The Zimbabwean business environment continues to weaken with an ever-unpredictable rising cost structure as production inputs are always on the rise with weekly fuel price increases leading the charge, load shedding crippling production and unstable exchange rates worsening the situation.
Businesses across various industries are failing to keep up with these ever increasing costs, hence passing the button to the customers by continuously pushing up prices to maintain the profit margins has become the norm.
The latest fuel price review by ZERA, hiking petrol of 27, 5% from ZWL 11. 76 to ZWL14, 97 per litre and that of diesel by 20, 7% from ZWL 12,42 to ZWL 15, 64 has once again punched the wind out of the business community’s lungs. Speculation confirms that we shall see the price of a litre going up beyond $20 by end of this month.
With less than 6 hours of electricity provision per day, most businesses are running using generators which consume the expensive and not so easy to get fuel. Network base stations that keep the entire telecoms ecosystem up and running are now fuel powered with each consuming over 100 litres per day. This puts pressure on the cost of running a network thus creating a whirlwind of price increases so as to sustain the business, as fuel is guzzling a significant proportion of their budgets. The telecommunication industry has been affected by all these inputs of production which are exchange rates to procure equipment, fuel to run base stations and ZESA unavailability and the recent tariff increase acerbates the situation.
Faced with all these insurmountable challenges and unfriendly environment, business sustainability will hinge on price changes to cushion their costs allowing businesses to break even.
Most businesses are now pinned on survival over profits. Other business objectives such as growth and expansion are now difficult to chase as the market’s disposable income is ever eroded by the hyper-inflationary environment (currently pegged at 390%) they are reeling under.
Telecoms customer pocket share has been reduced drastically leaving them with less active daily or monthly customers plunging the entire operator and industry’s revenue streams into turmoil.