Industry lobby group wants regulatory reforms

Nelson Gahadza

Zimpapers Business Hub

ZIMBABWE’S industry has called for further regulatory reforms to unlock the domestic economy’s full potential and competitiveness, thereby drive accelerated growth and investment.

The Treasury has projected a 6 percent economic expansion this year, following the slower growth of 2 percent last year due to the negative impact of El Niño-induced drought on agriculture, a key sector of Zimbabwe’s economy.

Confederation of Zimbabwe Industries (CZI) chief executive officer Ms Sekai Kuvarika said the regulatory environment was characterised by several constraints across sectors and ministries, which hinder business growth.

This comes after President Mnangagwa, in his first address to Cabinet in February this year, called on all Government institutions, departments and agencies to make sure that regulations, fees and administrative licences do not stifle, but facilitate businesses.

While delivering his keynote address at the National Competitiveness Commission (NCC) Summit in Bulawayo in February, the President reiterated his Government’s commitment to address teething issues in the economy.

He noted that the Second Republic was fully aware of the challenges facing businesses and was intensifying efforts to establish a conducive operating environment that fostered innovation and investment.

Against this background, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube announced in March that the Government was undertaking a comprehensive review to streamline the country’s tax and regulatory framework.

The objective, he said, was to identify and eliminate unnecessary taxes and regulatory fees that hinder business operations.

CZI is on record as saying it had noticed an increase in regulations and regulatory entities over the past 10 years, suspecting that in certain instances, regulatory authorities may be collecting more revenue from companies than Treasury, hence the urgent need for a regulatory impact review.

“This will strengthen the competitiveness of the country’s manufacturing sector, particularly now that the African Continental Free Trade Area Agreement is in effect,” said Ms Kuvarika.

“We are trying to bring a methodology or a process that should assist regulatory authorities to streamline regulations by first doing regulatory impact assessments (RIAs) before they introduce regulations, so that they don’t introduce regulations that may have unintended impacts on the economy and business.

“If the regulations have a negative impact on business, it has a negative impact on the economy; that is what we are trying to address.”

Ms Kuvarika was speaking at a regulatory impact assessment stakeholder dialogue organised by NCC, in conjunction with CZI and the National Economic Forum.

She said the benefits of regulatory reform were numerous, indicating that a more streamlined and competitive regulatory environment would unlock investment and the country can attract more foreign direct investment and retain existing investors.

That would also promote competitiveness because a competitive regulatory environment would enable local businesses to compete more effectively in the global market, particularly with AfCFTA, she said.

“It will also support start-up and small to medium enterprise (SME) growth through the creation of a more favourable business environment, driving innovation and job creation,” said Ms Kuvarika.

“We are aware that there is a process that the Zimbabwe Investment and Development Agency is going through, such as creating a portal of our regulations and putting them all in one place.

“But we believe that over and above that, what would complement that process is to ensure that we immediately start regulatory impact assessments across different sectors and across different regulators.”

Consultant and Genesis Analytics (South Africa) senior associate Ms Emma Green said most countries that adopted a RIA created their own standard method of doing it.

“It might be quite similar; it might differ, but overall, these are the overarching sets that seem to benefit the most. Kenya is at a very interesting current momentum, both because the whole world is going through a big red tape reduction trend,” she said.

“We are seeing, for example, with President Trump in the US (United States) cutting a lot of regulations for business in the EU (European Union) and the UK (United Kingdom) as well cutting a lot of regulations.

“This is trickling down across the developing world, but I think Zimbabwe is responding well to that trend.”

Ms Green said AfTCA was putting members under pressure to create a competitive environment, and Zimbabwe was making progress in that direction.

“An important way that red tape reduction will be achieved is through the introduction of regulatory impact assessment and post-regulatory impact assessment to look at how effective current regulations are and reduce any unnecessary red tape, but also more proactively introducing the regulatory impact assessment,” she said.

Ms Green noted that RIA required the highest level of political will, commitment and support.

She said the country should build strong legal and institutional frameworks and invest in capacity building and training.

“Make RIA an integral part of regulatory development, not an afterthought, and embed it in policy planning cycles and approval processes,” she said.

Ms Green said in the interim, to address immediate red tape, the country should consider red tape mapping and rapid RIA for key issues.

Then, for longer-term regulatory quality, she said there was a need to consider implementing a cross-cutting RIA system.

“The first stage is to secure high-level endorsement, followed by establishing policy and legal frameworks and a pilot RIA in strategic ministries and sectors and finally creating a central coordination unit,” she said.

Industry and Commerce Minister Nqobizitha Mangaliso Ndlovu, in a speech read on his behalf by his deputy Mr Raji Modi, said the Government was committed to improving the regulatory environment.

“Business should not suffer because of regulation, but regulations should improve the business environment. Overregulation accounts for 18 percent of business overheads, hence, as a Government, we are committed to streamlining that through the National Development Strategy 1 (NDS1), as well as the upcoming NDS2,” he said.

He highlighted that the Government will continue to work with the private sector to create a competitive environment.

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