Engagement key to improving business environment
Constant engagement between businesses, Government and local authorities is critical to improve the country’s business environment that has remained a major concern for several companies, experts have said.
In response to a difficult operating environment, businesses have demonstrated resilience through the adoption of low-cost operating models, diversifying products and expanding markets to include exports.
Economies are ranked on their ease of doing business and a high ease of doing business ranking means the regulatory environment is more conducive for businesses to thrive without many hindrances.
The period taken for licensing new companies is also considered a key metric for an economy’s doing business environment.
According to the Zimbabwe National Chamber of Commerce ( ZNCC), one of its primary areas of engagement with the central and local governments has been the cost and ease of doing business.
“The more cumbersome and costly it becomes to be a compliant business operation, the more we push established as well as start-up business enterprises into becoming informal operators,” said the Chamber’s president, Tapiwa Karoro.
He noted that areas that require objective review in this regard include the tax regime, operating license application and renewal processes and fees, the plethora of statutory instruments ( SI) and the establishment of policy consistency.
The economy has over the years been battling chronic inflation and exchange rate volatility, while several SI’s have been introduced to deal with certain circumstances.
Experts contend that interest rates also remain elevated, impacting borrowing, while several taxes are weighing on costs.
Edgars Stores Limited, in its recent financials, said management continues to review working capital and financing models to capitalise on opportunities that arise in the uncertain operating environment.
“Due to rising costs, cost containment remains a focus area. The group seeks to increase its net trading area through the opening of new stores,” the company said.
The group is also reintroducing Express Stores to focus on the lower-income segment of the market, which is currently dominated by the second-hand clothing market, as part of its efforts to expand its reach.
Economist, Dr Prosper Chitambara, said dialogue between government and business becomes critical in order to find ways to address the underlying fundamentals.
“The business environment remains a challenge for most businesses, but there is scope for improvement through engagements,” he said.
He said the dialogue should focus on key areas such as the electricity situation and the policies of the government, which will improve the negative risk factor.
Since the introduction of a new currency, Zimbabwe Gold (ZiG), in April 2024, the economy has witnessed a period of relative exchange rate stability and low inflation.
star africa corporation believes this can only be sustainable if the authorities maintain a tight monetary stance.
“With the raw sugar supply challenges largely resolved and the plant refurbishment and replacement programme on track, the business expects a volume recovery going forward.
The group will continue to improve operational efficiencies and reduce costs with the aim of returning the business to profitability,” it said.
The Zimbabwe Investment and Development Agency ( ZIDA), in its recent quarterly report, said it has entered into various collaboration agreements that will enhance the ease of doing business and facilitate domestic and foreign investments in Zimbabwe. is the government’s investment ZIDA promotion agency, responsible for promoting and facilitating domestic and foreign investment in the country.
Among its partners is the Zimbabwe Revenue Authority ( ZIMRA), which is the government’s revenue collection agency and is mandated to assess, collect revenue, facilitate trade and travel and enforce the payment of taxes, levies, royalties and duties for the country.
The collaborative relationship between the parties involves the exchange of information, real-time processing of investor-related issues, finding and implementing solutions to enhance the ease of doing business and facilitating investments.
The parties agreed to collaborate on three main areas: ease of doing business, investor-related services and integration of electronic systems.
Through its investment promotion drive, has been streamlining and ZIDA facilitating investment, both domestic and foreign, as a single point of contact.
The country also offers incentives such as tax breaks for new investments by foreign and domestic companies, full tax deductibility for capital expenditures on new factories, machinery and improvements, as well as waiving import taxes and surtaxes on capital equipment.
Experts believe that a stable political and macroeconomic environment, as well as favourable regulations, quality economic infrastructure, qualified human resources and a transparent legal system, are key parameters for creating an enabling environment that is attractive to investors.
“Although progress has been made in reducing regulatory costs, policy inconsistency and weak institutions continue to pose challenges for businesses.
“Corruption remains widespread and property rights, especially concerning agricultural land, are inadequately protected,” according to UNCTAD’s World Investment Report 2023.