Doing business in Zimbabwe cumbersome

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STARTING a business in Zimbabwe requires nine procedures, takes 90 days and costs 107 percent of per capita income.
Comparatively, in South Africa it only takes 19 days to start a business and costs only 0,3 percent of per capita income.
A standard container of goods from Zimbabwe requires eight documents, takes 53 days and costs US$3 280.
Importing the same container of goods requires nine documents, takes 73 days and costs US$5 101.
While it takes the same number of documents, it only takes 31 days and costs US$1 960 to export in the rest of Sub-Saharan Africa.
It is against this background that the Ministry of Industry and Commerce has set up an advisory committee which will examine the ease and cost of doing business in the country.
In a press briefing held in the capital last week, the Minister of Industry and Commerce, Mike Bimha said that the committee will analyse the business environment sphere of the country and offer recommendations to the ministry.
“The committee will analyse reports, studies and other available relevant data in order to provide a specific approach and measures required to improve the status quo in line with doing business in the country,” said Bimha.
“The committee will also require inputs from both Government and the private sector in order to improve the situation of the ease and cost of doing business in Zimbabwe.”
The committee will be chaired by Maureen Chitehwe who is a legal practitioner.
Other committee members include Brian Kagondo from Ariston Holdings, Adam Molai from Savanna Tobacco, Betty Nhachi a quality expert and engineer, Clifford Chiteya from CZI, Osbourne Majuru from Masawara Holdings.
Minister Bimha also launched an advisory committee on imports in line with goods entering Zimbabwe.
The mandate of the committee as said by Minister Bimha is to offer recommendations that will reduce dependency on non-essential imports and the proliferation of sub-standard goods into the country.
“There has been an outcry in terms of cheap products coming into the country at the expense of local manufacturers,” said Bimha.
“As a ministry we have begun to tackle this by recalling old trade certificates and introducing new ones with better security features.”
The committee will be chaired by Mr Mike Nyabadza who is the chairman of Anchor Holdings.
Other committee members include Tracy Mutinhiri who is the managing director (MD) of Lyons, James Maphosa, Eve Gadzikwa from Standards Association of Zimbabwe and Busiso Moyo from United Refineries in Bulawayo.
Both committees are expected to offer recommendations by end of next month.
According to the 2013 World Bank report on Doing Business Indicators, Zimbabwe was ranked 172 out of 183 countries.
The report on doing business provides an aggregate ranking on the ease of doing business based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size businesses through their life cycle.
The rankings are calculated based on considerations on starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, taxation, trading across borders, enforcing contracts and resolving insolvency.
In Zimbabwe it requires six procedures, takes 125 days and costs 5 305,5 percent of per capital income to get electricity connection in the country.
Dealing with construction permits is another challenge faced by the country.
It requires 12 procedures and 614 days to deal with construction permits in Zimbabwe.
In the report, Zimbabwe’s placement at the bottom with regards to operating a business is also blamed on the clarity of the Indigenisation and Empowerment policy which calls for a 51/49 percent stake for Government and foreign investors respectively.
At the Independence celebrations in April, President Mugabe expressed concern over how people misunderstood and how the Western media inaccurately reported on the country’s Indigenisation policy, presenting it as draconian and unattractive for foreign investment.
“In the implementation of the indigenisation programme, there has been some confusion,” he said.
“We have said where the companies have been established mainly on the basis of natural resources, mining, agriculture, manufacturing, we demand that Zimbabwe either through Government or through our people should have 51 percent and not less than 51 percent.
“But if a company establishes itself and is getting raw materials from outside and the raw materials are not from here in Zimbabwe, take the case of aluminium, we don’t have raw materials of it; if the raw materials come let’s say from Tanzania, which has it, and the company establishes itself here in Willowvale, we cannot demand 51 percent, we can negotiate with the company on what percent we shall have.”
Despite the woes, however, the country has attractive offers for investors.
Investors have hailed the country for having an abundant workforce which is skilled and hardworking in comparison to other nations on the continent.
Its tax structure is also attractive contrary to popular misconception.
An investor is only taxed 25 percent of their income after five years of operation in the country.
The country is in the process of establishing Special Economic Zones (SEZs) as a way of attracting investors.
The SEZs are defined as geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements and systems that are often different from those that apply to the rest of the country.
Through SEZs, investors will be exempted from the Indigenisation and Empowerment law.
They will enjoy 100 percent tax holiday and free industrial land for a certain period of time.

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