Why Zimbabwe's new 'one stop' investment shop is not a big deal

Dec 22, 2010

Long after many other countries have realized the importance of simplifying their investment procedures, Johnny-come-lately Zimbabwe has also seen the light.

With great fanfare, a ceremony was held in mid-December to open up a One-Stop Investment Shop in Harare. This of course is a welcome development. The bureaucracy involved in doing too many simple things is elaborate and demotivating in Zimbabwe. But the hoopla surrounding this belated, overdue step is embarrassing.
From The Herald of 14 December 2010:

One-Stop Shop to Boost FDI Inflows Four-Fold

Zimbabwe expects Foreign Direct Investment to rise four fold to 20 percent of Gross Domestic Product after streamlining the investment approval process with effect from next month.

President Mugabe launched the One-Stop Investment Shop in Harare yesterday. The one-stop shop is expected to shorten the investment approval process and eradicate the attendant system bottlenecks.

Under the OSS key institutions such as the Registrar of Companies, Immigration, the Reserve Bank of Zimbabwe, Zimbabwe Revenue Authority, Ministry of Mines and Mining Development, Ministry of Labour and the Environmental Management Agency will be housed under one roof.

Expectations are that this would significantly improve the ease of doing business ratings of Zimbabwe, its global competitiveness ranking and attract more foreign investment.

The Minister of Economic Planning and Investment Promotion, Mr Tapiwa Mashakada, said the OSS would reduce the time taken to process investment applications from 96 to five working days.

Zimbabwe is ranked 158 out of 183 in the 2010 World Bank Doing Business Report and 133 out of 136 countries in the World Economic Forum's Competitiveness Report.

The article also mentioned how the OSS has been modelled on ideas borrowed from the best practices in Africa including Mauritius, Uganda, Botswana and Rwanda among several countries in Africa.

A question that must be asked is why Zimbabwe is only now following these arguably less economically developed economies in streamlining its investment-approval and business-registration processes. The one-stop investment center concept is hardly a new innovation. That Zimbabwe is only playing catch up with this idea in 2010 is an indication of how poorly prepared it is to compete for global investment. In other circumstances Zimbabwe would have had a much better chance of attracting investment than some of the countries it is now copying in this regard.

Although Zimbabwe has so much going for it compared to most other African countries, and to indeed many other countries overall (human and natural resources, infrastructure, etc) it has a terrible political and economic reputation from the turmoil of the last decade. It therefore needs to work much harder than countries with fewer basic advantages to attract that investment because of its poor global image. Making a big deal out of something as basic as a simplified investment process in 2010 suggests that the country's rulers have a very poor appreciation of the uphill battle they face to convince investors that Zimbabwe has put the worst of its problems behind it and is now again a good and safe place to do business.

Even taking into consideration that this article appeared in a government-owned newspaper, the hope/prediction that the setting up of the OSS on its own would cause Foreign Direct Investment to rise four fold to 20 percent of Gross Domestic Product is silly.

Bureaucratic delays are not the main reason Zimbabwe is doing so much worse at attracting investment than it should. The many reasons going back over the last 10 years that the coutry has been so much in the news  are why many investors still shun Zimbabwe. Even as the country normalizes politically and economically, the images that remain in the minds of many people when they hear the word 'Zimbabwe' is still one of state-sanctioned if not instigated violence, stolen elections, the casual flouting of property rights and investment agreements, of being ravaged by cholera, hyperinflation, shortages and hunger, etc.

Even at the worst times of all these problems Zimbabwe never 'collapsed' in the way certain media enjoyed saying and writing. And apart from the hyperinflation, the other problems the country faced that earned it so much attention were arguably no worse than happen in many other countries without the same level of attention paid to them, which is not to minimize or excuse those problems. But the point is that for many reasons, Zimbabwe has a huge image problem in addition to the many lingering structural economic and political problems.

Restoring overall confidence in Zimbabwe as an overall political and economic brand is the real key to inspiring renewed confidence that will then lead to significant investment. Confidence that was lost over the events, actions and statements of several years will not be restored overnight. It will be a slow, painstaking process. One wonders if that process has really begun in earnest when one considers the bewilderingly mixed signals from various officials in the ZANU-PF/MDC coalition government on just what the agreed, official position is on many critical issues that impinge on investment.

For instance, what is exactly is the position on foreign ownership of businesses? The fact that there continues to be confusion over such a basic issue, with contradictory statements about this from different or sometimes even the same government officials is more of an investment impediment than bureaucratic delays. Those delays will hopefully be reduced by the one stop shop, assuming it even works as it should, but even that remains to be seen.

It will therefore take far more work than reducing the paperwork and running around involved in setting up a business in Zimbabwe for investments level to rise appreciably in the short term, let alone by a whopping four-fold.

As welcome as the one stop investment shop is, the simple-minded projections of the increases in investment that will likely result from it is also a worrying sign of how out of touch Zimbabwe's rulers are with how much work will need to be done to get the country as investment-competitive as its many advantages should make it.


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