A recent study by the World Bank indicates that Zimbabwe is improving its cost of doing business but, unfortunately, the current pace and scale are not satisfactory. This article indicates the key areas that Zimbabwe needs to focus on, with bold scale and pace for it to move out of the low economic freedom ranking. Currently, the country is ranked a lowly 140 out of 190 countries.
The Zimbabwe is open for business initiative is a bold policy declaration to prepare Zimbabwe for accelerated investments and development. It has to be noted that the Zimbabwe Investment Development Agency (ZIDA) and the National Competitiveness Commission (NCC) have, and are trying their level best to improve on company registration and access to information, the challenges remain on multiple, complex, and often opaque regulatory requirements needed for one to start or operate a business in Zimbabwe.
The Zimbabwe Revenue Authority (ZIMRA) recently launched its online platforms, TaRMS. It is celebrated as revolutionary but, it suffers from a history of “duality” in that the majority of business enterprises in Zimbabwe, the Micro-Small to Medium sector institutions have not received adequate public education on that platform and its applicability. ZIMRA seems to have deployed a “shock and awe” methodology of fining and charging companies for non-compliance instead of a charm offensive. The economy works on moral suasion and not threats. ZIMRA must also understand the historical dual nature of the Zimbabwean economy, that taxation was largely expected from the formal sector. Now that the outside sector of the informal economy drives today’s industry and commerce, a massive public education outreach is needed to bring more institutions onto the tax platform. Beyond the technicalities of the platforms is the steep transactional tax, the Intermediated Money Transfer Tax (IMTT). It is pegged at 2%, and noted as high tax on money.
TECa, Zimbabwe’s leading liberal economic policy Think-Tank encourages the Inter-Ministerial committee working on ease of doing business and tax reforms to be bold and really, as the President declares, open Zimbabwe for business. Recent studies indicate that for Zimbabwe to be an upper-middle-income economy by 2030, it needs average annual growth rates of 14%, far higher than the current 6%.
It needs a revolution and a national consensus.