Zimbabwe govt to simplify business licensing

The Zimbabwean Government is taking proactive steps to simplify the business licensing process and reduce associated costs, with the aim of improving the ease of doing business in the country. A Cabinet-approved committee, led by the Office of the President and Cabinet, is working on streamlining business licences by the end of the year.

This initiative forms part of the broader strategy laid out in the Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP), which aims to enhance industrial competitiveness and create a more conducive environment for business growth.

Key Features of the Licensing Overhaul

The primary objective of the overhaul is to reduce the number of licenses businesses are required to obtain and make them more affordable. The ZIRGP notes that high compliance costs and numerous licensing requirements are significant barriers to business competitiveness, driving up production costs and stifling economic growth.

By simplifying and lowering the cost of business licenses, the Government seeks to make it easier for businesses, particularly in manufacturing, to operate and thrive in a competitive environment.

Streamlining Business Licenses

According to the ZIRGP, the committee's target is to have the new system in place by early 2025. The committee is also focused on ensuring that licensing costs remain competitive and not punitive for businesses. The ultimate goal is to make it easier for entrepreneurs to start and operate businesses without being bogged down by excessive bureaucracy.

The ZIRGP also highlights the need for a Regulatory Impact Assessment to identify and address regulations that hinder competitiveness across various sectors.

Impact on Retailers and Other Sectors

Retailers have long raised concerns over the complexity of the licensing process. The Retailers Association of Zimbabwe (RAZ) has highlighted that operating a single supermarket in Zimbabwe can require more than 25 licenses and permits. This burdensome process is particularly difficult for retail chains with multiple branches, such as OK Zimbabwe, Pick n Pay, Electrosales, and Truworths.

The licenses cover a wide range of areas, including liquor sales, food handling, fire safety, environmental compliance, tax compliance, and social security, among others. For large retailers, the sheer volume of permits from various Government agencies often creates delays and complications, making it harder for them to compete, especially against informal traders who do not face the same regulatory scrutiny.

The Mining Sector Faces Licensing Challenges

The mining sector in Zimbabwe is similarly affected by overlapping licensing processes from different agencies, which contribute to operational inefficiencies. Licensing costs in this sector are also higher compared to neighboring countries, which discourages potential investment. For example, an investment license application at the Zimbabwe Investment and Development Agency (ZIDA) costs US$500, with an additional US$4,500 for the issuance of the license. This is significantly higher than in countries like South Africa (US$150), Zambia (US$560), and Botswana (US$152).

The high cost of licensing in Zimbabwe is often cited as one of the main reasons why the country struggles to attract foreign investment, particularly in the mining and manufacturing sectors, where the potential for growth is substantial.
Special Economic Zones (SEZs) and the Need for Lower Fees

Analysts have also pointed out that the full potential of Special Economic Zones (SEZs) in Zimbabwe is being hindered by excessive fees, such as the US$50,000 designation fee, which may deter foreign investors. Reducing these fees and streamlining the licensing process could make SEZs more attractive and encourage further investment in these designated zones.

Government's Commitment to Business-Friendly Reforms

The Government's effort to simplify the business licensing process is part of a broader commitment to improve Zimbabwe's investment climate. By tackling high regulatory costs, reducing bureaucracy, and ensuring the licensing process is more predictable, the Government hopes to boost business growth and attract both domestic and foreign investors.

As the committee works towards implementing these changes, businesses in various sectors are hopeful that the reforms will lead to a more efficient, affordable, and competitive operating environment in Zimbabwe.

With the streamlined licensing system set to take effect in early 2025, businesses are optimistic that the new framework will contribute to a more vibrant economy, stimulate job creation, and enhance Zimbabwe's attractiveness as an investment destination.