Zimbabwe firms predict gloom

MORE than three quarters of businesses across various sectors of the economy have said the ease of doing business in Zimbabwe was unfavourable as a result of policy inconsistencies and limited financing, according to a new survey.

The findings were revealed yesterday at the launch of the Zimbabwe National Chamber of Commerce (ZNCC) inaugural State of Industry and Commerce Survey, which was undertaken to provide information on industry performance.

The performance relates to capacity utilisation across all sectors of the economy.

The survey also looked at business confidence, competitiveness and new business establishments from year-to-year.

The survey was carried out in partnership with the Friedrich Naumann Foundation for Freedom in Zimbabwe.

It said 76% of respondents said the ease of doing business remained unfriendly in 2021.

However, 11% of respondents said the doing business environment was conducive, while 13% were neutral.

For the year 2020, 92% of the respondents said the ease of doing business was unfavourable with just 5% saying the doing business environment was conducive while 3% were neutral.

"Respondents were asked to indicate the challenges weighing down on the ease of doing business in the country. According to the survey results, the major challenges relate to limited availability of credit (91%), unpredictable policy landscape (82%), multiple licence requirements (73%) and red tape in public offices (67%) among others," the report revealed.

"Zimbabwe lacks patient capital which is critical for the much-needed recapitalisation and retooling."

The survey noted that over the past three years, the promulgation of a plethora of satutory instruments (SIs) had unintended destabilising effects on businesses.

It said the SIs were introduced with neither consultation with the business community nor impact analysis.

It also noted that despite the establishment of the Zimbabwe Investment Development Agency, red tape and multiple licences remained major inhibitors to doing business in Zimbabwe.

"More reforms are still needed in the licensing regime and efficiency in public service delivery," the report observes.

The report revealed that sectoral capacity utilisation ranged from 10% to 80%, the average being 47,5%.

The sectors with relatively high levels of capacity utilisation include agriculture, hunting, fishing and forestry (80%), transport and storage (77%) and information and communication (70%).

The sectors with low capacity utilisation were arts, entertainment and recreation (10%), accommodation and food service activities (21%) and financial and insurance activities (27%).

Among the drivers of capacity utilisation for the high performers, the report reveals, is the existence of readily available markets, the availability of capital and local raw materials.

COVID-19 restrictions, lack of capital and skills contributed to the low capacity utilisation for sectors such as the arts and tourism.

Launching the report, Finance minister Mthuli Ncube said the survey revealed the urgent need for government to source more foreign currency especially for those sectors with low capacity utilisation.

As to the concern of the plethora of SIs, Ncube said it was all part of efforts to fine-tune the economy.

"Government is working hard to address the challenges to create an enabling economic environment," he said.

"It is not yet uhuru. We still have a long way to go but we ask for discipline from business to be able to meet our objectives."