By Gracious Madondo
Zimbabwe is accelerating the ease of doing business to attract more foreign direct investments and stimulate local entities to contribute towards the development of the country’s economy.
Since the coming of the new political dispensation led by President Emmerson Mnangagwa, the Government has implemented various reform measures with the objective of improving the operating environment to enable companies to provide quality services to the people and create value for money in the country.
In his inauguration speech, President Mnangagwa said the Government was working on improving the ease of doing business in the country through rationalisation and cost measures in a bid to safeguard the country’s economic agenda.
“Internally, we will speed up the efforts to improve the ease of doing business and economic competitiveness. Measures will be put in place to promote domestic savings in support of the national development agenda,” said President Mnangagwa.
Mnangagwa’s serious intent in creating a conducive environment for business is encapsulated in an “Investment Guidelines and Opportunities in Zimbabwe” handbook which he recently unveiled.
The handbook clearly shows that the Government is geared towards a new economic order through a clear investment policy and action plan.
The handbook has clear guidelines on establishing greenfield investments, investing in the money market, the Zimbabwe Stock Exchange, Special Economic Zones and has provisions of external loans.
The aim of the Government as encapsulated in the handbook is to provide an efficient, effective and transparent system for attracting and carrying out investment, including giving guidelines on how one can invest in different sectors of the country’s economy.
The report states that Zimbabwe is in the process of implementing Special Economic Zones Act (SEZs) which prioritise a few selected sectors.
“The Government is in the process of implementing Special Economic Zones (SEZs) which focuses towards value addition and exports generation and the prioritized sectors include agriculture, manufacturing, mining, tourism, services and information communication technology (ICT),” read the report.
The report prioritises mining, tourism, ICT and manufacturing as areas of key investment ventures.
In the mining sector, foreign investors are free to invest in mining and to own 100 percent shareholding for mining operations in all other minerals except for platinum and diamonds which the foreign investor is expected to jointly own with the Government on a 49 to 51 percent basis in favour of the government.
Zimbabwe guarantees investment security to all investors in line with international protection agreements.
Although the World Bank Group Flagship Report titled, “Doing Business 2018 – Reforming to Create Jobs; Economic profile on Zimbabwe,” places Zimbabwe’s business environment at number 159 out of 190 economies from around the globe, a lot seem to have changed.
Whereas investors used to spend months to register and start operating a business, it now takes only two days to legally start a business and operate a company.
The procedure to legally register a company is complete once the final document is received with no prior contact with officials needed.
The World Bank report acknowledges the fact that the Zimbabwe Government has put in place incentives to attract foreign investment in mining, infrastructural development, energy, water, education, agriculture, transport, and the banking and financial services, among other sectors.
Mauritius tops the World Bank list of African countries with favourable business environment and is at number 25 world-wide.
Mauritius is ranked 24 places higher this year from number 49 in the 2017 Doing Business Report.
The country has improved its business environment in eight particular areas of business creation, obtaining a building permit, connecting to electricity, transfer of ownership, and payment of taxes, cross-border trading, enforcing contracts and resolving inconveniences.
The report also shows that Mauritius is the easiest country to do business in because it is easier to obtain a building permit in Africa and is ranked 9 in the world.
Second in the SADC region is Botswana.
The Doing Business Report indicates that Botswana’s status has, however, lowered compared to the 2017 Doing Business Report because of the lack of interest in investment in the diamond industry.
Botswana's foreign direct investment comes mainly from the Southern African Customs Union (SACU) and European Free Trade Association as well as Canada and Zimbabwe.
Ranked third after Botswana is South Africa.
The South African government is attracting foreign investors by providing them with various facilities to do business, especially in the tourism sector.
In protecting minority investors, the report indicates that South Africa is ranked 24 in the world making it the perfect destination for international investors in the SADC region.
The 2018 report ranks Zambia at number four in the SADC region as one of the world’s top 10 economies with the most notable improvements because of its newly implemented three regulatory reforms, the Moveable Property Tax Act, unified collateral registry and reduced tax of transferring property.
At number five after Zambia is Seychelles.
The report indicates that removal of administrative barriers and offering a variety of economic incentives, the Zambian government created an inductive environment for investment.
Seychelles’ most dynamic sectors that make the country attractive and conducive for business are tourism, agriculture, financial services, energy, fisheries and telecommunications.
The Ease of Doing Business is an annual ranking by the World Bank Group of how the regulatory environment of a country is conducive to business operations and protection to property rights.
Many economists are convinced that President Mnangagwa is pursuing the right trajectory, particularly his zest in wanting to turn Zimbabwe into a middle income economy by 2030. They say it is a matter of time before Zimbabwe starts being the most favoured investment destination in the region.
Renowned political and economic analyst, Dr Davison Gomo, said promoting the ease of doing business in the country is key in reviving the economy.
“Promoting the ease of doing business is central in getting any economy to work. It is the basis of any business venture and in the case of Zimbabwe it is what is key at the moment in order to make the country more attractive to investors and rebuild the country’s economy under the new economic development agenda,” Gomo said.
Gomo said there is need for the country to make sure that the civil service is working properly to make the opening of business as easy as possible.
“To ensure the ease of doing business initiative is fully applied, there is need for reforms and these reforms should be tried and tested. The mind-set and working culture of the civil services need to be changed to ensure the flow of positive business energy right from registering a business to the industry,” Gomo said.
Gomo said dealing with practical issues such as registration processes and taxes is critical in ensuring the ease of doing business in the country.
World Bank Ease of Doing Business Index (SADC Region)
3 South Africa