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Doing Business In Zim Still A Hassle

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Harare, March 18, 2013 – Doing business in Zimbabwe continues to be difficult according to World Bank rankings, which has shown that the country is ranked 172 out of the 185 countries.

Doing Business 2013 showed that Zimbabwe had dropped two percentage points from 170 in 2012. Neighbouring South Africa and Botswana ranked 39 and 59 th respectively.

According to data collected by Doing Business, starting a business in Zimbabwe requires nine procedures and takes 90 days.This is a reduction from the 97 days it took between 2004 and 2010. Obtaining a construction permit takes 12 procedures and takes 614 days compared to 333 in 2006.

On average, firms make 49 tax payments a year, spend 242 hours a year filing, preparing and paying taxes and pay total taxes amounting to 35.8% of profit.

Resolving insolvency takes 3.3 years on average and costs 22% of the debtor‘s estate, with the most likely outcome being that the company will be sold as piecemeal sale. The average recovery rate is 0.1 cents on the dollar.

The World Bank report notes that for policy makers trying to improve their economy’s regulatory environment for business, a good place to start is to find how it compares with the regulatory environment in other economies.

Doing Business provides an aggregate ranking on the ease of doing business based on indicator sets that measure and benchmark regulations applying to domestic samll to upmedium-size businesses through their life cycle.

Included in index in Doing Business 2013 were 10 topics namely: starting a business where Zimbabwe ranked last at 185th, dealing with construction permits (170), getting electricity (157), registering property (85), getting credit (129), protecting investors (128), paying taxes (134), trading across borders (167), enforcing contracts (111)and resolving insolvency (169).

The employing indicators were not included.

“While this ranking tells much about the business environment in an economy, it does not tell the whole story,” notes World Bank.

“The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business.”

However, the World Bank notes that it is good for policy makers to know where their economy stands against others in the world.

But just as the overall ranking on the ease of doing business tells only part of the story, so do changes in that ranking.

Yearly movements in rankings can provide some indication of changes in an economy’s regulatory environment for firms. For example an economy’s rank might change because of developments in other economies.

Year to year changes in the overall ranking does not reflect how the business regulatory environment in an economy has changed over time or how it has changed in different areas.

Doing business now measures how far each economy is from the best performance achieved by an economy since 2005. Tthis helps to assess how much an economy has moved forward.

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