Agri-business leaders perceptions of the enabling environment in Zimbabwe 2011

8/2/2019 Agri-business leaders perceptions of the enabling environment in Zimbabwe 2011

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This publication was produced by DAI for review by the United States

Agency foal Development.

January, 2011


Agency for International Development.

January, 2011


Agency for International Development.

January, 2011

PERCEPTIONS OF THE

PERCEPTIONS OF THE

INVESTMENT CLIMATE FOR

AGRIBUSINESS IN

ZIMBABWE: 2011

CONTRACT NO. EDH-I-15-05-00004-00

TASK ORDER EDH-I-15-05-00004-00

August 2011

This publication was produced for review by the United States Agency for International Development.It was prepared by Mr David Irwin under subcontract of IMANI to DAI.


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INVESTMENT

CLIMATE FOR

AGRIBUSINESS IN

ZIMBABWE: 2011

CONTRACT NO. EDH-I-00-05-00004-00

TASK ORDER EDH-I-15-05-00004-00

FinalforUSAIDApproval

ProgramTitle: ZimbabweAgriculturalCompetitivenessProgram(ZimACP)

SponsoringUSAIDOffice: USAID/Zimbabwe

ContractNumber: EDHI00050000400

Contractor: DAI

DateofPublication: August2011

Author:

DAI

The authors views expressed in this publication do not necessarily reflect the views of the

United States Agency for International Develo ment or the United States Government.


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Contents

1. SUMMARY ..................................................................................... 52. INTRODUCTION ............................................................................ 7

3. ENABLING ENVIRONMENT ASSESSMENTS ...................................... 7

4. RATIONALE FOR THIS STUDY.......................................................... 95. METHODOLOGY ........................................................................... 96. NATIONAL VIEW .......................................................................... 107. REVIEW BY SECTOR ...................................................................... 228. REVIEW BY BUSINESS SIZE ............................................................ 269. REVIEW BY LOCATION ................................................................. 2710. COST OF RED TAPE ..................................................................... 37


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5

Business leader perceptions of the investment

climate for Agribusiness in Zimbabwe: 2011

1. Summary

ThisreporthasbeenpreparedtohighlightthefactorsthatinhibitagribusinessesinZimbabwe

fromachievingitsfullpotentialincreatingjobsandwealth.Itfocusesontheperceptionsof

businessleaders,

since

investment

decisions

are

based

on

perceptions

of

the

environment

and

expectationsofhowitmightchange.Understandingthoseperceptionscanassistbusiness

associationsandpolicymakerstofocusonthefactorsthatarecausingparticulardifficulties,so

thereportalsosuggestsprioritiesforaction.Businessleaderswereaskedabout:

Theenablingenvironmentfactorsthatareimportanttotheirbusiness;

Thefactorsthatmakeitdifficulttodobusiness;

Whetherarangeofpublicagenciesweresupportiveofbusiness;

Theperceptionofwhetherand,ifso,howbusinessassociationsareaddressingeach

factor;

Theirperceptionofwhetherand,ifso,howgovernmentisaddressingeachfactor;

Theirviewofwhethereachfactorwouldbelikelytodeterfutureinvestment;

Theirsatisfactionwiththelevelofpublicprivatedialogue

Theirassessmentofthecostsinvolvedinmeetingtherequirementofregulationandred

tape.

Thefactorsthatmakeitdifficultforbusinessestogetonwithrunningandgrowingtheir

businessarepower,allaspectsofcreditand,tosomeextent,waterandroads.

Figure 1: Issues that cause difficulty weighted by importance

Respondentsperceivebusinessassociationstobemakingsomeefforttoimproveallfactors.

Therearecleargeographicaldifferences,however,withrespondentsinMaronderaandGweru

thinkinglessoftheeffortsoftheassociations.Thereislittledifferenceinperceptionbetween

respondentswhoaremembersofabusinessassociationandthosearenot.

Respondentssimilarlyperceivethegovernmenttobemakingsomeeffortonmostissues,

thoughnotonthecrucialissueofaccesstofinance.Again,therearegeographicaldifferences

withrespondentsinMaronderaandGwerugenerallylesspositive.

Respondentssaidthatnofactorcompletelydetersfurtherinvestment(score>2.5)butalsosaid

thatnofactorencouragesiteither(score


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6 BusinessLeadersPerceptionoftheInvestmentClimate

deterrentarecredit(access,loanperiodsandinterestrates)followedbycorruptionandthen

power.

Figure 2: Factors which deter investment

Again,therearegeographicaldifferences,withrespondentsinBulawayoleastpositiveabout

investment.Thereareconsiderabledifferencesinperceptionwhensizeofrespondentsis

considered,withrespondentsemploying15beingleastpositiveaboutinvestment.

Mostrespondentsthinkthatthereshouldbemorepublicprivatedialoguepresumably

hopingthatthiswillleadtoimprovementsintheenablingenvironment.

Wehavepreparedanenablingenvironmentpriorityindexbasedonthelevelofdifficulty

perceivedby

respondents

combined

with

their

perception

of

effort

being

made

by

governmenttoaddresseachissue.Noteinthechartthatthehigherthescore,themore

enablingthefactorandthelowerthenumber,themoredisablingthefactor.

