Zimbabwe, which has been lagging its regional peers in attracting the much-needed foreign direct investment (FDI) and is reeling with a huge debt overhang of over US$10 billion, is stepping up its efforts to improve the ease of doing business, by reviewing the country’s legislation among other things.
Under-pressure Mugabe, now trying to secure his legacy after his 35-year rule, has in recent times been dispatching government officials to study development models of some progressive developing and developed countries alike that have registered rapid economic growth driven by extensive reforms.
The latest United Nations investment report shows that Zimbabwe’s foreign direct investment leapt to US$545 million in 2014 — less than 5% of the country’s GDP — from US$400 million in the previous year, driven by interest in mining, infrastructure and services but still lags regional rivals.
Official data shows that Zimbabwe received US$1,8 billion in FDIs between 1980 and 2013, compared to neighbours Zambia which attracted US$8 billion and Mozambique at US$16 billion over the same period.
Already several delegations from Zimbabwe have been sent to countries such as Singapore, Malaysia, New Zealand, Georgia and Azerbaijan, among others, to study development models of those countries in a clear sign that Harare is now ready to engage the world. Government officials this week said that a team of eight comprising staff from the Office of the President and Cabinet and Zimbabwe Investment Authority (ZIA) was in Singapore last month and earlier this month on a comparative study visit to understand how the country does its business and how it attracts investment.
Singapore, according to the World Bank ease of doing business 2015 data, is ranked number one out of 189 countries, while Zimbabwe is ranked 171 out of 189. Inspired by the success story of Singapore under former Prime Minister Lee Kuan Yew who governed the Southeast Asian country for three decades after attaining independence from Britain, sources say the team was tasked to adopt economic measures which saw the country transform from a low income country to a prosperous modern state.
Experts, however, say Zimbabwe is confronted with deep structural issues which require more time before investors can feel confident in investing in the country.
“This was more of a President’s office- planned trip in response to World Bank views that doing business in Zimbabwe is still difficult,” said a senior government official.
“The team was in Singapore basically to compare our investment processes and with those of Singapore that is ranked number one in the world. They also did a comparative study visit of Malaysia which is ranked number 18 in the world.
“This is in a way to adopt new ideas and strategies of moving very quickly towards progressive systems that will attract investment.”
Sources also said officials from the Registrar of Companies are also expected to visit New Zealand to study the investment system there including the registering of companies. Georgia and Azerbaijan systems are also being studied.
“We want to compare the IT (information technology) systems in other nations that are advanced than us such as Georgia and Azerbaijan who are using modern computer systems, which we hope to adopt. Plans are that the Registrar of companies issues a tender for the new IT system by the end of October that will allow for implementation by maybe next year February to improve ease of doing business in Zimbabwe,”
another official said. The ease of doing business rankings are calculated based on considerations on starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, taxation, trading across borders, enforcing contracts and resolving insolvency.
It also measures the ease of starting a business in an economy by recording all procedures officially required or commonly done in practice by an entrepreneur to start up and formally operate an industrial or commercial business.
Government is also planning to introduce one application form for investors, which will be found online, and will incorporate information needed by ZIA, Zimbabwe Revenue Authority, Zimbabwe Manpower Development Fund and National Social Security Authority. Chief Secretary in the Office of the President and Cabinet Misheck Sibanda recently said government is coming up with a number of measures to attract foreign direct investment.
Among the measures is amending the Companies Act and other relevant investment regulations to align them with the best business practices. Government says the Inter-Agency Platform, which will be co-ordinated by the Office of the President and Cabinet to avoid unnecessary bureaucracy, will be a form of one-stop-investment-centre and will comprise of experts from the president’s office, ZIA, immigration department and finance and industry ministries.
“We are working on a simplified version of the Companies Act for small and medium businesses and we hope this will be rectified by February next year in time for the 2016 ease of doing business,”Sibanda said.
There are at least 22 Bills and amendments to existing legislation before parliament and several of them deal with improving the business environment.