Zimbabwe’s political instability and the impact on business

“Zimbabwe is open for business” has been the investment charm since the coming into power of President Emmerson Mnangagwa as his administration sought to attract long lost foreign investment into the country.

Guest column:RAYNOLD MHOTSEKA

However, unfolding events at home have failed to complement the mantra.

The core-relation between business and politics has refused to pay dividends.

Zimbabwe’s economy has become a public discourse. At the heart of the economic crisis is an unstable political environment stemming from the tyrannical rule of former
President Robert Mugabe’s era right through to the new political administration, where comparisons with the former, as far as change is concerned, have failed to convince not just the international community, but also the local investors.

There is lack of confidence in the market, driven by high currency exchange rates, consumers resorting to hoarding and business viability has remained low.

Political factors are government regulations that influence business operation positively and negatively and on its downward side, they can introduce a risk factor, which cause the business to suffer losses.

Zimbabwe’s hope for a real economic turnaround hangs on the country’s ability to solve the ongoing political challenges.

Overview of Zimbabwe’s political environment
The political instability in Zimbabwe has made the business environment less friendly and this has led to the lack of foreign direct investment into the country.

Even though the new political administration has taken its “Zimbabwe is open for business” charm offensive to the international community, the political instability at
home characterised by contested election results, protests and crackdown on civilians by security agents have proved a major barrier to the country’s prospects of being an attractive investment destination.

Governments have a great deal of power over businesses and many times, there is not much that businesses can do about it.

The criticism is that Zimbabwe has become a “command economy” with government’s hand visible in almost every sector of the economy including the latest urban mass transport service.

The viability of this plan has been broadly questioned.

Lack of political stability also leads to social instability which significantly affects business operations.

This has been driven by citizens’ disapproval of government policies such as the recent protests against the fuel price increase.

Eventually, it led to looting, riots and general disorder.

Soon after the recent protests characterised by looting as well as burning and destruction of business properties, industry counted losses totalling in excess of $500 million.

Consequently, some businesses, especially the small and medium enterprises said a rebound is almost impossible unless government intervenes through capital injections.

Tax and economic policies
An increasing or decreasing rate of taxes is a good example of political component, and this directly impacts business.

Among the major highlights since coming into power of the new administration is the increase in tax money.

Following the introduction of the monetary and fiscal policies in October and November last year, government introduced a new 2% tax per every dollar transaction on all electronic transactions from the 5% tax.

Increasing tax rates without complementing it with an increase in wages impacts on the cost of living for the citizens.

This, in turn, impacts on aggregate demand for the supply of goods into the market, therefore affecting business operations.

Summary
The main goal for business is to make profit and government’s goal is to ensure economic stability and growth. Both of them are different, but inter-dependent.

For this, government and businesses should respect the channels through which they try to influence and persuade each other on various matters.

These include lobbying by business organisations and trade unions calling for industrial actions to influence government actions.

Meanwhile, government’s role is to influence business by-laws and regulations as well as trade policies.

Do you have a coronavirus story? You can email us on: news@alphamedia.co.zw


16 Comments

  1. I simply want to say I am new to blogs and really liked your page. Almost certainly I’m likely to bookmark your blog post . You certainly come with remarkable posts. Appreciate it for sharing with us your web site.

  2. Normally I don’t read post on blogs, but I would like to say that this write-up very forced me to try and do so! Your writing style has been amazed me. Thanks, quite nice article.

  3. Everything you need to know about News in a great way.

  4. Pretty! This has been an extremely wonderful post. Thank you for supplying this info.

  5. Good day! I simply would like to offer you a big thumbs up for the excellent information you have got here on this post. I will be coming back to your site for more soon.

  6. You ought to be a part of a contest for one of the greatest sites on the internet. I’m going to recommend this blog!

  7. This excellent website certainly has all of the information I wanted concerning this subject and didn’t know who to ask.

  8. Hello, I think your website might be having browser compatibility problems. When I look at your website in Safari, it looks fine however, when opening in IE, it has some overlapping issues. I simply wanted to provide you with a quick heads up! Apart from that, wonderful blog!

  9. Do you believe reincarnation? Do you think is reincarnation real?

  10. Hi there! I just wish to give you a huge thumbs up for your excellent info you have right here on this post. I’ll be coming back to your site for more soon.

  11. I have discovered some points through your blog post. One other stuff I would like to state is that there are plenty of games that you can buy which are designed especially for preschool age youngsters. They include pattern identification, colors, animals, and forms. These normally focus on familiarization as an alternative to memorization. This will keep children occupied without feeling like they are studying. Thanks

  12. Spot on with this write-up, I seriously believe that this site needs a great deal more attention. I’ll probably be returning to read more, thanks for the information!

  13. That is a very good tip especially to those fresh to the blogosphere. Simple but very precise info… Appreciate your sharing this one. A must read article.

  14. Hello there! This article could not be written any better! Reading through this post reminds me of my previous roommate! He always kept talking about this. I will forward this post to him. Pretty sure he’s going to have a very good read. I appreciate you for sharing!

  15. I think this is among the such a lot significant info for me.
    And i am happy reading your article. However want to statement on few common issues, The site
    style is perfect, the articles is really nice : D. Just right job, cheers

  16. After looking over a handful of the articles on your website, I truly appreciate your way of blogging. I book-marked it to my bookmark webpage list and will be checking back in the near future. Please visit my website too and let me know what you think.

Comments are closed.