Figure 3: Enabling environment priority index

Sotheprioritiesareaccesstocreditandpower,withcorruptionregardedasmuchlessofa

priorityfor

attention,

though

that

is

not

to

say

that

it

can

be

ignored

since

it

is

an

investment

deterrent.Import/exportandbordersareperceivedverypositively.


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7

Apoorenablingenvironmentincreasescostsandreducescompetitiveness.Muchofthisis

hardtoassess,butitispossibletolookatthespecificcostsofredtapeandlicensing.

Respondentsestimatethattheyarespendingasmuchas10percentoftheirincomeon

dealingwithregulationreducingthissignificantlywouldmeanbusinesseswouldbemore

profitableandwouldthenbeabletoreinvestmoreoftheirearnings,perhapsevenreducing

theneedtorelyonexternalfinancing,butcertainlyreducingtheirgearing,thusmakingit

easier

to

raise

finance

when

necessary.

ThisisthefirsttimethatasurveysuchasthishasbeenundertakeninZimbabwe.Itishoped

thatitwillbepossibletorepeatthisonaregularbasis,sincetherealvaluewillcomefrom

lookingatthetrendsandinparticularwhetherprojectssuchasZimACPcanmakea

difference.

2. Introduction

Thisreporthasbeenpreparedtohelpbusinessassociations(includingfarmersunions,

commodityassociationsetc)andpolicymakerstounderstandbetterthebusiness

environmentfaced

by

the

agricultural

sector

in

Zimbabwe.

It

has

been

commissioned

by

the

ZimbabweAgriculturalCompetitivenessProgramTrust(ZimACP),a4.5year,USAIDfunded

programme,whoseroleistoraisethelevelandqualityofprivatesectoradvocacyandthe

effectivenessofpublicprivatedialoguewithintheagriculturalsectoraswellasdesigningand

implementinginitiativestosupportagriculturalbusinessesinZimbabwetoimprovetheir

competitivenessoverthelifeoftheprogramme.

Itisnowcommonlyacceptedthatimprovementsintheenablingenvironmentleadtogreater

levelsofinvestmentbytheprivatesector,morewealthandjobcreation,andultimatelymore

povertyalleviation.1Improvingthebusinessenvironmentisnotalwayseasy.Itrequiresco

operationanddialoguebetweenthepublicandprivatesectors.Tomakethebiggestimpact,

governmentand

business

associations

need

to

understand

the

needs

of

business

and

to

prioritisethoseissueswhicharecausingthebiggestheadachesandwhicharemostlikelyto

deterinvestment.Thepurposeofthisreportistocontributetothatunderstandingand

debate.

Itishopedthattheresultspresentedinthisreportwillstimulatediscussionaboutwaysin

whichtheenvironmentcouldbeimprovedforfarmersandagribusinesses.However,itisalso

intendedthattheresultsshouldprovideabaselinesothatZimACPcandeterminethelevelof

improvementintheenablingenvironmentasperceivedbyfarmersandagribusinesses.From

2012,comparisonstudieswillbeundertakentotrackperceptionsastheyreflectactionstobe

takenbybusinessleaders.

3. Enabling environment assessments

Severalinternationalorganisationsprepareglobalbusinessenvironmentsurveys.Perhapsthe

bestknownistheannualWorldBankDoingBusinessReport.

InDoingBusiness2011,Zimbabweisranked157outof183countries,moreorlessatthe

samelevelas2010and2009.Figure4showsZimbabwespositioncomparedtoasmall

numberofothersubSaharancountries.InDoingBusiness2011,Mozambiqueranked126,

Kenyaranked98,SouthAfricaranked34andMauritiusranked20.Somecountrieshave

adoptedambitioustargetstoimprovetheirposition:Nigeria,forexample,isrankedat137in

DB2011and

aims

to

be

in

the

top

20

by

2020.

1 See for example World Bank Doing Business reports (www.doingbusiness.org) and World Development Report 2005.


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Thereisaproblemwithusingrankingssinceacountrycanfallsimplybecauseothersmake

moreeffortorcanrisesimplybecauseothersfail.Buttherankingsareusefulinthattheygive

atleastsomeindicationofhowcountriesareperforming.

Figure 4: Doing business rankings

Source: adapted from World Bank Doing Business reports (2005-11)

Table1showshowZimbabweranks(outof183countries)insomeoftheindividualareas

anditcoulddobetterinallofthem.ItisworthnotingthatZimbabwefell30placesingetting

creditin2010and30placesinenforcingcontractsin2011.Ifthereisanythingthatbusinesseslikelessthanapoorenablingenvironment,itisanunstableenablingenvironment,sincethis

makesitsomuchhardertoplanahead.

