Operating within a hostile and volatile economic environment, many companies in the country argue that the government does not promote them or offer the support that benefits them.
For economies such as Zimbabwe, which are volatile to external pressures, there is a need for the government to have a bottom-up approach as far as addressing business needs is concerned.
Business representative institutions such as chambers of commerce, industry associations and the government should thrive on understanding what businesses need to thrive.
There is a general misconception most governments and business representatives have that they know the economy and hence ultimately know business needs in order to make them thrive. Such a status quo should change if the economy is to experience business successes.
There is a need to engage businesses when implementing policies that affect the business environment, as the businesses themselves know the challenges they are experiencing in their day-to-day operations. Such knowledge should then be incorporated into the crafting of policies that are aimed at promoting businesses successes.
In Zimbabwe, statistics show that most businesses that are affected by the volatile and adverse effects of the economy are mainly small to medium and entrepreneurial businesses. Most of these businesses have solutions-oriented innovations, which have the potential to put the Zimbabwean economy on a growth trajectory, but, unfortunately, they might only achieve success if the current system is improved.
Entrepreneurship is known for its catalytic role in fostering economic development worldwide. Entrepreneurs have a higher chance of creating employment opportunities for their communities, and as such, such businesses must be afforded a chance to operate in a healthy conducive economic environment.
Though entrepreneurial activity has increased in many developing countries, many entrepreneurs need help to combat the challenges and risks of operating in environments unsuitable for supporting entrepreneurship at a career level, and Zimbabwe is no exception.
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In Zimbabwe, the business environment is primarily shaped by public sector performance. The rise and fall of key state-owned enterprises is just one example of how government institutions and policies, directly and indirectly, impact the private sector. Government departments are tasked with growing a sustainable and equitable economy, but a dysfunctional department can be more of a liability than a public service. As such economic policies that are also implemented in the economy can also work as a blessing as well as a curse to the business environment.
There is, therefore, a need to mobilise businesses in the clustered industries, physical locations and the country at large to create a network of networks and bring together industry associations to take the voice of business forward. The industry should work better with national, provincial and local governments systematically around structured themes to improve the economy consistently and reduce critical impediments in the business environment. For businesses to thrive, business representatives and the businesses themselves must stand up and fix what is wrong within the economy, which fails to realise the growth and employment on the scale required.
In order to create an efficient system and structural changes in the economy, it is necessary to mobilise and scale up public-private cooperation to unlock opportunities for economic growth in the country. Public-private dialogues should be promoted, and businesses and the public sector engage with each other to table the areas of concern for the businesses. The public sector must work together in cooperation with the businesses to address the areas of concern for the businesses.
The President has consistently promoted his presidency by creating what is dubbed creating economic opportunities with the mantra “Zimbabwe is open for business”, but being open for business without having the right foundations for businesses to thrive will not yield any positive results. Businesses are likely unable to flourish if there are a raft of structural and policy problems that block economic growth, such as corruption, inadequate infrastructure and electricity shortages that have shut down already struggling industrial production.
Currently, all economic indicators in the country point toward an economic downturn rather than recovery, stabilisation, and inclusive growth. This points to the urgent need for the government and business representatives to develop solutions that promote business recovery and growth, and this can only be done by working with the businesses, putting their concerns first, and dealing with them.
Using the pillars highlighted on the global competitiveness index, the country’s authorities can take guidance from them. By working with local businesses, the public sector can address issues that the business constituency would have identified as matters/areas of concern. The Global Competitiveness Index (GCI) is a comprehensive index that captures the microeconomic and macroeconomic foundations of national competitiveness as the set of institutions, policies, and factors determining a country’s productivity level.
The variables used to measure this competitiveness are organised into twelve pillars representing an area considered an essential determinant of competitiveness and these are; Institutions, Appropriate infrastructure, Stable macroeconomic framework, Good health and primary education, Higher education and training, Efficient goods markets, Efficient labour markets,
Developed financial markets, Ability to harness existing technology, Market size—both domestic and international, production of new and different goods using the most sophisticated production processes and Innovation. According to the last GCI index published in 2019 by the World Economic Forum, Zimbabwe is the 127th most competitive nation in the world out of 140 countries. This shows that the country still has a long way to go in terms of being competitive globally and its productivity levels.
The primary constraints to businesses thriving in the country have been mainly attributed to currency instability and inconsistency, high production costs, and low agricultural output, resulting in many firms opting to import raw materials or even semi-finished goods.
The unending political and social uncertainty, corruption, looting of mineral resources through informal channels, lack of respect for property rights, and cronyism have also contributed to poor business performance. Many policies, such as the government policy framework, which provided the roadmap to be used to implement the enacted policies to support the performance of small to medium businesses, have failed due to numerous reasons, such as inefficient and improper communication, implementation and support of the policies hence their impact was highly insignificant.
All these factors point to the fact that though the government would intend to protect the country’s interest, the interests of businesses should also hold equal weight, as their successes strongly determine the country’s overall success.
There is, therefore, a need for both the public and the private sector to work together to promote business successes and, ultimately, economic growth in the country.
- Chivige-Mapfiro is an economist. These weekly New Horizon articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zimbabwe). — [email protected] or mobile: +263 772 382 852