eBusiness Weekly
Luke W Gumbo
On September 5 2019, a gathering took place in the air-conditioned auditorium of one of the top hotels in the shape of Monomotapa Crowne Plaza. Convened by no less than the Office of the President and Cabinet, it brought together stakeholders from both the private and public sector to look into the ease of doing business in the country.
For private sector participants it presented an irregular opportunity to present their concerns about, in their opinion, the pernicious extractive character of regulatory and compliance organisations in the country to the drivers of policy as opposed to its implementers.
Speaker upon speaker in elaborate and elegant presentations, gave a breakdown of how the regulatory burden of doing business in Zimbabwe was making Zimbabwean products uncompetitive on a regional basis.
It was also highlighted how the chord between service provision by these entities and the costs charged was over time cut as regulatory bodies and the taxman insisted on exercising their legislated authority. Naturally, those representing these entities were not amused and dissented to being cast as villains, insisting that their presence played a crucial role in the market place of business.
The underlying challenge with the institutional business architecture in this country is that the foundation rests upon the pre-independence edifice that was constructed to create a closed economy capable at least to some degree of withstanding sanctions from the rest of the world.
The provision of social services was viewed as a right not conditioned by the economic health of the country. True to the obtaining Marxist and social ideology of the time the dignity of the individual was non-negotiable. By consequence an overarching economic and enterprise ideology was not championed by the state or at least was secondary to the socialist objectives.
The regular appearance of economic blueprints, sixteen since independence was driven by a need to justify the social objectives in economic terms as opposed to an economic vision to expand the economy. As a result, the Zimbabwe business sector both in the private and public sphere rooted in a pre-independent closed industrial enterprise, struggled to reintegrate with a global economic order that, catalysed by technological innovation, was becoming more and more integrated on a cost competitive basis.
This, however, continued through independence as it dovetailed with the Marxist and socialist inclinations of the time. As the years rolled by, not even the Economic Structural Adjustment Plan (ESAP, 1991-1996) did much to change the underlying business architecture as most regulatory entities remained intact or morphed into other forms but retained their relationship with the market place. With no overarching business ideology a lot of these institution’s agendas ended up being driven by sectional interests, often by the managing executives who wary of supporting their case for continued existence alerted their seniors to the revenue generation capacity of these creatures.
Over the years a comprehensive needs analysis of the regulatory framework and its supporting institutions driven by the obtaining political economy, has not been in evidence.
The result has been that Zimbabwe has become like a big furnace that mills iron ore sub-optimally and at an insidiously high cost.
Untangling the regulatory and compliance web is key to building value adding economic base with export potential. Enabled by the issuance of Statutory Instruments that only required the indulgence of the parent ministry, these entities became little money printing presses. While the Minister of Finance and Economic Development alerted to the misuse of these instruments, announced the need to remit levies and fees collected to the consolidated account, this practice is yet to peak.
Back at Monomotapa Crowne Plaza, the business crowd in attendance was encouraged when the Chief Secretary in the Office of the President and Cabinet (Misheck Sibanda) acknowledged the challenges around the ease of doing business in the country and how investment destined for Zimbabwe had been diverted because the costs of doing business being deemed too high.
Government’s seriousness in addressing the economic challenges has been in evidence with the high level engagement with which the authorities embarked upon to draw foreign investors into the country.
Few in Government can give you the cost of regulatory compliance within the value chains. That points to a lack of oversight that cross-cuts entire ministries.
While aware that taxes and compliance costs are high without proper quantification the urgency to reform will be muted. An office that presides over collection and tabulation this type of information is necessary.
The role of Zimstats can be expanded to include this. While at it, instead of trying to right fit the present regulatory institutions to accommodate private interests, government might want to put on a more radical jacket and think up a more ambitious paradigm where a clean white dashboard is the starting point.
Like the shrewd palace courtiers they are, they know how to strangle such initiatives in the dead of night while presenting agreeable faces during the day to the governing authorities. In the middle of this present economic challenge, we are presented with the opportunity to bring change, and while this is not the first time we have been here, maybe this time it will be different.
◆ Luke W Gumbo is an economic and financial analyst. His views are personal and in no way represent any of the institutions he is associated with.