Table 1: Zimbabwe: Doing Business rankings

2009 rank 2010 rank 2011 rank

Ease of doing business (overall rank) 158 159 157

Starting a business 164 145 143

Dealing with construction permits 174 178 172

Registering property 85 84 82

Getting credit 84 113 128

Paying taxes 157 130 131

Enforcing contracts 77 78 110

Sources: World Bank (2008) Doing Business 2009; World Bank (2009) Doing Business 2010: reforming through difficulttimes;World Bank (2010) Doing Business 2011: making a difference for entrepreneurs.

WhilsttheWorldBanksworkisvaluabletopolicymakersinhighlightingareasworthyof

reformandpromotingdebate,itdoesnotofferaholisticviewinthatitfocusesonanarrow

selectionofindicators.Encouragingmorepeopletostartinbusinessortojointheformal

economy,or

encouraging

more

investment,

will

depend

upon

abroader

perception

of

the

easeofdoingbusinessthanthenarrowviewreportedinDoingBusiness.


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9

4. Rationale for this study

WithorganisationssuchastheWorldBankandWorldEconomicForumundertakingresearch

toassesstheproblemsfacedbybusiness,itmayseemthatthereisnoneedforfurther

studies.Thisstudyisdifferent,however:

Thisstudygathersandreportsontheperceptionsofbusinessleadersthemselves.People

acton

the

basis

of

their

perception

of

the

environment

(even

ifthat

is

not

wholly

accurate)

andtheirbestguessofwhattheenvironmentmightbelikeinthefuture. Itistherefore

important,ifnotmoreimportant,forpolicymakerstounderstandtheperceptionsof

businessleaders,inadditiontothemoreobjectivemeasuresofthebusiness

environment.

DoingBusinessdoesnotlookatspecificsectors,butthisresearchfocusesspecificallyon

thefactorsthatareimportanttofarmersandagribusinesses.Also,unlikeDoingBusiness,

itaimstoidentifygeographicaldifferences.

Thereareawiderangeoffactorswhichtogethercomprisetheenablingenvironment,

thoughnotallareimportanttoeverybusinessorsector.

Thesurveynotonlyaskedaboutthefactorsthatareproblematicbutalso,unlikeother

surveys,asked

business

leaders

to

identify

the

factors

where

business

associations

and

the

governmentareperceivedtobemakingapositiveeffort.

Thesurveyhasattemptedtoquantifythecoststobusinessofmeetingtheregulatory

requirementsimposedonthem.

5. Methodology

ThefieldworkwasundertakenduringMayand June 2011byJIMATDevelopment

Consultants,aninternationaldevelopmentconsultancyfirmwithitsheadofficeinHarare,

Zimbabwe.ThesurveywasconductedusingaquestionnaireoriginallydesignedbyDavidIrwin

andmodifiedindiscussionswithZimACPtoreflectthelocalcircumstances.

Thequestionnaire

was

pre

tested

by

JIMAT.

The

questionnaires

were

administered

face

to

faceandresultsforeachrespondenttranscribedintoaspeciallydesignedspreadsheet.

Thesampleconsistedofbusinessleaders,orselfemployedbusinesspeople.Asamplingframe

waspreparedtoprovideasamplepopulationgreaterthan385(togive,statistically,a95per

centconfidenceleveland5percentprecisionassuminga50percentdegreeofvariability).

WeestimatedapercentageforeachofthesixcommoditiescoveredbyZimACP(horticulture,

cereals,legumes&oilseeds,livestock&meat,cottonandtreecrops)basedonFAOstatistics

andonaconversationwiththeChiefEconomistattheMinistryofAgriculture,Mechanisation

&IrrigationDevelopment.ThereisadesirebyZimACPtocoverthewholevaluechainsothe

surveyalsocoveredinputandequipmentsuppliers,agroprocessorsandancillaryservice

providers,

such

as

banks,

vets

and

trainers.

Zim

ACP

works

nationally,

so

was

keen

to

cover

at

leastfiveareasinthesurveythough,tosimplifythelogisticsforthefirstsurvey,restrictedthe

fieldworktoanareawithina60kmradiusofeachcity:Harare,Bulawayo,Gweru,Mutareand

Marondera.Ideally,thegeographicsplitofthesampleshouldbebasedongeographic

contributiontoGDPbutfiguresarenoteasilyavailable,sopopulationwasusedasaproxy;

someagriculturalsectorsareconcentratedinoneortwogeographicareassothesplitwas

adjusted.Wealsorecognisedthatfindingexactlytherightnumberofrespondentsforeach

subgroupmightbechallenging,sothefieldteamusedthemasaguideratherthanbeing

expectedtoachievetheexactnumbersinthesamplepopulation.

Intheevent,thesamplepopulationcomprised390businessescoveringarangeofagricultural

sectors,locationsandbusinesssizes.Thecompositionofthesampleisshownintable2.


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Table 2: Sample population composition

By sector By commodity (farmers &processors)

By number ofemployees

Farmers 224 Cereals 72 0-5 62

Processors 123 Cotton 74 6-50 244

Total farmers & processors 347 Horticulture 66 51-100 37

Input suppliers 25 Livestock 60 >100 39

Ancillary service providers 18 Pulses & legumes 24

Total sample 390 Mixed 51

347

By location By business association

Harare 182 Member 220

Bulawayo 63 Not member 170

Gweru 70 Total 390

Mutare 46

Marondera 29

Personaldetails

of

respondents

were

collected

in

the

hope

that

we

can,

in

the

future,

run

this

asapanelsurvey.However,allrespondentswereassuredthattheirresponseswouldbe

treatedtotallyconfidentially.

