High regulatory costs affecting ease of doing business – CZI

The Confederation of Zimbabwe Industries (CZI) says regulatory charges imposed on companies by government agencies are too high and are contributing to the burden of doing business in the country.

In August, the CZI released the results of a study of three manufacturing sectors – timber/furniture, chemicals and pharmaceutical — to assess the process required and the costs that firms have to bear in complying with regulations, showing that companies were struggling to pay the fees.

These included charges to the Environmental Management Agency (EMA), National Social Security Authority (NSSA) and local authorities which increased the cost of doing business.

Zimbabwe is ranked number 171 out of 189 on the 2014 World Bank Doing Business rankings and 124 out of 144 in the World Economic Forum(WEF) Global Competitiveness Report for 2014-2015.

CZI official, Kuda Matare said today that there was need to find ways to bring down the charges.

“The idea is not to do away with regulation but to make sure that the regulators become more administratively efficient and we reduce the costs that are associated with regulation burdens that are put on companies,” he said.

He said one percent of production costs was going towards regulatory compliance, making Zimbabwe one of the countries with the highest regulatory fees.

“The issue is that in view of what is happening in our economy, can we not reduce the charges?” he said.

He said reducing the cost of regulatory compliance would make the country competitive and enable it to attract foreign direct investment.

EMA charges 1.5 percent of project cost for an environmental impact assessment. It was also accused of requiring a multiplicity of licences and many administrative processes which frustrated industry players.

According to the CZI study, NSSA demands registration fees of between $100 and $300 for registration of factories and about $200 for registration of an elevator or escalator.

Companies are also made to pay between $100 and $1,800 for a boiler, depending on size. Inspection fees for elevators and escalators are charged at $1,000 each while inspection fees for boilers range from $50 to $600 depending on size.

The pharmaceutical sector registration fees are as high as $6 000 while fertiliser producers are charged as high as $10 000 by the radiation authority and timber trader’s licences cost $100.

Matare said CZI, through its technical committees, would continue lobbying the authorities to reduce the fees.- The Source

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