Online Reporter
BUSINESSES complain a great deal about regulations governing their operations and the number of licences they have to pay for and hold, or the agencies they have to register with, to operate formally.
They say this makes doing business harder.
The Government has now promised to review the licensing and regulatory regime to see how this can be drastically reformed.
On the regulation and licensing side, everyone agrees that significant changes are possible, especially when licences, regulations, inspection and enforcement can be consolidated.
This, in turn, would mean lower costs to be recovered through fees.
While it would be fairly easy to gain the impression that local businesses are seriously over-regulated, this is unlikely to be the case.
There might well be some unnecessary conditions and checks, but probably not that many.
No one has ever sat down to draft a regulation with the objective of making doing business harder.
Of the conditions businesses are supposed to meet, two involve revenue collection: the taxes on value added and profits that require registering with the Zimbabwe Revenue Authority; and the local authority’s property rates, which are the main source of income for Local Government.
There are also business licences, whose number seems unreasonable.
While businesses accept that they have to pay taxes and rates, they, however, still want them to be lower.
And while most of the regulations are on health and safety — which are critical to protect workers and customers — the question is on how they can be better administered and enforced without unnecessarily inconveniencing businesses.
Sometimes new licences and regulations are born when the authorities seek to deal with either a previously unrecognised danger or new threats emerging in a particular sector.
What has happened, as the authorities seek to protect people, is an explosion in the number of agencies involved in regulating businesses, so there can quite often be significant duplication, as well as a dramatic build-up of separate forms and inspections.
Naturally, if a lot of extra licence issuers and inspectors are involved, the costs will be obviously higher, and hence total fees will be higher.
The most heavily regulated businesses are those selling food and drinks.
Those who operate supermarkets say they have to buy more than 20 licences and permits to comply with current regulations. This is precisely because a supermarket can combine a butchery, a bakery, a takeaway, a grocer and greengrocer, among others, which might need a set of separate licences. The licences also cover music usage, seed selling, pesticide handling, livestock products and hazardous materials storage.
In such instances, compliance for businesses, especially those that operate many outlets, becomes increasingly burdensome.
So, what is now needed is looking at what the regulations and licences were intended to cover and then consolidating them so that the protections remain in place, but in just one regulatory place.
For example, all regulations concerning a building should be consolidated.
This would include the ventilation, lighting, access to bathrooms, fire protection, fire escapes, compliance with standards on partitioning and all areas where a minimum standard is required.
The result is one building licence.
This can be similarly done for the health and safety requirements in the food industry.
It should be possible to have a single licence for a food factory, as well as one licence for a food shop — anything from a tiny grocery or takeaway to a giant supermarket — with consolidated regulations.
So, fees would be based on size and complexity, but each food business would have just one operational licence.
This would mean a business would have just a maximum of two licences: the business licence that includes all the building requirements and the operating licence if they are selling food or inflammable substances like petroleum gases.
Consolidating these regulations becomes key.
Such major consolidation would make doing business much simpler and cut the costs of the licence regime, which we stress should just be based on cost recovery of enforcement.
It is clear that the current licensing framework and operating conditions were encouraging non-compliance, where entrepreneurs would rather operate informally while bribing officials to look the other way.
This is partly the reason we have a burgeoning informal sector, which, however, has been eating the lunch of formal players.
A simplified licensing framework that rewards compliance would likely coax some informal players into the mainstream economy.
Doing business and operating formally should not be criminalised through byzantine regulations.
Therefore, the undertaking that has since been made by the Government to streamline and review fees, licences and permits within the next six months — reiterated by Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube last week — is most welcome, as it will both dramatically reduce costs for business and facilitate the ease of doing business.
This is likely to encourage local and foreign investors.
The latest intervention, which is a culmination of President Mnangagwa’s directive at the beginning of the year to simplify business processes, should be viewed as a continuation of reforms that have been spearheaded by the Second Republic since 2018.
We are indeed on the right track.
Online Reporter