Zim Most Hostile To Business

ZIMBABWE has been ranked 153 out of 178 countries in a 2008 World Bank report on “Doing Business” which looks at how regulatory environments influence the operations of business.

It was ranked lower than war-torn spots such as Iraq, Sudan, the West Bank and Gaza which were positioned at 142nd, 144th, and 118th respectively. 

The report analysed 10 stages of a business’s life which were starting a business, dealing with licences, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

The 10 indicators, which are used to analyse economic outcome and identifying reforms that have been successful and why, are then factored into the main index, “Ease of Doing Business” in which Zimbabwe has fared rather badly.

On starting a business, Zimbabwe was placed at position 143, proving that the regulatory environment governing the entry of new businesses was burdensome, according to the report.

“Economies differ greatly in how they regulate the entry of new businesses. In some the process is straightforward and affordable,” the report stated. “In others the procedures are so burdensome that entrepreneurs may have to bribe officials to speed the process — or may decide to run their business informally.”

This indicator is calculated using data compiled on how easy it is for small to medium sized companies to start operations legally.

On dealing with licences, Zimbabwe’s rank was a dismal 172 with only Kazakhstan (173), Ukraine (174), China (175), Liberia (176), Russia (177) and Eritrea (178) behind it.

The country’s track record on the issue of licensing has been poor following the controversial handling of Econet’s cellular phone licence application in the late 90s and TeleAccess’ fixed line phone licence in 2000.

Zimbabwe’s rank on the index of protecting investors was 107 and according to the report, this means the country has poor corporate governance practices, high corruption and weak internal systems in most companies.

“To document the protections investors have, Doing Business measures how countries regulate a standard case of self-dealing — use of corporate assets for personal gain,” the report stated.

Zimbabwe was also ranked 123rd on employing workers, 79th on registering property and 97th on getting credit.

However, given the time frame of the report — from April 2006 to June 2007 — Zimbabwe could very well be near the bottom in almost all indices, according to economists and analysts.

This follows government’s infamous crackdown on the business community in July last year when government forced businesses to slash prices and in the process forcing several businesses to close.

Independent economic analyst, Daniel Ndlela said latest research showed that Zimbabwe’s ranking had worsened since June last year.

“It is not a secret that Zimbabwe has done badly since then. It could be sitting very close to the bottom with just two or three countries under it,” Ndlela said.

Ndlela said the period from July 2007 to date had been extremely difficult for the business community, especially small to medium size enterprises.

Harare-based economist, John Robertson said Zimbabwe had fallen to a lower ranking since June 2007.
“We probably have fallen to worse levels by now. Furthermore, the investment climate has been damaged by indigenisation plans by government,” he said.

Zimbabwe’s economic environment has been described as hostile by both the Zimbabwe National Chamber of Commerce and the Confederation of Zimbabwe Industries. Manufacturing is at all time lows of 5%, while mining is at less than 15% of capacity.
 

By Kuda Chikwanda