Zimbabwe or the Republic of Zimbabwe is an enclosed country situated in Southern Africa. It is located between the Zambezi and Limpopo rivers and bordered by South Africa, Botswana, Mozambique, and Zambia.
Zimbabwe is known for its diverse wildlife and beautiful long landscape having dramatic nature reserves and safari areas. It is a country of roughly 14 million people with 16 official languages, with English, Shona, and Ndebele being the most common.
|Benefits of doing business in Zimbabwe||Drawbacks of doing business in Zimbabwe|
|Ease in dealing with construction permits||Registering a business is quite a complicated process|
|Easy to trade across borders||Expensive environment|
|Strength of legal right index||Changes in policies are common|
|Depth of credit information index||A country without its own currency|
Advantages of doing business in Zimbabwe
- Limited Liability
One of the biggest advantages of registering a company in Zimbabwe is that the owner is offered limited liability. The business here will exist as a completely separate legal entity from the owners.
Therefore, the owner will be able to enjoy corporate citizenship as they were an independent individual. This particularly means that, if the business suffers any losses or debts, as the owner of the company you will not be obligated according to the law of Zimbabwe as all the belongings are not your personal finances.
- Legitimacy and brand awareness
For a business to become successful, you need to register the company primarily. It increases your business reputation in front of your customers.
Corporates or individuals, won’t take your company seriously and also will not trust you if your company would not be legally registered. All the biggest brands across the world are registered and legalized such as Old Mutual, Delta Beverages, and much more.
Similarly, in Zimbabwe, you need to legalize or register yourself. The procedure here is very simple and fast.
- Easier to raise capital
Being a registered company in Zimbabwe, it is quite easy to raise capital than when not being a registered one. Whether it is for loans or angel investors or for any other initiative like sharing shares etc. raising capital is very easy here.
In Zimbabwe, institutes such as NGOs or banks usually support businesses or investors, and they prefer their deals with the registered companies as they have a formatted legalized structure.
- Supplier Arrangements
As a registered company, your business can qualify to receive discounts from suppliers that are not offered to non registered companies.
Suppliers usually reserve the wholesale rates for the business owners who are capable to show their legal proof or documents. Also, if any business plans to bid for government tenders, a registered company, all these depend on the type of company required by the tender. This is one of the major requirements.
- Low tax liability
A registered company usually pays less tax than a sole trader arrangement, depending on how much revenue the business generates.
In Zimbabwe, the current tax rates for companies and small to medium enterprises is quite lower than the highest tax rate for every individual. Whereas a sole trader pays taxes on the additional income which is received from the business but will be not able to take advantage of the tax deductions which are only available to the registered companies.
These expenses may include transport expenses, internet expenses, rent, rates, and much more.
- Business continuity
A registered company will never die with the founder. This is one of the powers of a company structure as it is easier to build structures for long term continuity as well.
Registering a business is one of the best ways to confirm your business’s success. It will not only limit your liability but also would raise capital and will have several advantages.
Disadvantages of doing business in Zimbabwe
Zimbabwe dollar was officially abandoned in 2009 and since then the country does not have a currency of its own. It uses several currencies, all of which are legally accepted by the tenders. This includes currencies of South Africa, the United States, Botswana, China, India, the United Kingdom, and the European currency as well.
This is an attraction for the foreign investors to the country but creates a difficult situation for the ordinary business means to convert between the currencies all the time.
- High-Cost Environment
All business costs include labor, electricity, rentals, and more which are 50% to 100% more expensive in Zimbabwe in comparison than in South Africa and are also short in supply.
For example, a 300ml canned soft drink costs around US$.80 and US$1.00 at most of the outlets present there.
- Liquidity Constraints
It is very difficult to make foreign United States dollar payments and transactions to creditors and suppliers outside the country, as the country has a very small amount or no foreign currency reserves.
- Business registration and licensing
Acquiring a license for a registered private limited company is a very long and complicated procedure and costs as much as US$800.00.
The whole process can take up to 90 days. However, recently the government of Zimbabwe has introduced a One-Stop-Shop measure which promises to resolve all the issues related to this department.
- Frequent adjustment to policies
The country is still trying to figure out their competitive advantages, so there are frequent changes and adjustments in the policy structure.
The changes in the structure can include the introduction or withdrawal of permit requirements to import and export specific goods, the indigenization policy requirements and reserve bank rules, regulations around money, currency policies, and a lot more changes.
These quick frequent changes in the policies by the government create unreliability for local businesses.
- Social tension
For several years and currently, the country has been dealing with issues due to civil unrest behavior in urban centers, specifically in the capital.
However, most of the businesses have not been certainly affected by this, but most of the days there are mass public riots where many of the outlets are closed down, especially in the central business districts.
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