This week, Cabinet made the kind of announcement every Zimbabwean businessperson wants to hear — we plan to cut down on the many licences that make it hard to do business.
But, we are not holding our breath. Here’s why.
Rewind to October last year, and The Herald reported: “A Cabinet-approved committee, chaired by the Office of the President and Cabinet, was working on streamlining business licences by the end of the year…”
Then in February, at the first Cabinet meeting of the year, President Mnangagwa told his ministers: “By nature, Zimbabweans are hardworking. In this regard, emphasis should be on ensuring that business does not suffer from prohibitive regulations as well as punitive administrative licenses and fees required by your Ministries. Fees, licences, permits and regulations should promote economic development and improve the livelihoods of the people.”
In the same month, the National Competitiveness Commission (NCC) – the statutory body which advises government on policies to make the economy competitive – held a Competitiveness Summit in Bulawayo. Again, government heard what business has been saying for years.
The NCC handed officials a list of recommendations, pointing out: “Regulatory compliance costs account for 17.8% of total overhead costs for businesses.”
A few weeks later, Finance Minister Mthuli Ncube joined in. Speaking to The Sunday Mail, he said a committee was already in place looking at the licences, with a clear target: “A good target would be to cut the number of regulatory licences needed to start a business by half. If we can achieve that — halving the number of steps and halving the cost of doing business — that would be a good target, and that is a target that we are aiming for.”
He even gave a timeline: “Give us about six months. I would say about July, August this year.” Well, it’s now “July, August”, and government is saying it is only now starting consultations with “stakeholders” — including business — on what to do. And this is where the real problem is.
Government already has the data. It has already consulted. Officials have already been to countless hotel seminars. Business has already submitted reports on what needs to be done. The NCC has already compiled recommendations. Yet, in July, there were more hotel meetings. Recently, we had the “Regulatory Impact Assessment (RIA) Stakeholder Dialogue” at Cresta Lodge, hosted by the National Economic Consultative Forum (NECF), the Confederation of Zimbabwe Industries (CZI), and the NCC. As usual, business presented its case, and so did the NCC. A South African consultant was even flown in to repeat the obvious: overregulation hurts business.
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Separately, on July 16, the NCC released the fourth edition of its Zimbabwe Competitiveness Report at Rainbow Towers. Again, recommendations were laid out.
The struggles are known. A dairy farmer needs 26 licences from multiple agencies just to operate. A retailer faces 25 different levies. Want to run a tourism operation with both a helicopter and a boat? You’ll need 17 licences for the chopper, and another 14 for the boat. A new tourism bill – published within days of this new Cabinet promise – proposes even more levies on operators across the sector. An SME can spend up to US$8,000 on levies before opening its doors. In food manufacturing, if you import raw materials, you’re expected to pay for government health inspectors to travel abroad every two years to inspect your source. Linking motor insurance to car radio licences has added another layer of needless annoyance for everyone.
Cutting all these costs won’t be easy. Many are controlled by powerful, gatekeeping agencies whose survival depends on these fees, while delivering little value to those that pay levies. Real reform would mean shutting some of them down – and we are not sure the government is ready to derail this gravy train. Research shows how some of these agencies are collecting more money from business than Mthuli himself is. One company paid US$134,000 in charges last year to regulators last year. But, it paid no corporate tax to Government. Why? Because it made a loss after paying levies.
So, the problem isn’t the absence of data. It is the absence of action.
Government doesn’t need another committee. It doesn’t need more hotel workshops, where the highlight for bored officials is queuing with lunch and drinks coupons in hand at the buffet. What it needs — what the economy demands — is for someone to finally act on what everyone already knows. For once.
