Political instability affects business

Political instability within the business sector is the main cause of the country's slow economic recovery, Kingdom Financial Holdings Limited, has said.

The diversified financial services institution says because of this, Zimbabwe needs to work very hard in areas that can help its poor rankings in the Global Index of Doing Business.

In a Report, KFHL, which is soon to re-list on the Zimbabwe Stock Exchange (ZSE), pointed out that the major sources of instability in the business environment were mainly "political and regulatory (legal) in nature".

The Group, currently led by Lynn Mukonoweshuro, said it was judging its findings on the "Doing Business Rankings" issued by the Washington-based World Bank which showed that poor Zimbabwe was ranked 157th out of 183 countries studied worldwide.

"From the political side the apparent divisions in the inclusive government do not auger well for a stable business environment," KFHL said. "Conflicting government policies or stances on policies not only confuse the business community but also stall the current economic recovery process. A good example would be the indigenisation law whose implementation has raised more uncertainty."

"The uncertainty over the timing of the elections, combined with the mixed policy messages coming from the current inclusive government negates the business environment and is weighing heavily on the country's ability to attract much-needed foreign investment. The 2011 rankings (World Bank) indicated that the major decline in ranking was on the enforcement of contracts where Zimbabwe slid 29 places to 110."

KFHL said Zimbabwe's regulatory framework had also been found "wanting in certain instances where sound corporate governance violations are not detected on time".

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Post published in: Business