daniel chigunweNote from ZNCC
Zimbabwe’s National Development Strategy 2 (NDS2), represents a critical milestone in the nation’s journey toward achieving Vision 2030 − a transformative blueprint aimed at establishing Zimbabwe as an upper-middle-income economy. As the country transitions from NDS1, the private sector continues to play a pivotal role in driving sustainable and inclusive economic growth.
The Zimbabwe National Chamber of Commerce (ZNCC) is currently participating in an ongoing workshop on NDS2 priorities in Kadoma, being represented at the highest level by the ZNCC President, Tapiwa Karoro.
All Government ministries, departments, and agencies are participating in the ongoing workshop. The success of NDS2 will depend on the prioritisation of structural reforms, the creation of a competitive business environment and the enhancement of economic resilience while building on the progress being registered in the soon-to-end, NDS1. Accordingly, we delve into the private sector’s perspective on the key priorities under NDS2, exploring the necessary steps to unlock Zimbabwe’s economic potential.
Strengthening the Rule of Law
A robust legal framework is fundamental to fostering investor confidence and ensuring economic stability. The rule of law underpins all aspects of economic activity, from property rights to contract enforcement and is essential for creating a predictable and secure environment for businesses. Secure land tenure is a cornerstone of economic development, particularly in sectors such as agriculture and mining, which are vital to Zimbabwe’s economy.
The absence of clearly defined and legally enforceable property rights creates uncertainty, deterring both local and foreign investors. To address this, Zimbabwe must establish a transparent and efficient land administration system that protects ownership rights and resolves land tenure inconsistencies. Strengthening the legal framework for contract enforcement will further enhance investor confidence, ensuring that businesses can operate with certainty and predictability.
A well-functioning judiciary is critical for resolving business disputes in a timely and fair manner. However, Zimbabwe’s judicial system has been plagued by inefficiencies, lengthy legal proceedings, and allegations of corruption, all of which hinder the ease of doing business. Streamlining court processes, enhancing transparency, and ensuring judicial independence are essential steps toward creating a fair and predictable legal environment. The ongoing establishment of specialized commercial courts could further expedite dispute resolution, fostering greater trust in Zimbabwe’s legal system among investors.
A dynamic and well-regulated market system is essential for fostering innovation, fair competition, and private sector-led growth. Government policies should aim to promote market efficiency while minimising excessive regulatory intervention. Encouraging competition in key sectors such as telecommunications, banking, and energy will help reduce costs, improve service quality, and drive economic diversification. A competitive economy not only attracts investment but also stimulates innovation, leading to increased productivity and long-term growth.
Enablers for private sector growth
For the private sector to thrive, certain foundational elements must be in place. These include reliable energy supplies, minimal government interference, and the privatisation of inefficient state-owned enterprises. Reliable and affordable energy is a prerequisite for industrial productivity and economic stability. However, Zimbabwe has struggled with frequent power outages and high energy costs, which have severely impacted industrial output.
To address this, the government must prioritise investment in renewable energy sources, upgrade national grid infrastructure, and continue to encourage maximum private-sector participation in power generation. Policies should also support independent power producers (IPPs) by reducing regulatory hurdles and creating an enabling environment for energy sector investments.
A thriving private sector requires a predictable and business-friendly regulatory environment. Excessive government intervention in commercial activities distorts market dynamics and discourages investment. To foster private sector growth, the government should focus on reducing its dominance in sectors where private players can deliver greater efficiency and innovation.
Instead of engaging in commercial activities, the government should play a facilitative role by providing infrastructure and regulatory clarity, thereby creating space for private enterprises to flourish.
The privatisation of loss-making state-owned enterprises (SOEs) is essential for improving economic efficiency. Many SOEs have become a drain on public resources, failing to deliver competitive services and the government recognized this and established the Mutapa Investment Fund.
Allowing private investment through privatization and public-private partnerships (PPPs) can enhance efficiency and service delivery. Additionally, further liberalization of key industries such as telecommunications, banking, and transportation will create a more competitive and investor-friendly economic landscape, driving growth and innovation.
Complex regulatory processes increase the cost of doing business and discourage investment. Streamlining tax administration, reducing bureaucratic red tape, and simplifying business registration procedures will enhance economic efficiency. A predictable regulatory environment allows businesses to plan long-term investments with confidence, while consistency in policy implementation will further improve investor trust.
