Reforms are the realistic way out
Zimbabwe moved from 161 to 159 in the World Bank rankings. Its rise has been attributed to improvements in the ease of setting up a new business.
The World Bank rankings also measure aspects of regulation affecting eleven areas of the life of a business, ten of which are included in this year’s ranking on the ease of doing business:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
To make starting a business easier, Zimbabwe eliminated the requirements to advertise applications for a business licence and improved access to credit information by launching a new credit registry. Credit scoring was later discontinued reducing access to credit information.
Zimbabwe is not out of the woods yet because the government is not prepared to fully embrace reforms. It is only interested in superficial reforms, which continue to spook investors.
The government still has not revoked the Indigenisation law, which several business delegations and international financial institutions have said on many occasions that it scares investors away.
Zimbabwe must accept a range of reforms prescribed by economic experts in order to attract capital. Political will and commitment are paramount to address the issue together with far reaching structural reforms.
Only then, Zimbabwe could become a preferred investment destination. However, until that happens, investors will run away and the nation will stay poor.