Digital Transformation a Key Enabler of Long-Term Resilient Growth in Zimbabwe
Strategic investments in the foundational elements of a digital economy is central for Zimbabwe to keep pace and avoid being left behind in a rapidly changing global economy, according to the new Zimbabwe Digital Economy Diagnostic.
As the COVID-19 crisis underscores the importance of digitally enabling every citizen, business, and government and ensuring universal access to services, the Digital Economy for Zimbabwe Country Diagnostic Report recognizes the country’s advances the good foundation upon which digital skills could be leveraged. However, the report notes, the country is only capturing a fraction of its economic growth potential.
“To truly reap the digital dividends, the new digital economy in Zimbabwe needs to be inclusive to ensure that anyone – regardless of age, gender, income, or geographic location – has the ability to access digital tools and services,” said Jana Kunicova, World Bank Task Team Leader and lead author of the report.
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—digital infrastructure, digital government platforms, digital financial services, digital skills, and digital entrepreneurship—are at various stages of development in Zimbabwe, requiring investments in policy and regulation as well as capital.
Report findings include:
- Digital infrastructure is one of Zimbabwe’s relative strengths, but regulatory roadblocks and macroeconomic conditions hamper its growth. Zimbabwe’s international connectivity infrastructure is relatively well-developed with fiber connecting major cities and urban areas. However, large gaps remain in rural areas.
- Digital government platforms using modern GovTech tools can become a potential growth area for Zimbabwe if coordination and interoperability improvements are given priority. 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. Aging infrastructure and insufficient resourcing, combined with overall macroeconomic distress, electricity, and connectivity issues, are major bottlenecks.
- 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. The government uses digital money almost exclusively. However, there is still no interoperability among mobile money operators and the cost of transactions is high. The usage of internet banking in rural communities is low due to limited internet coverage.
- Digital entrepreneurship is a nascent yet growing area in Zimbabwe, conditional on key regulatory reforms, improved coordination with the private sector, and at least some macroeconomic stabilization. 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.
- 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. The rapid pace of innovation, together with a supply side failure to deliver the required digital skills, means that many businesses, service providers, and organizations struggle to obtain employees with the right skills to harness technological opportunities. Serious investment by government and related players will be needed in basic and post-secondary education with a special focus on digital skills development.
The report concludes that to move the digital economy forward, 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. Much work remains to be done both on fixing the macroeconomic fundamentals, and yet these also create an opportunity for leapfrogging and incentive for further innovation, just as the case of digital financial services illustrates.