LIVINGSTONE MARUFU
Local companies have heightened the urgency for the government to reform the harsh business operating environment, which is seen as an impediment for them to compete in the African Continental Free Trade Area (AfCFTA).
The AfCFTA is the world’s largest free trade area by member states since the formation of the World Trade Organisation. It seeks to bring together all 55 member states of the African Union, covering a market with a population of more than 1.2 billion and a combined GDP of over US$3 trillion.
In its latest report, the Zimbabwe National Chamber of Commerce (ZNCC) said there was a need for an overhaul of the ease of doing business environment for local companies to benefit from AfCFTA and attract investors.
“The AfCFTA has taken off, international competition is beckoning, yet the country’s ease of doing business is still not conducive enough.
“Also, inflation pressures, power and foreign exchange challenges remain among the perennial challenges for the smooth running of business operations,” ZNCC said.
Recently, ZNCC conducted a state of industry and commerce survey which brought into light a number of comprehensive challenges facing business in Zimbabwe.
The survey results showed that more than 90% of respondents pointed to the limited availability of credit while 82% said the unpredictable policy landscape was hampering business.
More than 70% believed red tape in the public offices remains high.
“Relating to credit availability, Zimbabwe lacks patient capital which is needed for much needed recapitalisation and retooling.
“International lines of credit remain elusive given the country’s high sovereign risk,” ZNCC said.
ZNCC chief executive officer Christopher Mugaga told Business Times that over the few years the government has promulgated several Statutory Instruments which have had unintended destabilising effects on businesses and were done without consultations with the businesses.
“Despite the establishment of the Zimbabwe Investment Development Agency, red tape and multiple licence requirements remain major inhibitors to doing business in Zimbabwe.
“According to the survey, more reforms are needed in the licensing regime and efficiency in public service delivery,” Mugaga said.
He said there was a need to shorten the time taken to register an investment to keep pace with other African nations.
Zimbabwe is ranked 138 among 190 economies in the ease of doing business, according to the World Bank annual ratings.
The ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operation and stronger protections of property rights.
Economies with a high rank (1 to 20) have simpler and friendlier regulations for businesses.