6. National view

6.1 Factors important to business

Inthefirstquestion,respondentswereaskedtoindicatewhichofarangeoffactorswere

importanttothesuccessoftheirbusinessandthentoindicatewhethereachofthosefactors

madedoingbusinessverydifficult,somewhatdifficult,hadroomforimprovementorwasnot

aproblem

at

all.

The

reason

for

splitting

the

results

is

that

it

is

quite

possible

for

afactor

to

be

importantamanufacturermightneedareliablesourceofelectricpowerforexampleora

servicebusinessmightrelyoneffectivetelecommunicationsbutforthatfactornottocause

problemspowerortelecommunicationsmightbereliablyavailable.

Figure 5: Importance of factors (all respondents)

Withtheexceptionofimport&exportregulationsandborders&airports,mostfactorswere

seenasimportant.


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11

6.2 Factors which make business difficult

Figure6showsthefactorsthatbusinessesperceivetomakelifedifficult.Thefactorsthat

makebusinessverydifficultareaccesstofinance,power,loanperiodsandinterestrateson

loans.

Figure 6: Factors which make business difficult

Itisnotalwayseasytoassimilatethedatawhenresponsesaresummarisedinthisway,sothe

resultshavebeencodedbyallocatingascoreforeachresponseasfollows:1notaproblem;

2

could

be

improved;

3

makes

doing

business

somewhat

difficult;

4

makes

doing

business

verydifficult.So,anaveragescoreof4wouldmeanthateveryrespondentthinksthatanissue

makesbusinessverydifficultandanaveragescoreof1meansthateveryoneseestheissueas

notaproblem.TheresultsaresummarisedinFigure7.


Ascan

immediately

be

seen,

access

to

finance

and

power

are

both

regarded

as

making

businessmorethansomewhatdifficult.Loanperiodsandinterestratesarenotfarbehindso


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evenifabusinesscanaccessaloan,thetermsareseentomakebusinessdifficultaswell.

Roadsandwaterarealsoseenasmakingbusinesssomewhatdifficult.

InFigure8,thefactorswhichmakebusinessdifficultaredisaggregatedbymainactivity.For

mostfactors,thereislittletochoosebetweenthedifferentgroupsofrespondents.Itisworth

noting,however,thatserviceprovidersseemtohavethemostproblemwiththeenforcement

ofcontracts.Theyalsohavethemostproblemwithroads.


InFigure9,thefactorsthatcausedifficultyhavebeenweightedbyimportancetothe

respondent.Whilsttheoverallscoresareslightlylower,theresultsareverysimilar.Powerand

accesstofinancemakebusinesssomewhatdifficult,withloanperiodsandinterestrates

causingproblems.Borders&airports,import&exportregulationsandtradesunionsareseen

asnotbeingproblematicatall.

Figure 9: Issues that cause difficulty weighted by importance


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13

6.3 Public agencies

Thereareanumberofpublicagenciesintendedtosupportbusiness(suchastheZimbabwe

InvestmentCentre(ZIC)),ortoregulatebusiness(suchastheEnvironmentalManagement

Authority(EMA))orhaveadifferentrole(suchaslocalauthoritiesandNationalIncomes&

PricingCommission(NIPC)).Allimpactonbusinessinsomeway,sorespondentswereasked

whethertheyfoundeachoffouragenciessupportive.Whilstnonescoredparticularlywell,itis

interestingto

note

that

more

than

20

per

cent

of

respondents

saw

the

EMA

as

very

supportive.

Figure 10: Public agencies support business

Aswith

the

assessment

of

which

factors

make

doing

business

difficult,

the

responses

were

codedtogiveasinglescoreforeachagency.TheresultsareshowninFigure11andFigure12.

ZimbabweInvestmentCentreandNIPCareperceivedtomakenodifferencewhilsttheEMA

andlocalgovernmentareperceivedtobesomewhatsupportive.Itisinterestingtonote,

however,thatinMarondera,theEMAisseenasmakingnodifferenceandtheotherthreeare

allperceivedtobeunsupportive.

Figure 11: Perception of public agencies support for business (by location)

Perhapslesssurprisingly,thelargerabusiness,themorelikelytheyaretoseetheagenciesas

supportive.Businessesemployingonetofivepeopleseearetheagenciesasmakingno

difference,borderingonunsupportiveforNIPCandZimbabweInvestmentCentre.

Figure 12: Perception of public agencies support for business (by size)


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6.4 Business association performance

Thetermbusinessassociationisusedtocoveranyassociationthatpurportsinsomewayto

representbusinessesorindividualsinrelationtobusinessmatters,includingtrade

associations,chambersofcommerce,farmersunionsetc.

Weaskedrespondentswhethertheyperceivedbusinessassociationsweremakingeffortto

addressthe

different

factors

of

the

enabling

environment.

