Colonial laws hitting Zim’s foreign investment

via Colonial laws hitting Zim’s foreign investment – DailyNews Live 9 October 2014 by Kudzai Chawafambira

HARARE – Zimbabwe’s ease and cost of doing business is being weighed down by colonial laws inherited by the ruling government, the World Bank (WB) has said.

“I share with you the colonial history of Zimbabwe, that you were a British colony,” WB’s country manager Camille Nuamah told participants at the Doing Business Reform strategy meeting last Friday.

“Many of the things that private sector has to deal with in terms of bureaucracy have been inherited from a long time ago. Whereas, for example the British have moved ahead, you are still living off from systems that need remedial action.”

She added that it was “a whole mindset not thinking backwards and what you were before, but thinking outside the box and what you can be.

“This needs to be a continuous process (improving the ease of doing business) .I do think you have to be realistic at the beginning and should start in a way that you can continually implement reforms.”

Currently, it takes nine procedures, 90 days and cost 141,2 percent of income per capita, while no paid-in capital is required, to start a business in Zimbabwe.

This comes at a time when the country was this year ranked 170 out of 189 economies on the World Bank’s Doing Business indicators, a negligible two places up from 172 recorded in 2013 and 170 in 2012.

Despite the adoption of an economic blueprint, ZimAsset, targeted at unlocking Zimbabwe’s economic potential, the country fared poorly on most indicators, ranking 150 on ease of starting a business, 170 on dealing with construction permits, 157 on getting electricity, 167 on trading across borders, 118 on enforcing contracts, and 156 on resolving insolvency.

The southern African country’s low ranking indicated that the cost, time and procedures for doing business in Zimbabwe is high for locals and so deters even foreign investors.

Industry minister Mike Bimha noted that Zimbabwe’s poor ranking communicated a negative message and gave a negative perception from potential and foreign investors.

“Such a low ranking on the ease of doing business index means the regulatory environment is less conducive to the starting and operating of a local firm,” Bimha said.

“In the region, in 2013, foreign direct investment into the country amounted to only $400 million, against $1,7 billion in Zambia and about $5,9 billion for Mozambique, signalling strong competition on the global market for investment.”

Against this background, Bimha said it was important that the country needed to quickly align investment initiatives by working towards improving the ease of doing business in Zimbabwe in order to attract more FDI.