ZIMBABWE Economic Policy Analysis and Research Unit (Zeparu) executive director Gibson Chigumira has said regulation now constitutes a significant cost in the overall production costs for firms, impeding the performance of industry.
Speaking at a Confederation of Zimbabwe Industries (CZI) 2015 economic outlook symposium, Chigumira said economic success was dependent on policy coherence.
“Subsidiary policies and statutory instruments emanating from clusters should be coherent with the overall goal of ZimAsset,” Chigumira said.
He, however, noted that industrial and trade policy objectives often clashed with other regulatory authority laws, which imposed additional burdens on firms.
ZimAsset’s four strategic clusters are food security and nutrition, social services and poverty eradication, infrastructure and utilities, and value addition and beneficiation.
The government has pinned hopes on the resuscitation of industry on the economic blueprint, whose implementation it hopes would help shift from exporting primary products to export processed goods.
The research expert said low productivity in agriculture and industry would undermine the ZimAsset growth targets underlining the need to ensure the performance of key enablers in the economy.
Chigumira said the objective of distributive justice as well as controlling negative externalities arising from information asymmetry between suppliers and users was not coherent with industry promotion objectives.
“A plethora of regulators exist; some with overlapping mandates – NSSA (National Social Security Authority), RPAZ (Radiation Protection Authority of Zimbabwe), EMA (Environmental Management Agency), MCAZ (Medicines Control Authority of Zimbabwe), HPA (Health Professions Authority), local authorities and other sector specific regulators,” he said.
Lack of competitiveness has been widely blamed for the failure of industry to bounce back and support the economy.
Cost drivers, which have been identified, include labour, power, water, transport and access to credit as major cost factors.
But with an ever increasing number of regulators milking industry, Chigumira said they were also a huge cost contributor.
“A firm in the chemical industry can pay about $51 700 to regulators in a year.”
He added the example of a pharmaceutical manufacturer, who could spend $41 500 in regulation fees and fines.
With the economy failing to perform and sustain institutions through core service provision, the public and industry are now inundated with taxes, fines and fees from authorities seeking survival.
Last week, Finance minister Patrick Chinamasa said Zimbabweans were overtaxed while shooting down a proposal by some legislators for the government to introduce a levy to mobilise resources in the fight against cancer.
Some sectors have called for the government to address the issue of regulation and investigate methods to synchronise all regulation.
“Policies that are in conflict with each other would negate any positive contribution that either policy would have made,” Chigumira said.