Online Reporter
Nelson Gahadza, Zimpapers Business Hub
ZIMBABWE’S industry has called for further regulatory reforms to unlock the domestic economy’s full potential and competitiveness, drive accelerated growth and investment.
The Treasury has projected a six percent economic expansion this year, following the slower growth of two percent last year due to the negative impact of El Niño-induced drought on agriculture, a strategically key element of Zimbabwe’s economy.
Confederation of Zimbabwe Industries (CZI) chief executive officer Ms Sekai Kuvarika said the current regulatory environment was characterised by several regulatory constraints across sectors and ministries, which hinder business growth.
This, though, comes after President Mnangagwa, in his first address to the Cabinet in February this year, called on all Government institutions, departments and agencies to make sure that regulations, fees and administrative licences do not stifle but facilitate businesses.
The President reiterated his Government’s commitment to address teething issues in the economy while delivering his keynote address at the National Economic Competitiveness Summit in Bulawayo in February this year.
He noted that the Second Republic was fully aware of the challenges facing businesses and was intensifying efforts to establish a conducive operating environment that fosters innovation and investment.
Against this background, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube announced in March that the Government was undertaking a comprehensive review to streamline the country’s tax and regulatory framework.
The objective, he said, was to identify and eliminate unnecessary taxes and regulatory fees that hinder business operations.
Fincent said while businesses had to navigate several economic challenges, prospects for growth in the retail sector were promising.
CZI is on record as saying it had noticed the increase in regulations and regulatory entities over the past 10 years, hypothesising that in certain instances, regulatory authorities may be collecting more revenue from companies than the Treasury, hence the urgent need for a regulatory impact review.
“This will strengthen the competitiveness of the country’s manufacturing sector, particularly now that the African Continental Free Trade Area Agreement is in effect.
She said regulatory authorities’ mandates prioritised regulation over promoting economic growth and competitiveness, resulting in unintended negative impacts on businesses and the economy.
“We are trying to bring a methodology or a process that should assist regulatory authorities to streamline regulations by first doing regulatory impact assessments (RIA) before they introduce regulations, so that they don’t introduce regulations that may have unintended impacts on the economy and business.
“If the regulations have a negative impact on business, it has a negative impact on the economy; that is what we are trying to address,” she said.
Ms Kuvarika said this at a regulatory impact assessment stakeholder dialogue that was organised by the National Competitiveness Commission (NCC) in conjunction with CZI and the National Economic Forum (NECF).
Ms Kuvarika said the benefits of regulatory reform were numerous, indicating that a more streamlined and competitive regulatory environment would unlock investment and the country can attract more foreign direct investment and retain existing investors.
She said that would also promote competitiveness because a competitive regulatory environment would enable local businesses to compete more effectively in the global market, particularly with the African Continental Free Trade Area (AfCFTA).
“It will also support start-up and small to medium enterprise (SME) growth through the creation of a more favourable business environment, driving innovation and job creation,” she said.
Ms Kuvarika also noted that, post the introduction of regulations, a regulatory impact assessment can also be done.
“We are aware that there is a process that the Zimbabwe Investment Development Agency (Zida) is going through, such as creating a portal of our regulations and putting them all in one place.
“But we believe that over and above that, what would complement that process is to ensure that we immediately start regulatory impact assessments across different sectors and across different regulators, and our main call is that the Head of State needs to drive this,” she said.
She said there are different constraints in ministries and departments (MDAs), hence, the direction the country should take should come from the Head of State, as the President did earlier this year.
“It is an urgent thing to do because we are fighting for foreign direct investment, for our investors here to stay and to expand their businesses,” said Ms Kuvarika.
Consultant Ms Emma Green, senior associate, Genesis Analytics, South Africa, said most countries that adopted a regulatory impact assessment created their own standard method of doing it.
“It might be quite similar, it might differ, but overall, these are the overarching sets that seem to benefit the most. Kenya is at a very interesting current momentum, both because the whole world is going through a big red tape reduction trend.
“We are seeing, for example, with President Trump in the US, cutting a lot of regulations for business in the EU and the UK as well, cutting a lot of regulations.
“This is trickling down across the developing world, but I think Zimbabwe is responding well to that trend,” she said.
She said AfTCA was also putting pressure on Zimbabwe to create a competitive environment, and the country was making progress in that direction.
“An important way that red tape reduction will be achieved is through the introduction of regulatory impact assessment (RIA) and post-regulatory impact assessment to look at how effective current regulations are and reduce any unnecessary red tape, but also more proactively introducing the regulatory impact assessment,” she said.
Ms Green also noted that regulatory impact assessment requires the highest level of political will, commitment and support.
She said the country should build strong legal and institutional frameworks and invest in capacity building and training.
“Make RIA an integral part of regulatory development, not an afterthought and embed it in policy planning cycles and approval processes,” she said.
Ms Green said, in the interim, to address immediate red tape, the country should consider red tape mapping and rapid RIA for key issues.
Then, for longer-term regulatory quality, she said there was a need to consider implementing a cross-cutting RIA system.
“The first stage is to secure high-level endorsement, followed by establishing policy and legal frameworks and a pilot RIA in strategic ministries and sectors and finally creating a central co-ordination unit.
Ms Kuvarika said the industry was willing to continue working on ensuring that the Government started implementing the regulatory impact assessments.
“If we get collaboration from the Government to really commit to doing this for the different ministries and agencies and we all work together to ensure that at the end of the day, we have a competitive environment for our businesses and our economy,” she said.
Industry and Commerce Minister Nqobizitha Mangaliso Ndhlovu, in a speech read on his behalf by his deputy Raji Modi, said the Government was committed to improving the regulatory environment.
“Business should not suffer because of regulation, but regulations should improve the business environment. Over-regulation accounts for 18 percent of business overheads; hence, as a government, we are committed to streamlining that through the National Development Strategy 1 (NDS1) as well as the upcoming NDS2,” he said.
He also highlighted that the government will continue to work with the private sector to create a competitive environment.
In January 2025, the CZI implored the Government to implement radical deregulation measures to cut the high cost of doing business.
Earlier in January, CZI said regulatory compliance accounted for 18 percent of total overheads, with manufacturing firms required to comply with at least nine regulatory bodies.
It also noted that businesses are dedicating significant time and resources, with an average of three full-time employees handling regulatory issues and 10 days per month spent on compliance.
Zimbabwe’s most influential business lobby group pointed out that local businesses had to navigate 51 different taxes and regulatory fees, compared to just seven in South Africa.
To address the situation, CZI proposed a Presidential directive to cut regulatory costs by at least 70 percent by June 2025 and freeze new regulations unless they improve competitiveness.
