The Sunday Mail
Africa Moyo
SWEEPING reforms that are meant to simplify business processes are now at an advanced stage, with a new Companies Bill having been crafted as Government heightens efforts to improve the ease of doing business, it has been learnt.
A number of pieces of legislation are also set to be amended in the next few weeks. Government has set up specialised committees that are meant to craft far-reaching reforms in as far as business reforms are concerned.
Team leader of the technical working group on “Starting a business and protection of minority investors”, who is also the Deputy Chief Registrar of Companies under the Ministry of Justice, Mr Willie Mushayi, told The Sunday Mail Business last week that many laws will be amended in the “next few weeks” to make it easier for investors – both local and foreign – to start a business and operate successfully in Zimbabwe.
Currently, the procedures of starting and operating a business are considered to be relatively cumbersome, while the costs are regarded as punitive.
“You will find out that in the next few weeks, there will be a serious attempt to amend many legislations. The effort has already started but we are going to be seeing a lot of these bills going through the processes to become Acts.
“Coming down to the Companies Act, the stakeholders who were involved in the exercise pointed out numerous shortcomings of the current Act to a point where we saw it fit to come up with a new Companies Bill altogether to replace the current Act,” said Mr Mushayi.
With the help of the World Bank – a strategic partner – and consultants hired to do the preliminary work, a “zero draft” has been produced. The Registrar of Companies and the rest of the technical working group that was put together by the Office of the President and Cabinet (OPC) to assist with the reform effort are reviewing the “zero draft”.
After being reviewed by the technical working group, the Companies Bill will go through several stages of further review including by stakeholders. Mr Mushayi said once the stakeholders are “satisfied that their concerns have been addressed”, the Bill will then go through the Government process of legislation.
It is hoped that the new Companies Act would be ready by the end of the year. The new Companies Bill seeks to separate the functions of shareholders from those of directors.
In the current Act, the functions of shareholders overlap, a loophole that has been blamed for causing chaos in the administration and governance of many local companies.
Among many of the far-reaching interventions, the proposed Act will entrench a culture of good corporate governance in light of several bank failures attributed to poor oversight by directors. It also provides for electronic records filing and also brings together the Private Business Corporations Act and the Companies Act.
The Shop Licensing Act, which is administered by local Government authorities and is blamed for causing delays in processing business applications, has already been amended.
Before the amendment, prospective shop owners had to advertise at least twice and wait for objections before the license was granted.
Now, advertising is now limited to “certain circumstances”. A Statutory Instrument giving legal effect to the reforms is expected soon.
Other pieces of legislation, which do not directly relate to starting a business but affect the ease of doing business, will also be amended or introduced. For instance, there are plans to establish a Commercial Court to deal specifically with commercial disputes.
Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya has of late been canvassing for a Commercial Court. Dr Mangudya hinted the Commercial Court would be introduced as part of amendments to the Banking Act.
Currently, there are interminable delays in processing commercial issues as they also have to queue with other cases on the court roll. Chief Justice Godfrey Chidyausiku also weighed in during the official opening of the 2016 legal year on January 11 when he proposed the establishment of a “specialised court” which will be a division of the High Court, to deal with commercial matters. The technical working group on “Starting a business and protection of minority investors” is also concerned that name-searches are still being done manually although there is a computer database.
Mr Mushayi said there is a “lot of human interface” to come up with approved company names and stakeholders have suggested that name-searches be done online.
“The system must be able to carry out name-searches with minimum human intervention. Currently, we are working with a technical partner (the World Bank) and also with the assistance of CCS (the Central Computing Services under ministry of ICT) and the Ministry of ICT; we are putting together a system that we hope to launch this quarter, which would greatly improve the processing of name-searches and new companies as well,’ said Mr Mushayi.
The human interface has seen some officials at the Companies Registrar allegedly making rich pickings from corrupt enterprises as they require an incentive to accelerate processes. Similarly, some enterprising Zimbabweans have set up companies specifically to “assist” people to register companies at a minimum cost of US$300. This is despite the fact that company registration costs US$145, which gives the individuals a profit of US$155.
The National Social Security Authority (NSSA), the Zimbabwe Revenue Authority (Zimra), the Zimbabwe Investment Authority (ZIA), the Zimbabwe Manpower Development Fund (Zimdef) and the Registrar of Companies are meeting weekly to locate ways of improving the ease of doing business. The agencies have developed a monitoring tool which is distributed to customers who record how much time is taken to process a name-search, to register for tax purposes and registering a new company.
Plans are also underway to help reform the Registrar of Companies website in order to create an automated system that will also help companies, especially mining companies that have been complaining of the inconvenience of travelling to Harare to process some of the papers.
Zimbabwe has been faring badly in terms of the World Bank ease of doing business rankings, which measures the simplicity with which companies operate in given economies. The recent rankings rated the country 155 – below the regional average of 143 – out of the 189 economies that were measured.
Regional peers such as Botswana, South Africa, Namibia and Lesotho are ranked 72, 73, 101 and 114, respectively. THE ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operations and stronger protection of property rights.
