposed an internet and social media blockade after widespread, violent protests erupted over an astronomical fuel price hike. The military was immediately deployed to crush the protests, and all internet-based economic activity came to a sudden halt. 

Internet shutdowns are inimical to Zimbabwe’s economic development and blackouts only do more harm to an economy desperate for recovery, industry experts and stakeholders have said.

Yet, the government says it will not hesitate to shut down the internet again should “state security” matters dictate. 

Zimbabwe continues to reel from an acute liquidity crisis accentuated by inflation, lack of market confidence in the government’s surrogate currency, chronic fuel shortages and low, foreign, direct-investment inflows.

But for many Zimbabweans, the internet and social media have become an integral part of everyday life, with young “technopreneurs” as movers and shakers across the volatile financial landscape.

The internet shutdown cumulatively cost the country $5.7 million each of the six days it was down, in direct economic costs, according to ExxAfrica Business Risk Intelligence. 

Zimbabwe’s economic conundrum reads like a script from “The Good, the Bad and the Ugly.” The World Bank expects Zimbabwe’s gross domestic product to grow by 3.7 percent this year compared to the 3.8 percent projected in June last year. And the GDP growth rate exceeds the projected growth estimate for sub-Saharan Africa, estimated at 3.4 percent. 

But with high unemployment, thousands of university graduates earn money in the informal sectors while the tech-savvy have ventured into the information technology sector. 

Zimbabwe’s ‘technopreneurs’ 

Current Zvikonyo, an entrepreneur who works at Tropical Systems Internet, a small startup and internet cafe in the small town of Chinhoyi, 65 miles west of capital Harare, said the recent internet shutdown forced them to cancel online appointments booked by clients several weeks ago. 

“We host local, and international, online business especially during this first quarter of the year as a lot of companies need to update their registration status as well as renew their licenses,” said Zvikonyo. Chinhoyi residents rely on TSI’s online services for annual company registration, license renewal and tax form requirements.

“Should this [internet shutdown] happen again in the future, we may have to connect ourselves to satellite services like VSAT, although this will be highly risky. The consequences will be unimaginable should we be caught by state machinery doing this.”

“Should this [internet shutdown] happen again in the future, we may have to connect ourselves to satellite services like VSAT, although this will be highly risky. The consequences will be unimaginable should we be caught by state machinery doing this,” he said.

“Our whole business model is premised on selling internet access at a markup to make a profit. Besides students from the nearby Chinhoyi University of Technology, most of our clients rely on Facebook and YouTube for advertisements, so during the shutdown, we were left in a very precarious position,” he said.

E-Concepts Media, Ltd., a full-service marketing and media tech company in Zimbabwe, also felt the pinch. Managing Director Liberty Chirove told The World that clients instructed his company to hold everything until the internet was restored and people were back in business and offices.

“As our business is internet-based, we couldn’t update clients’ websites and social networking sites, even our own. You can imagine the problems that the shutdown created for us with up to 70 big, regular clients locally, and in neighboring countries Zambia and South Africa waiting for services,” said Chirove, a Harare-based technopreneur.

“Technology is meant to simplify our lives. Shutting down the internet by the government meant shutting down business. As an entrepreneur, no work means no payment. We can’t really estimate the actual costs of the shutdown, but this month, we made significantly less than half compared to what we earned in the same month last year,” said Chirove.

“We believe there is no reason whatsoever to cut access to and dissemination of information in this age,” he added. 

“Technology is meant to simplify our lives. Shutting down the internet by the government meant shutting down business. As an entrepreneur, no work means no payment. We can’t really estimate the actual costs of the shutdown but this month we made significantly less than half compared to what we earned in the same month last year.”

Mobile money and the e-commerce boom 

With cash in short supply, mobile money and e-commerce also took a hit. The majority of Zimbabweans now use a mobile money platform known as EcoCash. Since its product launch in 2011, the platform has handled an estimated $4.5 billion in transactions.

EcoCash is also an integrator of various third-party services, acting as the primary gateway for payments for most people, and these parties all communicate with EcoCash via the internet. By switching it off, the government made that impossible.

The latest report released by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) acknowledged the internet as central to Zimbabwe’s economy. 

The country’s internet penetration increased by 3.5 percent from 51.9 percent recorded in the second quarter of 2018, to 55.4 percent.

Mobile internet usage shot up by 21 percent from 6,104 terabytes recorded in the second quarter of 2018, to 7,395 TB, reflecting Zimbabweans’ growing appetite for internet usage.

POTRAZ forecasts that mobile internet will continue to dominate internet usage in the country as compared to fixed internet technologies.

“Increased use of over the top [OTT] services [often less expensive social media applications] is inevitable as consumers implement personal financial austerity measures in the current economic environment. Nevertheless, this will drive data usage for the sector,” said the POTRAZ report. 

Solomon Kembo, an entrepreneur and Internet Society Zimbabwe chapter president, said the ubiquity of the mobile phone and use of electronic payment systems have contributed to Zimbabwe’s e-commerce boom. 

“With the majority of Zimbabweans affording a mobile business, they saw value in trading goods and services on the ‘valuable’ network because of the resultant critical mass. However, payment systems such as mobile money transfers, diaspora remittances, money transfer middleware [software that facilitates money transfers] and electronic banking triggered the widespread adoption of e-commerce,” Kembo told The World.

“Internet shutdowns are definitely retrogressive as they dampen economic activity and they also violate international law.” 

The Internet Society has partnered with NetBlocks to develop a tool to further assess the financial cost of shutdowns, and Kembo’s chapter will continue to utilize the Internet Governance Forum, a network of Zimbabwean stakeholders concerned with internet freedom, to engage various stakeholders on ways to deal with internet shutdowns in the future.

“Internet shutdowns are definitely retrogressive as they dampen economic activity, and they also violate international law,” said Kembo.

Internet: It’s a family affair

The internet shutdown halted most electronic remittances from Zimbabwe’s huge diaspora, who rely heavily on remittances sent by friends and relatives abroad due to the country’s prevailing economic crisis. 

Financial authorities estimate that remittances add up to $1 billion a year.

Companies like Western Union, MoneyGram and WorldRemit all depend on the internet for transactions. The shutdown meant that agents could no longer pay out cash to receivers, further aggravating dire predicaments. 

Even Zimbabwe’s rapidly growing funeral services sector were not spared. 

Daniel Siguake, assurance manager with Moonlight Funeral, said the company’s operations are all dependent on the internet, and consequently, the company could not underwrite any new business during the shutdown. 

“Not only were clients unable to make calls to us on our VOIP (Voice Over Internet Protocol) lines, which are internet-based but we were unable to assess, authorize and pay funeral assurance claims thereby disadvantaging bereaved policyholders,” he said. 

Sigauke said the company could not access funds from the bank for the payment of claims and claims requirements.

“We normally write $32,000 [Zimbabwean dollars] worth of new business per month translating to approximately $1,000 [United States dollars] lost per day for new business. We then normally bury an average of five cash clients at a cost of $3,500 USD each per day. In a nutshell, we lost $52,000 USD per day during the shutdown,” said Sigauke.

‘Economic sabotage’ 

Economist John Robertson, based in Harare, said future shutdowns will have massive repercussions across the economy because even the government itself needs internet for all payments to the revenue authority, ZIMRA. 

“This country has become totally dependent on the internet and attendant e-commerce. It would be an act of economic sabotage if it [internet] was interfered with in any way. So, we wouldn’t expect to see the government instigating actions that would be damaging to the economy,” Robertson told The World.