Zimbabwe's 'ease of doing business' rating falls

Published: 10 June 2013
Zimbabwe has slipped down two places in the World Bank's ease of doing business 2013 survey, ranking 172 out of 185 economies.

The report, released on January 14, ranks economies based on ease of doing business in registering property, getting electricity, protecting investors, enforcing contracts and trading across borders among others, is a key benchmark to investors.

The country also performed badly in the ease of getting credit ranking, falling 10 places to 126 from 116.

According to the report, Zimbabwe slipped 14 notches on resolving solvency, seven steps on paying taxes, four steps on protecting investors, two steps on getting credit and one step on registering property and dealing with construction permits.

The Doing Business 2013 report, however, shows that the country has improved on getting electricity (+8), starting a business (+2), trading across borders (+5) and enforcing contracts (+1).

In the region, South Africa tops the ranking at 39 in the world, Rwanda on 52, Botswana on 59, Zambia on 94 and Mozambique on 147.

Below Zimbabwe are Democratic Republic of Congo at 181 and Republic of Congo at 183.

Ranked at 168 in 2011, Zimbabwe has been tumbling each year despite a raft of reforms introduced in the economy following the establishment of the multi-currency system in 2009.

Zimbabwe's major weakness is policy inconsistency and political bickering.

This has been exacerbated by the indigenisation law — compelling all foreign-owned companies with a net asset value of at least $500 000 and above to cede 51 percent shareholding to locals.

The indigenisation programme now requires both indigenous and foreign companies to get indigenisation certified, a move analysts say hampers the ease of doing business in the country.

The Economic Planning and Investment Promotion ministry introduced a one-stop-shop in 2010, aimed at reducing bureaucracy in starting a business, but policy inconsistency and political instability has seen foreign investors taking a wait-and-see approach on the country.

Subsequent reforms by the Zimbabwe Investment Authority, implemented in 2011, saw the time required to start a business declining from 97 days to 90 days.

Tapiwa Mashakada, Economic Planning minister, said although a lot of progress had been made in making Zimbabwe an attractive investment destination, the major task was to manage investors' negative perception towards the country.

"The Indigenisation policy must be scrapped, it is irrelevant to our economic situation," said Mashakada.

"For an economy like ours that is very thirsty of fresh capital, we need to have an unencumbered flow of foreign direct investment," he said.

Mashakada said Zimbabwe must come up with an investment charter that persuades investors to commit themselves to work with local people, promote financial sector stability and local procurement.

"That is the modern way of doing business. People must form companies and not the other way round. What we must be doing is broadening the cake and not shrink it," he said.
- news
Tags: Business, Ratings,


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