An examination of regulatory costs in Zimbabwe: A barrier to business competitiveness

A March 2025 report by the National Competitiveness Commission (NCC) has highlighted the significant impact that regulatory costs are having on businesses in Zimbabwe.

Titled “Regulatory Costs in Zimbabwe,” the report meticulously outlines the various fees, levies, and charges imposed by different regulatory bodies, revealing how these costs hinder business competitiveness and place a heavy burden on companies.

The report begins by addressing land development levies enforced by Rural District Councils (RDCs). These levies, though seemingly small at USD 3 per hectare annually, can accumulate substantially for businesses with large land holdings, particularly as they apply even to non-productive land.

This creates significant financial strain on businesses, especially given the absence of corresponding benefits from the RDCs. Furthermore, the levies are not tailored to geographical and locational factors, compounding compliance challenges for industries in specific regions.

The Forestry Commission of Zimbabwe also imposes regulatory fees on the timber industry, including licenses and permits as outlined in Statutory Instrument (SI) 116 of 2002.

These include application and renewal fees for timber trader licenses, as well as forest produce movement and export permits, adding additional financial strain on businesses in this sector.

The Agriculture Marketing Authority (AMA) further burdens companies, particularly in the agricultural sector.

Under SI 147 of 2012, businesses involved in buying and contracting agricultural products are required to register annually, adhering to a variety of obligations.

For example, abattoirs must pay dual registration fees to both the AMA and the Veterinary Public Health (VPH) Department, while SI 129 of 2017 adds charges on cattle abattoirs, milk processors, and chick producers.

Similarly, the Radiation Protection Authority of Zimbabwe (RPAZ), operating under the Radiation Protection Act [Chapter 15:15] of 2004, mandates various authorizations and imposes fees for the use and possession of radiation sources, further inflating the costs of doing business.

The Environmental Management Agency (EMA) also plays a role, administering fees and penalties for industries involved in atmospheric pollution, hazardous substances, and effluent and waste disposal, which increases the regulatory burden for manufacturing firms.

Additionally, the National Social Security Authority (NSSA) levies regulatory costs under the Factories and Works Act [Chapter 14:08], requiring factories to register and obtain various certificates and licenses. Meanwhile, the Medicines Control Authority of Zimbabwe adds another layer of complexity by requiring businesses to pay numerous charges under Statutory Instrument 186 of 2012, issued under the Medicines and Allied Substances Control Act [Chapter 15:03].

The report also highlights other hidden costs, such as border fees for trucks and various retail sector licenses. The Zimbabwe National Water Authority (ZINWA) imposes charges on water usage and management, contributing further to the financial burden on businesses.

The costs associated with starting a manufacturing business are another concern raised in the report. It details the legal processes and associated fees, highlighting how these financial barriers discourage investment and business growth.

The importance of improving the business regulatory environment was underscored by His Excellency, the President of the Republic of Zimbabwe, during his address to Cabinet on February 11, 2025. The President emphasized that improving the ease of doing business is critical for economic performance. He stated that “concerted efforts must be made to revisit all the areas that hinder the start or growth of investments, whether local or foreign,” and called for a reduction in “prohibitive regulations and punitive administrative licenses and fees” to foster economic growth and improve livelihoods.

In response to these concerns, the Ministry of Finance, Economic Development, and Investment Promotion has begun reviewing taxes, with some expected to be reduced by as much as 50% within six months.

The NCC report concludes by stressing that regulatory costs are a significant contributor to fixed costs, which ultimately lead to higher prices for goods and services in Zimbabwe. These elevated prices hinder the competitiveness of Zimbabwean businesses in regional markets. Business member bodies have raised concerns that some regulatory agencies may be collecting more revenue than the national treasury, using fees as a means of funding their operations rather than facilitating business growth and economic success.

To address these challenges, the report recommends reducing regulatory fees, particularly those imposed by local authorities and regulatory agencies.

It also calls for minimizing regulatory charges on primary producers to reduce the multiplier effect on costs throughout the value chain. The report further advocates for shifting from open-ended tariffs to fixed fees with caps, as well as conducting continuous reviews of regulatory costs to ensure they remain relevant and do not unduly burden businesses or the economy.

To access the full report, visit the NCC website at https://www.ncc-zim.co.zw/.