Theresponseswerecodedtogiveasinglescoreforeachfactor:anaveragescoreof4

representsaperceptionthatbusinessassociationsaremakingtheissueworse;3suggeststhat

thebusinessassociationsaremakingnoefforttoaddresstheissue;2suggeststhat

associationsaremakingsomeeffort;and1suggeststhatassociationsaremakingarealeffort

toaddresstheissue.

Giventhatoneofthereasonsthatbusinessesjoinbusinessassociationsistoencouragethe

associationtomakeadifference,onemighthaveexpectedasubstantialdifferenceinthe

responsesofmembersandnonmembers.Itisinterestingtonote,therefore,thatthe

differencesarefairlysmall,thoughmembersthinkmorehighlyofassociationsonmostfactors.

Theresults

for

import

&

export

regulations

and

borders

&

airports

imply

aperception

that

associationsaremakingarealefforttomakeadifference,butformostrespondentsthese

factorsareunimportant.Onalltherest,associationsareseenasmakingsomeefforttomakea

difference.

Figure 13: Perception of business association effort to make a difference

Thereislittletochoosebetweenresponseswhendisaggregatingbysector.


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15


Thereseemstobelittledifferenceinresponsebetweencommodities(coveringbothfarmers

andprocessors).


Whenwedisaggregatebylocation,however,wedoseesomedifferences.InMarondera,

associationsare

perceived

to

be

making

no

effort

on

every

factor

(including

borders

&

airports

andimport&exportregulations).InGweru,associationsareperceivedtobealmostasbad.


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Whenwedisaggregatebysize,weseethatitisthesmallestbusinesseswhohavetheworst

perceptionoftheeffortsmadebybusinessassociations.



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17

6.5 Government performance

Weaskedrespondentswhethertheyperceivedgovernmentwasmakingeffortstoaddressthe

differentfactorsoftheenablingenvironment.Answersrangedfromthegovernmentis

makingrealeffortstoaddresstheissue(coded1),throughsomeeffort(coded2),noeffort,

(coded3)togovernmentactionsaremakingthisissueworse(coded4).So,anaveragescore

of1wouldmeanthateveryrespondentthinksthatthegovernmentismakingarealeffortto

addressthe

issue

and

an

average

score

of

4would

mean

that

every

respondent

thinks

that

the

governmentismakingtheissueworse.

Inallaspectsofcreditaccess,loantermsandinterestratesthegovernmentwasperceived

tobemakingnoeffort.Foreveryotherfactor,however,thegovernmentwasperceivedtobe

makingsomeeffort.Therearesomeresultstowhichattentionshouldbedrawn.Processors

aremoreworriedthanotherbusinessesbytheavailabilityofskilledlabour,licensing&

regulationandinvestmentregulation.Farmersaremoreworriedthanotherbusinessesby

corruption,roadsandwater.

Figure 18: Perception of government effort to make a difference

Onceagain,therearesomestrikingregionaldifferences.BusinessesinMaronderaperceivethe

governmentismakingnoeffortforeveryfactor,withtheleasteffortinbordersandairports.

BusinessesinGweruhaveperceptionsthatarealmostthesame.BusinessesinBulawayo

perceivethatleasteffortisbeingmadetoaddresstheissueofaccesstofinance.


18/38


Figure 19: Perception of government effort to make a difference

6.6 Influence on investment

Thenext,andpossiblythemostimportant,questionaskedrespondentswhichfactorswere

likelytoinfluenceinvestmentdecisionsandhow(scored1:encouragefurtherinvestment;2:

neitherencouragenordeter;3:deterfurtherinvestment).Nofactorwasseenasdefinitely

deterringinvestment,thoughpowercomesclose,atleastforsuppliers,andloanperiods,at

leastforserviceproviders.Corruptionalsodetersinvestment.

Figure 20: Factors which affect investment decisions

Thepictureismoremixed,however,whenwedisaggregatebycommodity.Livestockfarmers

andprocessorsseemtobemostdeterredfrominvestment,particularlyworryingaboutpower,

allaspectsofcreditandenforcingcontracts.Cottonfarmersandprocessorsaremostdeterred

bycorruption,

which

they

say

does

deter

further

investment.


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19


ThereisalsoconsiderablegeographicvariationwithbusinessesinBulawayomostdeterred

frominvesting.Theysaythataccesstofinance,loanperiodsandinterestrateswoulddeter

furtherinvestment,thoughcorruptionsandenforcingcontractsarenotfarbehind.Businesses

inGwerusaythatcorruptionwoulddeterfurtherinvestment.


Thereisconsiderablevariation,too,whenwedisaggregatebysizeofbusiness.Businesses

employing15aredeterredfromfurtherinvestmentthemostparticularlybyallaspectsof

credit,bycorruptionandbypower,thoughenforcingcontracts,roadsandtaxationareclose

behind.


20/38



6.7 Public Private Dialogue

Publicprivatedialogueisimportantinensuringthatpublicandprivatesectorseach

understandtheotherandthereisevidencethatgood,interactivecommunicationsmakea

differenceinraisingthelevelofunderstanding.

