HomeBusiness DigestZim falls further in investment ratings

Zim falls further in investment ratings

Shakeman Mugari

ZIMBABWE continues to tumble in global investment destination ratings despite government’s claims that it has created a favourable environment to lure off-shore business.

A recent report compiled by the Investment Climate Department of the World Bank ranks Zimbabwe as one of the most difficult countries to do business in because of bureaucracy, corruption-prone systems and high start-up costs.

The report titled, Doing business in 2006, ranks Zimbabwe 126 out of 155 countries that were surveyed to ascertain the investment climate.

The report ranks Zimbabwe’s investment climate as one of the worst in Sadc where it is ranked 10th out of the twelve countries considered.

Seychelles and Swaziland were the only Sadc members that were not included in the study. Only Tanzania and war-ravaged Democratic Republic of Congo are rated worse than Zimbabwe.

Mozambique, a country recovering from civil war, is ranked better than Zimbabwe at 110 globally and ninth in the region.

The survey looked at critical issues that businesses consider before investing in a country such as the cost and time of starting a business, licencing, registration of property and protection of investors.

Mauritius is ranked 23, making it the African country with the most conducive environment for business. Neighbouring South Africa is rated 28th, Namibia (33), Botswana (40) while Zambia is 67 out of the 155 countries.

Malawi is ranked 96, Lesotho 97 and Mozambique 110. New Zealand is the easiest country to do business in, according to the report.

The report measured the number of taxes that investors have to pay and procedures they have to follow when closing businesses and exporting or importing products.

It considered the cost and procedures for hiring and firing workers and enforcing contractual agreements in the corporate world.

Zimbabwe is among the countries with the highest business start-up costs. It is also among the countries with the highest costs of registering a property.

The report noted that there was a direct relationship between the business atmosphere and employment creation.

“Although macro-policies are unquestionably important, there is a growing consensus that the quality of government regulation of business is a major determinant of prosperity,” say the report.

While in other successful countries like Finland it takes about 56 days for an investor to get a licence, in Zimbabwe it takes 481 days (about 1 year and 4 months) to get the same document. A business has to wait 160 days to get a licence in Botswana, 165 in Zambia and 176 days in South Africa.

Zimbabwe is also fares lowly in corporate governance and regulating of the liability of directors to the shareholders.

Joanna Kate-Blackman, a private sector development analyst with the World Bank department who visited Zimbabwe last week, told businessdigest that there was need for more reforms to increase investment in the country.

She said their research had shown that there was a direct relationship between bureaucracy and corruption. “For instance, the number of procedures that investors go through to get a licence in Zimbabwe create fertile ground for corruption,” said Kate-Blackman.

“Increased interaction between business and government officials also increases the chances of corruption.” She said Zimbabwe and other African countries needed more reforms to create an investor friendly environment.

“A better investment environment creates employment and reduces poverty.”

The report is one of many that have ranked Zimbabwe lowly as an investment destination. Other global economic intelligence data have rated Zimbabwe among the worst because of its political and economic risk and lack of property rights.

Recent Posts

Stories you will enjoy

Recommended reading