The recent amendments to the Indigenisation and Empowerment Act and the slight adjustments on petroleum levies are massive steps to entice investors, as Zimbabwe opens up for new business. Other positives on the ease of doing business include the reduced waiting periods for permits, licenses, tax clearances and company registration time frames.
By VICTOR BHOROMA
Addressing the ease of doing business is part of transforming a composite local business climate, which may need more time and government commitment to fully develop. There is no doubt that the country has what it takes to compete with the best on the African continent or at least our Sadc peers in terms of foreign direct investment inflows.
The World Bank Report (2017) on the ease of doing business ranks Zimbabwe 159 out 190 countries. The country averaged 163 from 2008 to 2017, reaching an all-time low of 171 in 2011 and a record high of 153 in 2014 after the introduction of the multi-currency system.
The ease of doing business matters because the higher the score, the more favourable the business climate to potential investors. When investors make decisions on how to capitalise on their assets, various aspects come into play apart from the return on capital. Some of the aspects include taxation, direct production costs, exchange rates, labour laws, inflation rate, technology banking regulations and repatriation of dividends. All these aspects may not necessarily be in the purview of the government since private players and regulatory authorities also come into play.
Nonetheless, the following aspects represent the policies, which have a long term effect on the local business environment. These can be actioned now while the iron is still hot on improving government efficiency and attracting FDI.
One stop shop investment centre
Centralising all investment approvals within Zimbabwe Investment Authority (ZIA) offices is now urgent. The current process where investors move from one government office or department to the other is now old, bureaucratic and inefficient.
The one stop shop investment centre (OSSIC) provides information on all procedures to invest in Zimbabwe namely; incorporation of companies, applying for investment licences, registration of the various tax heads and fiscal incentives, work and residence permits, indigenisation clearance, environmental management certification, acquisition of land and shop licences, acquisition of mining titles and other operational permits.
Ensuring that the OSSIC is online would make Zimbabwe more accessible to a wider range of investors by a simple visit on the ZIA website or office. This will effectively reduce processing and turnaround times for permits, licences, clearance forms and registrations.
Zambia, Angola and Mozambique have moved ahead with South Africa since the turn of the century and are now attracting billions in investment yearly. Their investment figures and GDP paint the whole picture.
Electronic governance or e-governance is the application of information and communication technology for delivering government services, exchange information and communication transactions.
The Zimbabwean government has a lot to embrace from fellow African countries like Kenya, Tanzania and South Africa, where e-governance has revolutionised government processes and improved efficiency in every industry.
Government ministries should have accessible databases for entities or players in their sector for example farmers, miners, manufacturers and tourism players.
This information is vital for investors and local financiers who seek business opportunities or partnerships.
Zimbabwe is one of the largest producers of platinum, gold, diamond, nickel and other strategic minerals, but there is no information on the size of the deposits, which is usable to investors or financiers locally or internationally.
Other aspects that we are still lagging behind include; enterprise resource systems such as SAP, Pastel, online registration confirmations and online payments in government.
These systems reduce human manipulation, promote departmental co-ordination and improve efficiency, thereby, saving the government millions. Our systems are still manual, slow and prone to corruption at all levels of the government.
Tax reviews in key sectors such as petroleum, telecoms, mining and finance are pivotal in reducing production costs or enhancing product competitiveness on the export market.
The government needs to move to a volume based taxation model, so as to encourage investment, innovation and growth from private players.
For example, taxes on financial transactions (RTGS), local and international calls, duty and levies on petroleum products and royalties on mining products such as gold, nickel, chrome and platinum need to be aligned with our regional peers, who incur similar costs in production or importation from the same suppliers.
A quick survey in Sadc on all these levies will clearly have Zimbabwe on top of the table, but last on investment or capacity utilisation.
Setting up an investor’s forum
The logic behind such a forum would be to enable leadership to engage investors more frequently and get firsthand information on local investment constraints and international business trends. This input will then be used to align our investment policies and continuously improve the local business climate in a proactive manner.