Doing business reforms come to fruition

GOVERNMENT’s aggressive pursuit to simplify business processes is coming to fruition, with revelations that the number of days it takes to start a business has since been reduced from 90 to 13.There are plans to reduce them further to between one and three days.

Such reforms ensure the efficiency of agencies such as the National Social Security Authority (NSSA), the Zimbabwe Revenue Authority (Zimra), City of Harare, the Zimbabwe Investment Authority (ZIA) and the Zimbabwe Manpower Development Fund (Zimdef).

Also a second draft of the new Companies Act is expected soon.

Bureaucratic red tape is considered a put off for investors.

This year’s World Bank statistics on the ease of doing business rank Zimbabwe 155 – down from 153 a year earlier – out of 189 economies.

Experts say the rankings are however set to improve.

The doing business rankings look at the whole chain from starting a business, where Zimbabwe is ranked 182; dealing with construction permits (184); getting electricity (161); registering property (114); getting credit (79); protecting minority investors (81); paying taxes (145); trading across borders (100); enforcing contracts (166) and resolving insolvency (152).

Regional peers such as Botswana, South Africa, Namibia and Lesotho are ranked 72, 73, 101 and 114, respectively.

Government has since called for the revamp of the Companies Act in line with the Rapid Results Approach framework.

Presently, the Office of the President and Cabinet is spearheading the reforms.

Five technical working groups – paying taxes and trading across borders; resolving insolvency; enforcing contracts; construction permits and starting a business and protection of minority investors – were created to ensure the expeditious implementation of the reforms.

So far, the technical working group on “Starting a business and protection of minority investors” has scored a number of milestones which include creating the first draft of the Companies Bill and reducing the number of days it takes for local authorities to approve an investment from 56 to 5 days.

Investors are no longer expected to advertise before they set up shop as was the case earlier.

Team leader of the technical working group Mr Willie Mushayi, who is also the deputy chief Registrar of Companies under the Ministry of Justice and Legal Affairs, said the time it takes to register a company with NSSA has been revised from 14 days to 14 minutes.

This was achieved through automating the registration process.

“The same applies for Zimra, it was taking another 14 days and we have managed to reduce it to one day because we have also implemented the automation system at Zimra.

“We are in the process of automating the Registrar of Companies Office and we are currently carrying out a parallel trial system for name search applications which we are actually processing as you walk in.

“We were taking an average of seven days according to the World Bank but we are now taking a day or two at most. We are rolling out the automation to also include the actual registration of companies which, according to World Bank, we were taking almost 14 days and we have reduced that to three days,” said Mr Mushayi.

He said the automated system makes it difficult for employees who might want to delay the process with the hope of soliciting for bribes.

In essence, the system sends an email to the investor and copies it to the supervisor and manager after 24 hours.

“So the system itself is transparent and it allocates the person who should work on it and must be out in three days. That enables us to know who will be delaying the process,” he said.

It is hoped that when all pieces of legislation are in place, in particular the Shop Licensing Act and the Companies Act, the number of days to start a business could be further slashed to between one and three days.

The envisaged framework will also ensure the simultaneous registration of new businesses with other Government agencies, implying that once an investor incorporates a business, it will automatically reflect with Zimra, NSSA, Zimdef and ZIA.

The Companies Bill incorporates input from key institutions such as the Institute of Chartered Accountants of Zimbabwe (ICAZ), the Instituted of Chartered Secretaries of Zimbabwe (ICSAZ), the Bankers Association of Zimbabwe (BAZ), SMEs, and the Employers’ Confederation of Zimbabwe (Emcoz), among others.

“It (the current Companies Act) does not allow for e-filing, it has got no provision for mergers and acquisitions, it does not clearly separate the duties of directors and shareholders and it’s not very clear on the role of the company secretary and even the appointment of auditors.

“So these are shortcomings that we knew and we wanted to know from stakeholders what else they wanted included in the new Act,” explained Mr Mushayi.

Contributions from stakeholders will be included in the second draft Bill that is expected this week.

Once the second draft of the Companies Bill is out, it will also be released to stakeholders for more input before it is finally taken to the Ministry of Justice for final drafting.

“They (legal drafters) will then look at it in view of the laws in Zimbabwe and proper alignment of other existing laws with the Constitution.

“They also then release it to the CCL (Cabinet Committee on Legislation), that is the natural process.

“So ideally, from drafting it goes to CCL and they scrutinise and develop it before releasing it to Cabinet and Cabinet will debate it and improve on it and it’s finally released to parliament,” added Mr Mushayi.

The new Companies Act is expected to be ready in the next four months.