HomeOpinionNew Perspectives: Ranking improvement key in Zim’s economic policy thrust

New Perspectives: Ranking improvement key in Zim’s economic policy thrust

By Pepukai Chivore
It is no secret that Zimbabwe’s ranking on a number of internationally recognised indices that project the country’s image and the ease of doing business environment has been sliding over the past two decades. Zimbabwe’s ranking in the Global Competitiveness Index (GCI) compiled by the World Economic Forum, Corruption Perception Index by the Transparency International, Doing Business Index by the World Bank and the Economic Freedom Index compiled by the Heritage Foundation, just to mention but a few have been consistently declining in comparison with regional peers.

Although some encouraging improvements have been scored recently especially on the doing-business front, a lot still needs to be done if the aspirations set out in the First National Development Strategy (2021-2025) (NDS1) are to be met. The NDS1, in paragraph 432 targets to improve the Global Competitiveness and Ease of Doing Business rankings to below 100. There are inconsistencies, however, in the NDS1 under the various clusters. Page 236 of the NDS1 targets an ease of doing business rank of 80 by 2025 under the Economic Growth and Sustainability Results Framework, while under the Governance Sector on page 302 the target for the same indicator is 100 by 2025.

Under the Image Building, International engagement and Re-engagement Results Framework on page 281 of the NDS1, the country targets a competitiveness ranking of 109 out of 140. Be that as it may, the policy thrust is to improve the country’s rankings with a view to attracting investment and enhancing economic growth and development.

Under the Improved Country image, NDS1 targets to improve on the Good Country Index from 100/153 in 2020 to 90/153 by 2025; Improve on the Country Brand Ranking from 120/189 in 2020 to 100/189 by 2025; and Improve on the Global Happiness Index from 146/191 in 2020 to 100/191 by 2025. Although not in any way insurmountable, policymakers need to walk the talk if this is to be achieved.

The various Global Indices Reports identify formidable constraints to Zimbabwe’s competitiveness and doing business environment which include inefficiencies in the goods, labour and financial markets; slow uptake of new technology; low labour productivity; high tax rates; infrastructure deficiencies; multiplicity of business licenses/levies and corruption among other factors. Infrastructure deficiencies have been observed in electricity, transportation, water and communications which are the key enablers to productivity and hence competitiveness.

Other most problematic areas of doing business are identified as policy instability, foreign currency regulations, inefficient government bureaucracy, access to financing and corruption. These urgent issues have been put on the spotlight to direct our Policy Makers focus so that these can be confronted and resolved.

We may not need to reinvent the wheel but copy from Rwanda, a regional shining example of how determination, consistency and political will has seen Rwanda emerging as a prosperous and far more stable, with strong GDP growth, a reducing inequality coefficient and an ambitious vision for the future.

The IMF and the World Bank have publicly lauded Rwanda for various reasons, including its target-driven developmental model, the continually improving business environment, and its healthcare and education policies.

Although there are over 50 indices published by various organisations, this article will concentrate on Zimbabwe’s performance on only four.

The Global Competitiveness Index (GCI) compiled by the World Economic Forum (WEF) measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity. Zimbabwe, in 2019 was the 127th most competitive nation in the world out of 140 countries ranked, down from 124th out of 137countries, in the 2017 – 2018 edition of the Global Competitiveness Report. The competitiveness index for Zimbabwe was 44,24 score. The highest index and the smallest ranking is the best.

The Ease of doing business index compiled by the World Bank ranks countries against each other based on how the regulatory environment is conducive to business operation and protection of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses. In 2020, Zimbabwe was ranked 140 among 190 economies in the ease of doing business. The rank of Zimbabwe improved to 140 in 2019 from 155 in 2018.

The index of economic freedom measures the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. Zimbabwe’s economic freedom score is currently at 39,5, making this economy the 174th freest in the 2021 Index. Its overall score has decreased by 3,6 points, primarily because of a decline in monetary freedom, according to the Heritage Foundation which compiles the index. Zimbabwe is ranked 46th among 47 countries in the Sub-Saharan Africa region, and its overall score is well below the regional and world averages

The Corruption Perceptions Index, published by Transparency International, ranks countries and territories based on how corrupt their public sector is perceived to be. A country’s score indicates the perceived level of public sector corruption on a scale of 0 (highly corrupt) to 100 (very clean). The Corruption Index in Zimbabwe remained unchanged at 24 Points in 2020 from 24 Points in 2019. Zimbabwe was ranked 157 out of 180 countries around the World in terms of the corruption perception index in 2020, down from 158 in 2019. The only countries in Africa ranked lower than Zimbabwe in terms of Corruption Perception are Eritrea, Somalia, Sudan, South Sudan, Equatorial Guinea, Libya, Burundi, and DRC which all have faced civil unrest or war.

Readers may recall that in response to the need for expeditiousness in delivering business environment reforms that address key private sector constraints, the government, through the Office of the President and Cabinet in 2016 spearheaded the process of ease of doing business reforms under the auspices of the Rapid Results Approach (RRA).

The reforms were aimed at making the business environment conducive and attractive to investors by removing unnecessary institutional processes, legislative and procedural bottlenecks as well as to improve efficiency and timeliness in the approval and issuing of licenses and permits.

Other notable reforms that have been made in the country include the amendment of the country’s labour laws, operationalisation of the One Stop Shop (OSS) Investment Centre and the review of the Indigenisation and Economic Empowerment Act.

It is however important at this juncture to point out that the onus of economic reforms is not only on the government; far from it, the private sector has a big role to play. There is therefore a need for sweeping mindset changes across the entire spectrum. Zimbabwean businesses now thrive on utilising the arbitrage opportunities created by the gaps in policy, making cosmological profits.

The mentality of the Zimbabwe dollar of between 2003 and 2008 has not left business and labour with some employees and employee unions calling for wage increases on a monthly basis without productivity justification to back their demands. Margins, on some products, are still in the 60-100% category while most parastatal bosses are bleeding the fiscus to maintain their superfluous lifestyles and finance their organisations’ unjustified spending largely bordering on irrational exuberance.

We cannot continue to pay for inefficiencies in utilities, we cannot continue to watch the corrupt being emboldened and we cannot continue to passively receive inefficient services from government departments. It’s high time we walk the talk and make the competitiveness, doing business and improvement in socio-economic freedoms a reality for the betterment of our and our children’s lives.

  • Chivore is an economist based in Harare. He is an expert in Public Finance Management who writes in his personal capacity. — pchivore@gmail.com. These weekly New Perspectives articles are coordinated by Lovemore Kadenge, independent consultant, past president of the Zimbabwe Economics Society and past president of the Institute of Chartered Secretaries and Administrators in Zimbabwe, now under a new name Chartered Governance and Accountancy Institute in Zimbabwe (CGI Zimbabwe). — kadenge.zes@gmail.com or mobile +263 772 382 852.

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