Zimbabwe Country Profile 2011 Summary
Core Content
This document provides an overview of the business environment in Zimbabwe based on the World Bank's Enterprise Surveys. The surveys cover various aspects of the formal private sector, including infrastructure, trade, regulations, corruption, crime, finance, innovation, and workforce characteristics. The data is benchmarked against the Sub-Saharan Africa region and the Low Income income group.
Main Topics and Key Findings
Business Environment Obstacles
- The Enterprise Surveys highlight the challenges faced by firms in Zimbabwe, including inefficiencies in regulations, high corruption levels, and inadequate infrastructure.
- The top 10 constraints are benchmarked against the regional average, with the top 3 broken down by firm size.
- Key obstacles include corruption, regulatory inefficiencies, and delays in obtaining business licenses and permits.
Average Firm
- The average firm in Zimbabwe is relatively old, with an average age of 33.4 years.
- Female representation in top management is 17.4%, with higher participation in small firms (23.5%).
- Female participation in firm ownership is 56.2%, showing a relatively high level of involvement.
- The majority of firms are privately owned (94.2%), with a small percentage being foreign-owned (5.1%) or government-owned (0.5%).
Infrastructure
- Firms in Zimbabwe face significant electricity and water supply issues.
- On average, there are 6.7 power outages per month, resulting in a 6.9% loss of sales due to power failures.
- Water shortages occur 2.5 times per month, with an average duration of 5.9 hours.
- Delays in obtaining electricity, water, and telephone connections are considerable, with an average delay of 30 days for electricity, 56.5 days for water, and 39.8 days for telephone connections.
Trade
- Only 11% of firms in Zimbabwe are exporters, with a lower percentage of small firms (2.9%).
- 63.4% of manufacturing firms use foreign material inputs or supplies.
- Average time to clear direct exports through customs is 4.9 days, and imports take 7.6 days on average.
- Export losses due to theft and breakage are minimal, at 0.1% and 0.5% respectively.
Regulations, Taxes, and Business Licensing
- Regulations and taxes impose a significant administrative burden on firms.
- The Graft Index in Zimbabwe is 8.0, indicating a relatively high level of corruption compared to the regional average (7.8) and low income group (18.9).
- 12.5% of firms expect to give gifts in meetings with tax inspectors, and 44% expect to give gifts to obtain a construction permit.
- The time spent by senior management dealing with government regulations is 2.5%, with an average of 1.8 visits to tax officials per year.
- Limited partnerships dominate firm ownership structure (57.4%), while sole proprietorships account for 17.5%.
Corruption
- Corruption is a major issue, with firms frequently facing demands for informal payments.
- The Graft Index measures the proportion of times firms are asked or expected to pay bribes for public services.
- Firms in Zimbabwe are more likely to expect informal payments for construction permits than those in the regional average and low income group.
Crime and Informality
- The perception of the court system as fair is relatively high at 61.0%.
- Security costs account for 1.6% of sales, with losses due to theft, robbery, and vandalism at 0.5% of sales.
- 94.7% of firms are formally registered when they start operations, indicating a moderate level of informality.
Finance
- Internal finance is the primary source for investment, with 84.7% of firms relying on it.
- Bank finance accounts for 8.6%, and trade credit for 6.0% of investment financing.
- 12.5% of firms have bank loans or lines of credit.
- The value of collateral needed for a loan is high, at 261.3% of the loan amount.
- 93.5% of firms have checking or savings accounts.
Innovation and Workforce
- Only 18.0% of firms have internationally recognized quality certifications.
- 54.5% of firms have their annual financial statements reviewed by external auditors.
- 31.0% of firms use their own websites, and 79.1% use email for communication with clients and suppliers.
- The average number of temporary workers is 10.5, and permanent workers is 53.7.
- 23.4% of firms employ full-time female workers.
Key Indicators Comparison
| Indicator |
Zimbabwe |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| Corruption Indicators |
|
|
|
|
|
|
| Graft Index |
8.0 |
