Red tape throttles investment

beit hotel

The construction and operation of Nssa’s Beitbridge Hotel is full proof of the red tape investors have to go through in Zimbabwe. The investors had to go through many offices which include Environmental Management Agency, Beitbridge Town Council, Zesa among others

Lloyd Gumbo Mr Speaker Sir
Forget about the Indigenisation and Economic Empowerment Act being the reason there is minimal Foreign Direct Investment. Neither is it the unpredictability of the implementation of the laws here nor alleged lack of property rights. If these were the reasons the country would not have attracted and continue to attract prospective investors from Europe given the bloc’s public perception about Zimbabwe following an historic land redistribution exercise and the passing of the indigenisation policy.

Vice President Emmerson Mnangagwa, who together with his counterpart VP Phelekezela Mphoko, occupy the second highest office in Zimbabwe is aware of the reason there has been no swift foreign capital inflow.

“I will push you as ministers to deliver and put an end to red tape and you will do the same to your subordinates,” he said while commissioning a $10 million litre water tank in Mutare constructed under the Zim-fund initiative recently.

“As Government, we will refine our policies to aid development. We are worried about the low foreign investment uptake due to red tape. We need to be investor friendly and not current situations whereby investors take long periods to know of their fate because of red tape.”

Mr Speaker Sir, our ears have had enough, it is our eyes that are starved of action.
Zimbabwe cannot afford to frustrate foreign capital flowing in given the desperate need for it to fund a number of projects that would improve people’s livelihoods and infrastructural development.

But as the country cuts the red tape for prospective foreign investors, locals should also come into the equation because at the moment the frustrations that they go through to fully register a company and be listed on the State Procurement Board has encouraged a number of them to operate illegally.

Why should it take not less than a month to fully register a company and be listed on the SPB?
Uzumba MP Simbaneuta Mudarikwa summed this up in the National Assembly recently;
“There are over 75 pieces of legislation that you go through to invest in the hotel industry. Just to mention a few, when you start a hotel business, you want to talk to EMA (Environmental Management Agency) to give you a licence for river sand extraction, pit sand extraction; you want to go to Vehicle Inspection Department to get a certificate of fitness for that vehicle. You want to go to SPCA to get a dog license . . . You want to go to ZESA to get electricity, to the local authority, you even want to consult the dead people because you have to go to midzimu to confirm whether this is appropriate.

“Mr Speaker, you move on, when the building is there, you want to get a liquor licence and a gambling licence. You want to go to Forestry Commission to get a licence of planting certain species, you have to go to National Parks to get a licence for keeping fish, you go to the councils to get a licence for a hair dressing salon and you want to go to the police for a firearms licence. You also want to go to ZBC for a radio and television licence.”

It is for this reason that we must follow what other countries are doing to attract investment and create an ease of doing business environment if the country is to move out of the economic doldrums that it finds itself in.

According to a World Bank ease of doing business index between 2010 and 2014, Zimbabwe ranked 171 out of 189 while its neighbours like South Africa and Botswana were on 43 and 74 respectively while Zambia ranked 111.

Mr Speaker Sir, it is against such competition for ease of doing business that Zimbabwe should be worried about if it is to attract FDI.
Other countries like China are blossoming because they have cut the red tape, so why shouldn’t we?

While some quarters may want to cite the land redistribution exercise and the indigenisation policies as the reasons behind the above ranking, it is our bureaucracy that has a major say because the world over capital is allergic to bureaucracy.

Business analyst Taurai Changwa says to create an ease to do business environment: “All information should be available on the internet and it should just take a day for registration to be completed.

“In developed countries a company can be registered online. Companies are faced with a lot of headaches when it comes to meeting requirements such as registering for a business licence with City of Harare, registering with SPB, vendor number registration and ZIMRA.

“Registration should be simple, fast and succinct to encourage companies to comply with the laws. What complicates the whole thing is that some officials manning these offices sometimes expect kickbacks for them to process the papers faster. That should stop as it dents progress,” he said.

It is important to streamline the processes for company registration and approval of foreign investment if the country is to benefit.
Mr Speaker Sir, we have been swift in bemoaning the red tape but very slow in cutting it.

Feedback: lloyd.gumbo@zimpapers.co.zw.