Simpler business setup vital for economic growth

HARARE - While the words economic empowerment and development have been thrown around over the past decade-plus, it seems the focus has been on somewhat exciting and novel initiatives as opposed to reviewing the inefficiencies and bottlenecks in the current system.

Most of these models are incompatible with the 21st Century and thus continue to stifle the creation of new businesses and exploitation of the vast opportunities in Zimbabwe.

This has been evidenced, of late, by the inability of the country to attract investment into the critical areas of the economy as well as the continued closure of Zimbabwean businesses over the last three years.

This situation has culminated with what has now been termed the “vendors phenomenon” where the majority of Zimbabwe’s able and creative population has been forced divert their energies into “unsanctioned” economic activity, operating illegal taxis and selling everything from cell phone accessories, rat and cockroach poison, bananas and tomatoes to second hand clothes on the streets.

It is estimated that 80 percent of vendors in Harare are between the ages of 18 and 50.

Harare’s Central Business District has now been overrun by not only vendors but also “the mushikashika” — the new modes of urban transportation (Small Japanese sedans and station wagons designed to carry four passengers but now illegally shuttle up to seven or eight people!) from the Fourth Street to Copacabana and Market Square kombi ranks.

This chaos along with the usual concerns of perennial water and electricity shortages has become the norm.

As the current situation continues to spiral out of control, usual service delivery which includes safe reliable modern transportation or even a subway system in a well-organised clean garden city akin to Singapore seems more of a dream not be realised any time soon — at least in our lifetime.

The solutions to Zimbabwe’s issues are quite straightforward. Politics aside, the nation needs a reviewed national strategy that includes a set of rules that make starting and running a business simple for anyone, whether Zimbabwean or not. We cannot say we want investment on one hand and on the other expect businesspeople to come to Zimbabwe and wait for three to four weeks before their business is set up when it can be done simpler elsewhere. After all, Zimbabwe is not the only place in the world where opportunities exist!

The world has become smaller and investors and money can move easily across regions and settle where the rules suit them best.

One of the first indicators to any businessperson wanting to invest in a country looks at is the state of local businesses as well as the ease at which Zimbabweans set up businesses in their own country.  We cannot think it is possible to attract investment if our businesses at home are dying and the processes to register a business, pay tax and open a bank account are prohibitive for Zimbabweans.

There needs to be greater effort to grow existing Zimbabwean businesses and a simpler platform to create new ones. The rules need to be plain at best, doing away with stale and mundane requirements such as “proof of residence” and cutting the number of steps and time in the business setup process.

Rwanda is a shining example of progress in this area. In 2015 the country ranked as the third easiest place to do business in Africa according to the World Bank’s Ease of Doing Business report.

It takes anywhere from 24 hours to a maximum of three days to set up a business, with a company bank account being opened instantly with minimum paper work and registration with the Rwanda Revenue Authority and a Tax Identification Number being awarded within 30 minutes.

Rwanda also ranks 4th in the world on the ability of businesses in Rwanda to access credit.

A conducive business environment is therefore vital not only to attract Foreign Direct Investment, but also to grow Zimbabwean businesses.

The regulations we set need to be clear and in line with world standards accentuating our ability to compete on a global scale not an African scale.

    Comments (1)

    well said, my brethren! if the ministers and other people of influence would responsible would read this! our business systems are archaic, really. There is need to reform them.it is sad that we are worlds apart with such small emerging countries as rwanda. your keen observation is invaluable. it is the thin dividing line between recovery and siding deeper into a quagmire that the country is in.

    edika - 22 July 2015

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