2.5 M EASURES TAKEN BY THE G OVERNMENT OF Z IMBABWE TO CREATE A CONDUCIVE ENVIRONMENT
2.5.1 SME Policy Index: Analysis of the Policy and Strategy Framework for SMEs in Zimbabwe . 45
2.5.1.2 Cheaper and faster start-up
Central to cheaper and faster start-up is the company registration process which includes registration, notification and compliance (SME Policy Index, 2007:15). Lessening the requirements for company registration lessens the burden of compliance on SMEs thereby encouraging more small businesses to register. The SME Policy Index (2007:15) is concerned with a restructuring of the registration process thus achieving a substantial reduction of the time and costs associated with company registration. To achieve this government can establish one stop shops, licenses and permits, and the establishment of an electronic company register (SME Policy Index, 2007:15). These suggestions are aimed at easing the process of registration and act as incentives for small businesses in the informal sector to register.
Deregulation is an intervention strategy by the government of Zimbabwe which entails the removal of legal impediments to starting and growing a business and is enshrined in the Small Businesses Act (National Policy and Strategy for SMEs, 2002:8). Loosening the grip of government regulations on company registration will encourage company registration as well as their growth. Msipah et al. (2013:82) are of the view that the Small Business Act acts as a legal instrument to facilitate the growth of the sector and offer an effective mechanism for giving
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incentives to SMEs. Such a legal instrument is important as it gives the government a legal obligation to ensure the development of the small business sector. It also shows government support of SMEs and will go a long way to lessen the burden of starting up and growing a small business.
Minimising and simplifying the process of establishing a business through simple procedures that require minimum time and effort for example the issuing of relevant licences and permits, is another intervention strategy for lessening the burden of registration (National Policy and Strategy for SMEs, 2002:8). Chirisa et al. (2012:128) concur with this and point out that there is need for government to eliminate those regulations that stifle business growth by removing bottlenecks in the registration process of SMEs. The SME Policy Index (2012:4) notes that reforms to the company registration process have limited overly burdensome regulations in countries like Belarus and Ukraine. Therefore, simplification of the registration process is important to the establishment of small businesses.
However, in Zimbabwe the government is still to enact the Small Business Act and as such, there are still challenges with the registration process for SMEs in Zimbabwe (Zimbabwe Medium Term Plan, 2011:157). The lack of a commitment from the government towards fulfilling its obligations is problematic. Murwira (2014) reports that the Zimbabwean government is yet to align over 400 laws to the new constitution and in this task, it is largely underfunded and resource constraint. Such a situation shows that the chances of the Small Business Act being enacted are slim due to the government being incapacitated.
Furthermore, the Government of Zimbabwe through ZimASSET (2013:34) points out that the success of the policy is dependent on the alignment of legislation, policies and guidelines by all government ministries and departments. The slow progress in the alignment of laws and policies presents a problem for SMEs especially since he financing of the sector is reliant on the Small Business Act. The importance of the Small Business Act is such that the SME Policy Index (2012:4) highlights that legislative simplification reduces administrative and legislative barriers for SMEs.
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In 2002 government suggested the establishing of a one stop shop by the Zimbabwe Investment Authority which would reduce the time of setting up a business from 48 days to 5 days. At the time Zimbabwe was ranked 157 out of 183 on the World Bank’s Ease of Doing Business Report (Industrial Development Policy, 2012:31). However, in 2014 Zimbabwe was ranked 170 out of 189 on the World Bank ease of doing business rankings (Murwira, 2014). With the establishment of a one stop shop it would have been expected that doing business in Zimbabwe would become easier however it is increasingly becoming more difficult to do business in Zimbabwe. Partly to account for this is the fact that officers at the one stop shop have no power to make the necessary decisions and also the existence of numerous bottlenecks that make doing business in Zimbabwe cumbersome and expensive (Murwira, 2014).
Furthermore, due to administrative bureaucracy it takes longer for SMEs to register and obtain licences for their entities. According to Gombarume and Mavhundutse (2014:105) it takes 952 days to deal with licensing issues in Zimbabwe. To this end, Chipangura and Kaseke (2012:54- 55) argue that cumbersome laws, heavy regulatory burden and administrative bureaucracy increase the transaction costs for SMEs thereby hampering their performance and growth. The registration process is also costly because of the numerous procedures that the business has to go through. Figure 2.2 is an illustration of the assessment framework for cheaper and faster start-up.
The legislation and regulation for SMEs framework is included to show how legislation and regulation can be developed to influence SME start-up.
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Figure 2. 2 Assessment framework for cheaper and faster start-up and better legislation and regulation for SMEs.
Figure 2.2 shows the SME Policy Index assessment framework for Cheaper and Faster start-ups and better legislation and regulations according to the OECD (2014:41). In order for the Government of Zimbabwe to allow for cheaper and faster start-up there is need to lessen the time it takes for the issuance of business establishment registration certificate and the completion of the overall registration process and entry in operations. Online access and one-stop-shop for registration and start-ups can facilitate the cheaper and faster start-up process OECD for ASEAN and East Asia, 2014: 41).