Soweaskedaquestionthathasnotgenerallybeenaskedinotherbusinessleaderperception

surveys,thoughwasaskedinthemostrecentsurveyinNigeria.Specifically,weasked

respondentswhethertheyweresatisfiedwiththelevelofdialoguebetweenthepublicsector

andprivatesector.

Only10percentofrespondentsaresatisfiedwiththelevelofpublicprivatedialogue.

Figure 24: Satisfaction with level of public private dialogue

Onemighthaveexpectedtheretobeabigdifferencebetweenrespondentswhoaremembers

ofabusinessassociationandrespondentswhoarent.Interestingly,thereisaverysmall

difference,though

members

are

slightly

more

satisfied.

It

is

not

possible

to

draw

conclusions,

however,whetherthisisbecausethereisalowlevelofdialogueorthatassociationsarenot

goodattellingtheirmembersaboutwhattheyaredoing.

Figure 25: Satisfaction with level of public private dialogue

Sothere

are

twin

challenges

here

both

to

increase

the

amount

of

dialogue

and

to

ensure

that,

thefactthatthereisregulardialogueiscommunicatedeffectivelytobusiness.


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21

6.8 Enabling environment priorities

Wehavepreparedanenablingenvironmentpriorityindexbasedonthelevelofdifficulty

perceivedbyrespondentscombinedwiththeperceptionofhowthegovernmentisaddressing

theissue.

Thechartbelowshowsthecombinedviewsforalloftheissues.Notethatthescalehasbeen

invertedand

rebased

so

that

afactor

that

causes

the

most

difficulty

for

business

and

in

which

thegovernmentismakingtheproblemworsewillbeshownaszeroandafactorthatcauses

theleastdifficultyforbusinessandinwhichthegovernmentismakingarealefforttoimprove

thepositionisshownas100.

Thisrevealsthatborders&airportsandimport&exportregulations,neitherofwhichare

importanttomostrespondents,aredoingthebest.Thefactorsthatneedattentionareaccess

tofinance,togetherwithloanperiodsandinterestrates,power,roadsandwater.Corruption

comesnextbutisseenasratherlessofanissuethaninothercountrieswhereasimilarsurvey

hasbeenundertaken.

Figure 26: Enabling environment priority index

Whilstitisdifficulttocombineallviewsintoasinglefigure,werecognisethathavingasingle

figuremakesiteasytoseeataglancewhethertheprivatesectorperceivesthattheenabling

environmenthasimprovedordeteriorated.

Wehave

therefore

calculated

asingle

figure

of

65

which

compares

favourably

with

the

resultsofsurveysinothercountriesinsubSaharanAfrica,thoughthatisnottosaythatit

couldbemuchbetter.

Table 3: Enabling environment perception index

2008 2009 2010 2011

Zimbabwe 65

Nigeria 62 60

Tanzania 57 66 67 63

Kenya 52 56

Uganda 63 59


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7. Review by sector

7.1 Farmers & Processors

Mostfarmersandmostprocessorsspecifiedthecommodityinwhichtheyspecialisedand,

below,wehavelookedatthefactorsbycommoditytoexplorewhetherfarmersand

processorssawthingsdifferentlydependingontheirprimarycommodity.Itshouldbenoted

thatmostcommoditiesareconcentratedinspecificgeographicareas,sodifferenceswillnot

necessarilybeduesolelytothecommodity.Figure27showstheoverallperceptionoffarmers

andprocessors.Forfarmers,theissuethatcausesthemostdifficultyisaccesstofinance,

followedbypowerandthenloanperiodsandinterestrates.Waterandroadsbothmake

businesssomewhatdifficult.Otherissuesaremuchlessofaproblem.

Thereseemstobeasignificantdifferencebetweenfarmersandprocessorsintheirviewofthe

difficultycausedbyaccesstofinance,thoughitisstillthesecondbiggestproblemfor

processors.Processorssaythatpoweristheirbiggestproblem.Whilsttheissuesarenotseen

assevere,itisinterestingtonotethebigdifferencesinperceptionofdifficultycausedby

licensing,investmentregulations,import&exportrequirementsandborders&airports.There

isalsoabigdifferenceintheperceptionofdifficultycausedbysecurity.Noneofthese

differencesis

surprising.


7.1.1 Cereals

Cerealfarmersandprocessorssaythatallaspectsofaccesstofinanceandpowerarethe

issuesthatcausethemdifficulty.Roadscausethemsomedifficulty.


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Figure 28: Factors which make business difficult for cereals

7.1.2 Cotton

Cottonfarmersandprocessorssayalsothatpowerandaccesstofinanceareproblems(though

interestinglyloanperiodsandinterestratesseemtobelessofaproblem.Roadsaremorea

problembuttheirbiggestissueiswaterthoughitshouldbestressedthatstillonlymakes

businesssomewhatdifficult.Corruptionismuchmoreofaproblemforcottonfarmersand

processors.Securityseemstobemuchlessofanissueforcottonthanforothercommodities.

