Government on Monday launched a one-stop investment shop for the country, about two years behind schedule.
Typically, the institutional reform was received with euphoria and pomp. As expected, every senior government official didn’t want to miss out; as a result, a simple launch ceremony ended up taking a whole day, and needlessly so.
No doubt, the establishment of the institution is a big milestone for local businesses now freed from red tape, and for Zimbabwe, which will now be recognised as a reforming country.
The one-stop investment centre, for the first time, integrated the operations of all regulatory authorities that deal with company registration, namely the Zimbabwe Investment Authority (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, Zesa and others.
These will now be housed under ZIA.
The net gain is that it will take just five days to get the approval of all relevant authorities in the process of registering a new business, instead of 96.
In his address, President Robert Mugabe said the institutional reform would significantly ease the process of starting business and boost the country’s competitiveness in the global league of economies.
But a representative of the World Bank, one of the world’s most important ranking institutions, was quick to throw a note of caution saying the country should not rush to take dessert too early, as the one-stop investment centre is just one in a series of steps to be taken to right the local business environment.
The multilateral lender downgraded Zimbabwe in the 2011 Doing Business Report.
Widely followed by investors worldwide, the report can be regarded as the most important determinant of the global distribution of foreign direct investment.
Of course, the World Bank was correct in its assessment. Registering a business is just one of the 10 variables surveyed.
The country still has a lot of work to do in terms of 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).
A significant jump in just one variable won’t be enough to improve the country’s rating.
For reforms to have an impact, they must always be implemented in a holistic manner.
For instance, it does the country no good to cut the duration and cost of registering a business if the same businesses are going to take forever to resolve a commercial dispute.
The Meikles Limited saga and the SMM disputes are emblematic of this. Other examples include the wrangle between the Reserve of Zimbabwe and ZABG on one side and Trust Bank and Royal Bank on the other.
These cases amply demonstrate that there is something wrong with Zimbabwe’s commercial law.
Clearly, it takes more than piecemeal institutional reforms to revamp the country’s business competitiveness profile.
But that is not to say the step taken is not significant.
The country’s high level of economic informality naturally called on government to relax company registration laws to facilitate their incorporation into the formal economy.