A NEW report by a quasi-government entity has shown that multiple layers of laws and regulations continue to worsen Zimbabwe’s ease of doing business and competitiveness despite pronouncements by the executive projecting the country as pro-business.
BERNARD MPOFU
After taking power in 2017 following a military-assisted transition, President Emmerson Mnangagwa promised to break with the past and adopt a raft of neoliberal policies to make Zimbabwe an attractive investment destination.
Driven by Mnangagwa’s “Zimbabwe is open for business” mantra, the government then remodeled its investment agency along that of Rwanda and established a national competitive commission.
Experts also say Zimbabwe may fail to realise much from the enormous potential of the over one billion people strong market once the African Continental Free Trade Area takes shape.
According the World Bank, Zimbabwe remained on position 140 out of 190 economies on the 2020 World Bank Ease of Doing Business. The country of improved to 140 in 2019 from 155 in 2018.
According to the latest NCC report titled: The Effects of Laws and Regulations on Zimbabwe’s Competitiveness and the Role for Regulatory Impact Assessment, Zimbabwe should do more to make its business climate friendly to both domestic and foreign capital.
Government agencies issue numerous business regulations every year in the form of primary legislation, secondary legislation such as statutory instruments (SIs) guidelines, circulars, manuals, and formats notifications.
These regulations govern the operation of businesses by setting out the legal requirements for achieving policy objectives. As such, regulations are necessary for a well-functioning, market-based economy, but they, according to the NCC, do not always achieve their socio-economic goals.
“The regulatory environment can either pro[1]mote or hamper business operations. Like fish in the water which is fine when water is clean and not contaminated, businesses thrive when the regulatory environment is clean and not contaminated by toxic regulations,” reads the NCC report.
“Regulations can, however, have significant negative effects on businesses. It is therefore important to put a filter Regulatory Impact Assesment (RIA) within the country’s regulatory governance cycle to remove toxic regulations.
“Zimbabwe’s regulatory business environment has for a long time been considered business unfriendly. Business owners, business associations, media, international observers and organisations and key indices measuring the business environment in Zimbabwe have called out the country’s unconducive regulatory business environment. To this end, the introduction of RIA is undebatable.”
The RIA, the reports says, acts as a gauge to test the quality of regulations. It therefore filters “toxic regulations”, thereby managing the quality of the regulatory inflow and stock.
“The major important benefit of RIA is that it provides crucial information to decision-makers on whether and how to regulate with a view to achieve public policy goals,” says the NCC.
“Significant benefits of RIA derive from adopting a structured, rational thinking, decision-making, and consultation process. A well-functioning RIA system assists policymakers in identifying the potential outcomes of proposed regulations and determine whether regulations will achieve the intended objectives.
“Competitiveness and the regulatory environment of a country are key to economic growth and development as well as improvement of the standards of living for Zimbabwe. To this end, continued implementation of policies, strategies and programmes that addresses competitiveness gaps is key if the country is to successfully enhance all competitiveness aspects of the economy. However, this requires concerted efforts by all stakeholders, including Government, Private Sector, amongst others.”
Regulations, the report further noted, can have unintended negative effects and, as a result, limit the competitiveness of business.
“One of the most obvious (negative) effects of regulations is that it increases the costs of doing business, the report reads.
“Other regulations may distort the healthy competition in the marketplace, for example, by creating market barriers, or disrupt innovation, or impeding international trade.
