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Economic indicators crucial to investment: World Bank

In his key note address at the Zimbabwe Quoted Companies Survey 2011 awards on Thursday, Lenneiye said Zimbabwe was doing badly on the World Bank’s Doing Business Report indicators.

 

The Zimbabwe Quoted Companies Survey 2011 was produced by The Standard’s sister business paper, the Zimbabwe Independent and sponsored by BancABC under the theme: “Staying the course”.

 

Lenneiye looked at five of the indicators — ease of employing workers, getting credit, protecting investors, trading across borders and paying taxes —and said an improvement on these facets would help lure investors into the economy.

 

Lenneiye said the country had scored badly on the protection of investors with a score of four and said Zimbabwe “needs to get closer to the index of six achieved by Rwanda”.

 

He said the cost of production, especially labour, in Zimbabwe was high as compared to other countries. He said in 2010, Zimbabwe experienced redundancy costs of 446 weeks of salary. This is equivalent to eight years of full-time employment. Botswana on the other hand had redundancy costs of 90 weeks of salary, Rwanda with 26 while Uganda had 13 weeks.

 

“An American employer incurred zero costs,” Lenneiye said. He said investors engaged by the World Bank had raised concern on the unavailability of reliable infrastructure.

 

Lenneiye said more than 90% of the country’s road network was in a poor condition and public, private partnerships (PPPs) with the right legal, regulatory and institutional framework would help address the situation. Power and water supplies are erratic thereby affecting production.

 

On power, some companies have resorted to generators thereby increasing the cost of production. He said the lack of credit was also hindering investments together with the issue of collateral in cases where credit is available, which complicated things for prospective investors.

 

Lenneiye said government has addressed some of the concerns raised by investors by simplifying processes via the creation of a one-stop shop and finalisations of PPPs in infrastructure.

 

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