Figure 29: Factors which make business difficult for cotton

7.1.3 Horticulture

Horticulturefarmersandprocessorssaythataccesstofinancemakesbusinessverydifficult,

withpower,interestratesandloanperiodsalsocausingdifficulty.Theyalsosaythatenforcing

contractsisabigproblem.


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Figure 32: Factors which make business difficult for pulses & legumes

7.2 Input suppliers

Suppliersofinputsmayhaveabusinesswiderthansimplysupplyingtheagriculturalsector.

However,theirproblemsarebroadlythesameasthoseoffarmersandprocessors.Thebiggest

problemsarecausedbyaccesstofinance,loanperiodsandinterestrates.Powerand

corruptionmakebusinesssomewhatdifficult.Tradesunions,health&safetyregulationsand

theenvironmentalmanagementactbarelyfeatureasproblems.

Figure 33: Factors which make business difficult for input suppliers

7.3 Ancillary service providers

Providersofancillaryservicesarealsolikelytobeprovidingservicestomorethanjustthe

agriculturalsector.Thereseemstobemoredistinctionbetweenissuesthatareproblematic

andissuesthatarenot,thoughtheproblemareasareverysimilar.Accesstofinanceandloan

periodscausedifficulty,thoughinterestratesarethebiggestissue.Poweristhesecond

biggestissue.Roadsmakebusinesssomewhatdifficultasdoestelecomsandtaxation.Trades

unions,health&safetyregulationsandimport&exportregulationsdonotmakeany

difference.


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Figure 34: Factors which make business difficult for service providers

8. Review by business size

Respondentswereaskedtostatehowmanystafftheyemployed.Noteveryrespondent

answeredthisquestion,butmostdid.

Figure 35: Factors which make business difficult: by business size

Analysingtheresponsesbybusinesssizeisinteresting.Theprevailingviewamongstdonors

andpolicymakersisthatabadbusinessenvironmenthitssmallfirmsthehardest(because,

forexample,theyrelymoreonexternalfinance,highcompliancecostsarespreadovera

smaller

revenue

base

and

they

are

less

likely

to

be

able

to

take

a

stand

say

on

corruption),

but

theseresultssuggestthatisnotthecase.Ofcourse,thismaybeduetothefactthatin

Zimbabwemanysmallbusinessesdonotcomplywithregulationsanyway(meaningthatthe

complianceburdenisminimal),andthatlargercompanieswithmorecomplexoperationsare


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27

morelikelytobecapitalintensive(meaningfinanceismoreofaconstraint)andaremorelikely

torelyonports,theenforcementofcontractsetc.Itmayalsohavesomethingtodowithlevels

ofawarenessexecutivesofbigcompaniesaremorelikelytohavetravelledtotheUSAand

EuropeandwillthusbemoreawareofthelimitationsoftheZimbabweanbusiness

environment.

Thesmallestbusinesses,thatis,thoseemployingfewerthan5people,saythatthebiggest

problemis

caused

by

access

to

finance

and

they

appear

to

have

abigger

problem

with

this

thanlargerbusinesses.Theyhaveaproblemwithpoweraswellwhichalsomakesbusiness

verydifficultthoughitisfirmsemployingmorethan100peoplewhosaytheyhavethe

biggestproblemswithpower.

Firmsemployingmorethan100alsohavethebiggestproblemswithtelecoms,labourlaw,

import&exportregulationsandhealth&safetyregulations.

Itseemsthatitisfirmsemploying51100peoplewhohavethemostproblemwithcorruption.

Perhapsthemostinterestingobservationisthatfirmsemploying650findeveryfactor(except

licensing&regulation,whichisnotabigproblem)aslessproblematicthanothersizesof

business.

9. Review by location

Figure 36: Factors which make business difficult: by location

ItseemsthatbusinessesinBulawayo,onthewhole,findthefactorsmoreproblematicthan

businesseselsewhere.AccesstofinancemakesbusinessverydifficultinBulawayo.Theyhave

thebiggestproblemwithloanperiods.BusinessesinBulawayo,however,haveleastproblem

withtradesunions.

PowercausesmoredifficultyforbusinessesinMarondera,butBulawayoisclosebehind.

Businessesin

Bulawayo

have

the

most

problem

with

roads

and

water.

It

is

businesses

in

Gweru

andMarondera,however,thatperceivemostdifficultywithcorruptionandlabourlegislation.

Import&exportregulationsonlyseemtocauseaprobleminMarondera.


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9.1 Harare

InHarare,accesstofinanceandpowermakesbusinessdifficult.

Figure 37: Factors which making business difficult

Businessesseemtothinkthatbusinessassociationsaremakingsomeefforttoaddressmostof

theissues.Theyarenotregardedasmakingnoeffortormakingtheissuesworse.

Figure 38: Business association performance in addressing key factors

Governmentisalsoregardedasmakingsomeeffortoneveryissueandisnotperceivedtobe

makingnoeffort ortobemakingtheissuesworse.


