GOVERNMENT should draw key lessons from Rwanda a country ranked number two after Mauritius in the ease of doing business in Africa, businesses have said.
By MTHANDAZO NYONI
Zimbabwe is ranked 159 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings, up two places from 161 reported in 2016.
Ease of doing business in Zimbabwe averaged 162,60 from 2008 to 2017, reaching an all-time low of 171 in 2011 and a record high of 153 in 2014.
The World Bank’s ease of doing business rankings measure a total of 11 indicators such as dealing with construction permits, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, labour costs among others.
Zimbabwe, according to the World Bank report, cut or simplified post-registration procedures (tax registration, social security registration, licensing) along with other countries such as the Bahamas, Brunei Darussalam, Greece, India, Iraq, Kenya, Kosovo, Madagascar, Malta, Niger, Tajikistan and Thailand.
Zimbabwe has been struggling to attract foreign direct investment, due to policy inconsistency and bottlenecks associated with doing business in the country.
In 2016, the Southern African nation received foreign direct investment totalling $319 million from $421 million in 2015.
In its feedback, following the business mission in Rwanda last month, the Zimbabwe National Chamber of Commerce (ZNCC), which had partnered Investment Access Group, said if Zimbabwe could draw key lessons on the ease of doing business from Rwanda, the situation would change.
Rwanda’s government came up with a position under Vision 2020 to bring to the fore it’s economy.
With over 72% of Rwanda’s population in agriculture, the strategy included opening Rwanda to business and linking it to the rest of the world, as it is also a member of the Commonwealth.
Among other reforms, the Rwanda Development Board (RDB) was formed in 2008, after merging eight different institutions, it said.
The vision of the RDB was to move GDP per capita from $720 to $1 200, to increase exports (currently they are experiencing a trade deficit), to advocate policy change, assess the needs and develop the labour market.
ZNCC said the merging of eight institutions was to bring all services together to reduce bottlenecks, time and bureaucracy for investors.
“Opening up a business in Rwanda takes less than six hours at zero cost and this can happen online. An after-care division was also set up to oversee the registered projects. An investor Open Day was established every Friday to interface with investors,” the industry body said.
ZNCC said manufacturing was one key area RDB was promoting, as they were on the move to narrow down the trade deficit. Overall imports were at $450 million with construction materials mainly forming the components of the imports of $202 million.
“Focus is also on labour intensive jobs, textiles and garments, agro-processing (fertilisers, cooking oil, wheat flour) and has the desire to be the regional destination for conferencing having raised $46 million last year from conferences alone,” ZNCC said.
“The country has also introduced an open visa regime and now even non-Africans can get visas on arrival.”
Association for Business in Zimbabwe chief executive officer, Victor Nyoni, weighed in, saying Zimbabwe should emulate Rwanda, particularly, when it comes to the period it takes to open a new business.
“We are in total agreement that Zimbabwe should draw key lessons on the ease of doing business from Rwanda. For instance, when one wants to open a business in Bulawayo, some licences have to be obtained from Harare. That on its own is an impediment to the ease of doing business. Surely, something should be done,” he said.
A Bulawayo-based economic analyst, Reginald Shoko said the major impediment to ease of doing in Zimbabwe was around the statutory requirements, which in some cases were duplicated unnecessarily.
“Government must utilise the information and communication technology infrastructure we have in the country to interface between ministries, statutory authorities and councils so as to create an effective and efficient service delivery system, as in these best performing countries in the ease of doing business and also it must consider scrapping other statutory fees, as an incentive for investors, as they will pay taxes when in full operation,” he said.
Rwanda is targeting 1,5 million jobs by 2022 and a 22% growth in exports annually.
Zimbabwe has been trying to reform its ease of doing business conditions to attract foreign investment, but at a snail’s pace.
For instance, in 2016, Zimbabwe launched an official website that includes a list of documents and fees required to complete a land transaction, as well as a specific time frame for delivering legally-binding documents proving property ownership.
The country made starting a business easier by eliminating the requirement to advertise applications for a business licence. Despite that, Zimbabwe was ranked 180 out of 190 in the starting of business category.
Businesses said more needed to be done for more meaningful results.