Local firms lose out on Econet's $1,2bn capex

Published: 26 May 2014

Indigenous companies have benefited little from Econet Wireless' $1,2 billion capital expenditure on procurement of network equipment because they do not have capacity to supply and meet expected quality requirements, group chief executive Mr Douglas Mboweni said.

He said this on Monday to the Parliamentary Portfolio Committee on ICT, Postal and Courier Services chaired by Kuwadzana East Member of Parliament Mr Nelson Chamisa.

This was after Zaka Central Member of Parliament Mr Paradzai Chakona asked: "You have spent $1,2 billion on infrastructure development over the past 16 years.

"How much of that has benefited local or indigenous companies?"

In response Mr Mboweni said, "Your capex, predominantly, is being spent on products and services that are manufactured outside.

"What is local is probably the labour, maintenance of diesel generators, where you can get local suppliers."

As such, he said, the majority of local companies only benefited from "small-time" jobs such as maintenance of diesel generators and fuel supply.

In response, Mr Mboweni said indigenous firms did not have capacity to supply or meet quality standards of the bulk of the telecoms equipment Econet required.

He said the bulk of the core network equipment and even simple structures such as towers were imported as local firms either lacked capacity or could not supply quality at cost-effective prices.

"These are your switches, your processors and base station controllers. They form the bulk of our network infrastructure.

"If you go to our Willovale centre you will get these processors, they are (huge) computers basically.

"None of those boxes are manufactured in Zimbabwe or anywhere near Zimbabwe, not even South Africa," he said.

"The boxes are manufactured in Sweden, Beijing and Shanghai (China). We wish we could spend locally because then we would avoid shipping duties and so forth."

There have been calls to prioritise local procurement of goods and services to improve liquidity and retain money within the country.

But Mr Mboweni said local firms had no capacity.

"The reality of the matter is that there are no local suppliers for that kind of equipment, and that is the bulk of our equipment we bring into the country," he said.

The advanced equipment, the Econet boss said, also included radio network, base stations and steel towers.

"We would get a proposal to do towers cheaper from China; same quality or probably even better quality than from local suppliers, it's a reality," said Mr Mboweni.

"So you find that there has been an issue with the capacity of local suppliers to provide even things like steel structures and I know that maybe it's because our steel industry has so many issues unsettled at this stage."

Mr Mboweni said even seemingly basic equipment such as radio network antennas had to be imported.

"You then find that the third piece, which is the transmission, dishes or fibre we were talking about, all the guys doing their fibre in this country have to import."

Mr Mboweni said local suppliers must improve on quality.

"If you turn to local suppliers to say can I get a similar generator you struggle and quite honestly the capacity our industry to support the level of quality that we are expecting at the moment is limited," he said
- The Herald

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