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Figure 39: Government performance in addressing key factors

Itseems

that

businesses

in

Harare

are

not

deterred

from

investment

by

most

factors,

though

accesstofinance,especiallyinterestrates,isadeterrent.Powerandcorruptionarecloseto

beingdeterrents.


9.2 Bulawayo

Asnotedearlier,accesstofinanceandpowermakebusinessverydifficultinBulawayo.Roads

andwatermakedoingbusinesssomewhatdifficult.


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BusinessesinBulawayothinkbusinessassociationsaremakingarealefforttoaddresstwo

factors:import&exportregulationsandborders&airports.Otherwisetheythinkassociations

aremakingnoeffort.


Thereis,itseems,averysimilarviewofthegovernmentwhichisseentobemakingareal

efforttoaddressimport&exportregulationsandborders&airports.Governmentisseento

bemakingnoeffortonanyotherfactorthoughtheireffortstoaddressaccesstofinance

comeinformostcriticism.


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31


InBulawayo,

no

factor

encourages

investment

and

it

is

deterred

by

access

to

finance

with

corruptionandinfrastructurecomingclosetobeingdeterrentsaswell.


9.3 Gweru

InGweru,nofactormakesbusinessverydifficult,thoughcorruption,whichisthebiggest

issue,power,

roads,

water

and

access

to

finance

all

make

business

somewhat

difficult.


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Businessassociationsareperceivedtobemakingnodifferenceneithermakinganeffortto

addresstheissuesnormakingtheissuesworse.


Thepictureseemsslightlymoremixedwhenbusinessesareaskedabouttheirperceptionof

howgovernment

is

addressing

the

issues.

However,

on

average,

government

is

seen

to

be

makingnoefforttoaddressanyissue,butnorisitseentobemakingtheissuesworse.


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BusinessesinGweruaremorepositiveaboutinvestment,withtradesunions,health&safety

regulations

and

telecoms

encouraging

investment.

The

only

real

deterrent

is

corruption.


9.4 Mutare

ThefactorsthatcauseproblemsinMutareareaccesstofinanceandpower.



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Businessassociationsareseenasmakingnoefforttoaddressanyissue,exceptforimport&

exportregulationsandborders&airports.



Governmentisperceivedinasimilarway,makingnoefforttoaddressthebulkofissues.

Whilst

no

factors

would

encourage

investment,

none

would

deter

it

either.

Once

again,

though,itiscorruptionthatcomesclosesttobeingadeterrent.


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9.5 Marondera

InMarondera,powermakesdoingbusinessverydifficult.Corruptionheadsthelistoffactors

thatmakesbusinesssomewhatdifficult,alongwithaccesstofinance,waterandroads.


Business

associations

are

not

seen

to

be

making

any

effort

to

address

the

issues.

They

are

seen

lesspositivelythanineveryotherlocation.


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Onceagain,viewsofgovernmentaresimilar.Thegovernmentisnotseentobemakingany

issuesworse,

but

nor

is

government

seen

to

be

making

any

effort

to

address

the

issues.



Thereisremarkableuniformitywhenitcomestolookingatwhichfactorswoulddeteror

encourageinvestmentwithnofactormakingadifferenceeitherway.


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10.Cost of red tape

Respondentswereaskedaboutthecostsofregulation:thedirectcostoflicensingincluding

thecostofthelicencesthemselves,theeffectivecostthroughthestafftimerequiredto

completepaperworkassociatedwithregulation,andtheeffectivecostthroughstafftimeof

dealingwiththeenforcersofregulation.Respondentswereaskedtosayinwhichexpenditure

bandtheybelievedthateachofthesecategoriesofcostfell.

Figure 57: Cost of red tape and regulation

Mostrespondentsestimatedthatthecostsofregulationwereinthebandof03percentfor

eachofthethreecategoriesofexpense,thoughmanythoughtthattheywereconsiderably

higher.Combiningthese,itseemsthatmostrespondentsspendaround11percentof

turnoveronredtapeandregulation,thoughserviceprovidersandsuppliersthoughtthattheir

costswerehigher.


Amongstfarmersandprocessors,thecostswerehighestforlivestockandlowestforcotton.



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Theproblemwithlicensingandregulationisthatitiseasytounderestimatethetruecosts.If

abusinesssendsamemberofstafftorenewapermitorpayatax,andthepersonqueuesall

day,thatcostmaynotbeaccuratelycapturedbythebusiness.Iftheownertakespaperwork

homeandcompletesitintheevening,thereisagoodchancethatthecostwillnotbe

captured.Andiftaxinspectors,say,cometothebusiness,causingdisruption,itislikelythat

thecostoflostproductionwillnotbeadequatelycapturedeither.Sowhilstthecostsappear

high,

there

is

a

good

chance

that

they

will

actually

be

higher

still.

Gettingthisdownwouldnotonlymakebusinessesfeelthatthegovernmentwastryingto

makeadifference,butwouldfreeupresourcesthattheycouldinvestedinexpandingtheir

businessescreatingmorewealth,creatingmorejobs,becomingmoreprofitable,andthus

payingmoretaxessoeverybodywins.

Agri-business leaders perceptions of the enabling environment in Zimbabwe 2011

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