Government on Monday launched the much-awaited one-stop investment shop, re-profiling Zimbabwe’s business competitiveness and offloading several bureaucratic burdens from potential investors previously exposed to protracted and disjointed regulatory approvals.
The launch chalked up a second milestone for the country, as it came just over a year after the administration opened a one-stop border post at Chirundu in August last year, the first in Africa, estimated to have cut transportation costs by at least 30%.
Chirundu, shared by Zambia and Zimbabwe, is the continent’s second busiest inland port after Beitbridge.
This means in just over 12 months, Zimbabwe has taken a big step towards cutting cargo turnaround time and the time taken to open a new business.
The launch ceremony was attended by senior government officials, including President Robert Mugabe and Prime Minister Morgan Tsvangirai, diplomats, the local business community, regional economic communities, investment authorities from around Africa and the country representative of the World Bank.
Officially launching the facility, President Mugabe said government’s aim was to ease the process of doing business, making it as hassle-free as possible.
“The investor should no longer need to move from one office to the other or even be subjected to red tape,” President Mugabe said.
“We also expect the response rate to improve dramatically, for it should take a few days, not more than five to process investment applications. The resultant efficiency would certainly improve our ranking on the global Doing Business Report.”
President Mugabe said institutional reform, if complemented with the scrapping of sanctions, should see the country shooting back to a respectable position in the global league and recouping local and foreign investments.
Foreign direct investment (FDI) inflows have declined inexorably over the last seven years, from over $440 million in 2001 to an all-time low of under $10 million in 2008, recovering sluggishly under the multiple currency regime.
He said FDI, considered the only answer to the country’s current capital and low savings crises, would be aligned to indigenisation and economic empowerment legislation.
The one-stop investment shop, housed under the Zimbabwe Investment Authority (ZIA), has brought key regulatory authorities under one roof, namely ZIA, the registrar of companies, the Deeds Office, the Reserve Bank of Zimbabwe, Mines ministry, the Environmental Management Agency, the Immigration Control Department, Local Government and Zesa, among others.
The institution, is primed to cut the time taken to start a business to five days from nearly 100 and hoist Zimbabwe from the dregs of the world.
“I know the aspiration is 96 days to five days. I am not satisfied, what about 24hrs?”President Mugabe asked, expressing confidence the one-stop investment shop would be a panacea to Zimbabwe’s adverse ranking.
In the 2011 Doing Business Report, the World Bank and the Iinternational Finance Corporation downgraded the country one step to 157 out of the 183 economies, implying the local environment for doing business had not improved or the country was lagging behind others in terms of reforms.
The report, produced every year to keep track of business reforms across the world, researches business laws and regulations in over 183 economies between May and June the following year and benchmarks 10 variables that promote or inhibit economic growth, ranking countries according to their performance on the indicators.
Widely considered a proxy for economic competitiveness, the Ease of Doing Business Index reviews regulations relating to starting a business (corporate law), registering property (real estate law), employing workers (employment law), protecting investors (corporate law), getting credit (collateral law), enforcing contracts (commercial litigation), closing a business (bankruptcy) and trading across borders (trade law).
The Africa manager for the World Bank’s Investment Climate Advisory Services David Bridgman observed that Zimbabwe’s regulations dealing with licensing new businesses, construction permits, trading across borders and closing a business were overly onerous.
He observed that starting a business in Zimbabwe was “lengthy and costly”, with the process taking up to 96 days and costing as much as 500% of the country’s per capita income, currently estimated at around $260.
This is against a global benchmark of one day and zero cost, respectively. The variable is especially critical given Zimbabwe’s high level of economic informality. Bridgeman also noted that building a warehouse in Harare was a cumbersome, protracted and expensive process, taking as long as four years and fleecing an estimated 24,470% of income per capita.
“Trading across borders is also lengthy and costly because of customs bureaucracy,” Bridgman observed, stating importers were required to complete nine documents and wait up to 73 days to receive the consignments.
World Bank Zimbabwe operations officer Samuel Taffesse said the multilateral lender would provide technical and advisory support to the new baby.
“We support the one-stop investment shop, but it’s not by itself an end,” Taffesse said.
“It is a process towards improving the country among other comparable countries in terms of ease of doing business.”
So far, the country has eased business start-up by slashing registration fees and expediting name searching and company registration.