Key victories on economic front
But more required to improve business Corruption, bureaucracy weigh down growth
ZIMBABWE’s competitiveness has generally improved on the back of Government interventions like dismantling inefficient systems that militate against profitable business, the Zimbabwe National Competitiveness Report (2016) has revealed.
The report, which was released last week, was compiled under the auspices of the National Economic Consultative Forum.
It shows that while the country’s business environment still trails its regional peers’, there is cause for optimism.
The report recounts policy and legal reforms relating to general economic competitiveness that have been instituted since September 2015 via a Rapid Results Approach and assessed every 100 days.
The reforms include setting up a Competitiveness Commission and a National Productivity Institute, amending the Companies Act and refining the Labour Act.
This aims to reduce disproportionately high regulatory, transactional and administrative burdens on businesses.
The report benchmarks Zimbabwe with carefully selected comparator countries to determine how the country is faring.
These countries are South Africa, Kenya, Rwanda, Zambia, Botswana and Mozambique.
According to the document, Zimbabwe still needs to work on high cost of finance, policy instability, restrictive labour regulations, inadequate supply of infrastructure, an inefficient Government bureaucracy and corruption, among other inadvertent anti-business factors.
In his foreword to the report, President Mugabe says his Government is committed to improving the investment climate.
“Government has made remarkable progress with regards to implementation of the recommendations in the 2015 report. These include the setting up of a Competitiveness Commission and the National Productivity Institute which are both at an advanced stage of implementation.
“Furthermore, the Ease of Doing Business reforms that are being spearheaded under the Rapid Results Framework are also addressing some of the competitiveness challenges highlighted in the first report.
“The main objective of the Ease of Doing Business reforms is to improve the investment climate in Zimbabwe with a view to boosting both local and foreign direct investment.”
President Mugabe continues: “Institutional processes are being reviewed to improve the country’s investment climate. Issues to do with insolvency, taxation, the border challenges, construction permits and property registration procedures are being addressed under the reforms.
“In the same manner, the second report has also identified several factors that are inhibiting the country’s competitiveness, particularly focusing on the manufacturing and financial services sectors.”
The report highlights milestones such as consolidating tax payment processes, reducing time taken to make payments through various agencies, and streamlining processes across Gov- ernment ministries, departments and agencies.
Principles of more than eight pieces of legislation, by-laws and regulations, were also drafted.
The report reads in part: “In addition, the report recommended the establishment of a National Competitiveness Commission and National Productivity Institute that will assist the country in the identification of cross-cutting issues affecting the country’s competitiveness, develop the appropriate strategies for the country’s competitiveness and spearheading research related to productivity, respectively.
“In line with this recommendation, the National Incomes and Pricing Commission was converted into the National Competitiveness Commission. Pursuant to the recommendations in the 2015 Competitiveness Report, Government has also made remarkable progress with regards to implementation of Doing Business reforms which are being spearheaded by the Office of the President and Cabinet under the Rapid Results Framework.”
It also reads, “As a result of the above mentioned efforts, a number of targets were achieved in various thematic areas, for example, the number of days taken to process the requirements of starting a business were significantly reduced from 90 days to 30 days.
“Regarding construction permits, the days were reduced from 448 days to 120 days, and property registration now takes 14 days instead of the previous 36 days. Time taken to pay taxes was also reduced from 242 hours to 160 hours.
“The Government of Zimbabwe has reaffirmed its commitment to improving the country’s business and investment environment by launching the second phase of the RRI 100-day approach to the Ease of Doing Business in Zimbabwe.”
On the downside, various taxes, statutory levies and fees continue to hinder competitiveness.
Multiplicity of licences, permits and levies required by the Environmental Management Agency charges, Medicines Control Authority of Zimbabwe, National Social Security Authority, Radiation Protection Authority Zimbabwe and Health Professions Authority are also affecting businesses profitability.
“Financial market development ranking has slipped by eight ranks because of the high cost of funds, difficulty in accessing loans and unavailability of venture capital.
“The challenge of Non-Performing Loans is now under control since the setting up of Zimbabwe Asset Management Corporation. Financial inclusion has improved, with the advent of mobile banking and transfer services becoming the means of transaction payment.
“The average cost of producing electricity per unit (kWh) from the hydro and thermal power stations is high compared to comparator countries due to ageing equipment and inefficiencies in power distribution.
“Water continues to be an expensive cost driver in Zimbabwe. Zimbabwe’s fixed charges are the least competitive amongst the countries in the region and the pricing models in use continue to be not sensitive to water intensive industries.”
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