Limited access to affordable credit constrains business expansion and investment. Strengthening financial markets, improving access to low-cost financing for small and medium enterprises (SMEs), and incentivising long-term investment capital are essential for driving industrial growth. Encouraging alternative financing mechanisms, such as venture capital and crowdfunding, will expand financial inclusion and foster entrepreneurship.
Zimbabwe’s informal sector plays a significant role in economic activity but remains largely unregulated. Formalizing this sector is essential for enhancing productivity and integrating informal enterprises into the mainstream economy. Providing incentives for informal businesses to formalize, such as tax breaks, financial support, and simplified compliance processes, will encourage greater participation in the formal economy. Regulatory frameworks should be designed to support rather than penalise formalisation, ensuring that small enterprises can transition smoothly into the formal sector.
Informal businesses often lack the technical skills and resources needed to compete in formal markets. Offering training, access to finance, and market linkages will help small enterprises transition into the formal sector. Strengthening business support services and providing mentorship programs for micro and small businesses will contribute to sustainable growth and decent job creation.
Efficient management of public resources
Effective governance in public financial management is critical for economic stability and growth. Mismanagement of public funds and corruption undermine economic progress, eroding investor confidence and stifling development. Transparent and accountable management of public resources is essential for building trust and promoting economic stability. Implementing stringent financial controls, publishing regular audit reports, and ensuring independent oversight of public expenditures are key steps toward improving fiscal discipline. Transparent budgeting and accountable resource allocation will not only enhance investor confidence but also ensure that public funds are used efficiently to drive development.
Public-private partnerships offer a powerful mechanism for leveraging private sector efficiency in infrastructure development.
Expanding PPPs to cover key sectors such as transport, water, healthcare, and digital connectivity can accelerate progress toward sustainable growth. To maximize the potential of PPPs, the government must establish clear roles, risk-sharing mechanisms, and legal frameworks that ensure transparency and mutual benefit. By fostering collaboration between the public and private sectors, Zimbabwe can attract more investment in critical infrastructure projects.
Regionalised value chains and trade expansion
Zimbabwe’s integration into regional and global value chains is essential for expanding trade and achieving economies of scale. The African Continental Free Trade Area (AfCFTA) presents a significant opportunity for Zimbabwe to enhance its trade footprint and boost economic growth.
The AfCFTA offers Zimbabwe the chance to access larger markets and integrate into regional value chains. To fully capitalise on this opportunity, the government must focus on improving trade facilitation, reducing non-tariff barriers, and enhancing logistics infrastructure. Aligning regulatory standards with regional requirements and encouraging export-oriented production will further enhance Zimbabwe’s competitiveness in African markets.
Overreliance on traditional commodities such as minerals and tobacco makes Zimbabwe’s economy vulnerable to external shocks. Diversifying the export base by promoting manufacturing, agro-processing, and value-added industries is essential for building economic resilience. Support for export-oriented businesses through incentives, trade finance, and capacity-building initiatives will drive sustainable growth. Strengthening institutions that facilitate trade and investment will further enhance Zimbabwe’s export competitiveness.
Addressing Cost Drivers and Competitiveness
High energy and utility costs, complex regulatory frameworks, and limited access to finance are significant barriers to business competitiveness in Zimbabwe. Addressing these challenges is essential for unlocking economic growth. Establishing cost-reflective but fair pricing mechanisms for electricity and water, improving efficiency in state-run utilities, and encouraging competition in energy generation will help lower costs. Policies should also focus on increasing transparency and efficiency in utility management to reduce wastage and improve service delivery.
Conclusion
The success of NDS2 hinges on addressing structural bottlenecks, enhancing business competitiveness, and fostering collaboration between the government and private sector. Strengthening governance, promoting efficient market systems, and prioritising key enablers such as energy security and infrastructure development will drive economic transformation. By leveraging regional trade opportunities, improving public resource management, and formalizing the informal sector, Zimbabwe can build a more resilient and inclusive economy. Achieving Vision 2030 requires a concerted effort to create a business-friendly environment, enhance investor confidence, and unlock the full potential of the private sector. A well-executed NDS2 will pave the way for long-term economic prosperity and sustainable development, ensuring that Zimbabwe realizes its aspirations of becoming an upper-middle-income economy by 2030.
This article was created by the Zimbabwe National Chamber of Commerce for Business Weekly
Bongani Ndlovu