7.2 |
9.2 |
40.8 |
18.9 |
24.5 |
| % of Firms Expected to Give Gifts in Meetings With Tax Inspectors |
12.5 |
10.5 |
15.4 |
6.8 |
18.2 |
25.4 |
| % of Firms Expected to Give Gifts to Secure a Government Contract |
3.7 |
3.4 |
3.4 |
3.9 |
34.2 |
41.7 |
| % of Firms Expected to Give Gifts to Get a Construction Permit |
44.0 |
48.8 |
40.1 |
58.9 |
26.3 |
34.4 |
| % of Firms Expected to Give Gifts to Get an Import License |
10.4 |
1.2 |
16.3 |
49.3 |
16.1 |
22.4 |
| % of Firms Expected to Give Gifts to Get an Operating License |
5.3 |
5.5 |
6.2 |
49.3 |
19.7 |
26.3 |
| Regulations, Taxes, and Business Licensing |
|
|
|
|
|
|
| Days to Obtain Import License |
16.3 |
8.3 |
13.8 |
75.7 |
18.7 |
16.0 |
| Days to Obtain Construction-related Permit |
63.3 |
85.5 |
75.4 |
65.6 |
28.0 |
52.6 |
| Days to Obtain Operating License |
5.9 |
6.4 |
5.7 |
5.7 |
5.1 |
21.3 |
| Senior Management Time Spent in Dealing with Government Regulation (%) |
2.5 |
2.3 |
2.6 |
2.6 |
7.5 |
7.8 |
| Average Number of Visits or Required Meetings with Tax Officials |
1.8 |
1.5 |
1.7 |
2.7 |
2.7 |
2.5 |
| Open Shareholding Company (%) |
5.6 |
2.4 |
3.9 |
20.2 |
2.5 |
2.9 |
| Closed Shareholding Company (%) |
15.5 |
16.6 |
15.8 |
10.8 |
25.1 |
23.4 |
| Sole Proprietorship (%) |
17.5 |
23.8 |
12.2 |
10.2 |
55.2 |
54.7 |
| Partnership (%) |
3.2 |
5.4 |
1.5 |
0.0 |
9.3 |
8.6 |
| Limited Partnership (%) |
57.4 |
50.8 |
65.6 |
58.9 |
4.9 |
7.9 |
| Other (%) |
0.8 |
0.9 |
1.1 |
0.0 |
2.7 |
2.3 |
| Average Firm Indicators |
|
|
|
|
|
|
| Age (years) |
33.4 |
28.7 |
36.4 |
40.8 |
13.3 |
13.1 |
| % of Firms With Female Top Manager |
17.4 |
23.5 |
13.6 |
6.8 |
15.2 |
13.6 |
| % of Firms With Female Participation in Ownership |
56.2 |
58.8 |
55.6 |
49.3 |
33.0 |
32.7 |
| Private Domestic (%) |
94.2 |
97.0 |
94.5 |
84.3 |
80.8 |
86.7 |
| Private Foreign (%) |
5.1 |
3.0 |
4.6 |
13.4 |
14.7 |
10.6 |
| Government/State (%) |
0.5 |
0.1 |
0.4 |
2.4 |
0.8 |
0.9 |
| Other (%) |
0.2 |
0.0 |
0.5 |
0.0 |
3.6 |
1.8 |
| Finance Indicators |
|
|
|
|
|
|
| Internal Finance for Investment (%) |
84.7 |
89.2 |
86.1 |
75.7 |
79.0 |
79.7 |
| Bank Finance for Investment (%) |
8.6 |
1.6 |
7.9 |
19.8 |
10.2 |
8.3 |
| Trade Credit Financing for Investment (%) |
6.0 |
8.1 |
5.7 |
3.3 |
3.6 |
3.1 |
| Equity, Sale of Stock for Investment (%) |
0.4 |
0.0 |
0.3 |
1.2 |
1.8 |
2.7 |
| Other Financing for Investment (%) |
0.3 |
1.0 |
0.0 |
0.0 |
5.4 |
6.1 |
| Working Capital External Financing (%) |
18.1 |
19.4 |
15.5 |
20.4 |
25.8 |
24.5 |
| Value of Collateral Needed for a Loan (% of the Loan Amount) |
261.3 |
207.3 |
302.8 |
229.0 |
155.2 |
176.4 |
| % of Firms With Bank Loans/line of Credit |
12.5 |
4.2 |
14.0 |
36.6 |
22.5 |
21.7 |
| % of Firms With a Checking or Savings Account |
93.5 |
90.0 |
96.7 |
97.1 |
86.8 |
83.3 |
Infrastructure Indicators
| Indicator |
Zimbabwe |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| Number of Power Outages in a Typical Month |
6.7 |
7.1 |
6.2 |
6.6 |
9.0 |
13.9 |
| Value Lost Due to Power Outages (% of Sales) |
6.9 |
5.9 |
7.7 |
8.1 |
5.1 |
6.2 |
| Number of Water Shortages in a Typical Month |
2.5 |
2.7 |
2.2 |
2.6 |
2.6 |
2.4 |
| Average Duration of the Water Shortage (hours) |
5.9 |
5.1 |
4.8 |
9.6 |
3.8 |
2.5 |
| Delay in Obtaining an Electrical Connection |
30.0 |
23.3 |
38.4 |
24.8 |
30.7 |
34.3 |
| Delay in Obtaining a Water Connection |
56.5 |
18.3 |
14.8 |
92.4 |
29.7 |
33.0 |
| Delay in Obtaining a Mainline Telephone Connection |
39.8 |
54.0 |
27.8 |
36.0 |
30.4 |
29.4 |
Trade Indicators
| Indicator |
Zimbabwe |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| % of Exporter Firms |
11.0 |
2.9 |
12.9 |
33.0 |
10.1 |
10.4 |
| % of Firms that Use Material Inputs and/or Supplies of Foreign origin |
63.4 |
46.2 |
69.7 |
84.3 |
61.0 |
61.1 |
| Average Time to Clear Direct Exports Through Customs (days) |
4.9 |
N/A |
6.4 |
4.0 |
7.5 |
7.8 |
| Average Time to Clear Imports from Customs (days) |
7.6 |
6.5 |
5.9 |
11.4 |
13.4 |
14.5 |
| Losses during Direct Export Due to Theft (%) |
0.1 |
N/A |
0.0 |
0.1 |
1.6 |
1.8 |
| Losses during Direct Export Due to Breakage or Spoilage (%) |
0.5 |
N/A |
0.1 |
0.7 |
1.9 |
1.8 |
Crime and Informality Indicators
| Indicator |
Zimbabwe |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| % of Firms Believing the Court System is Fair, Impartial and Uncorrupted |
61.0 |
63.3 |
57.4 |
62.5 |
43.5 |
40.7 |
| Security Costs (% of Sales) |
1.6 |
1.5 |
1.6 |
1.6 |
2.1 |
1.7 |
| Losses Due to Theft, Robbery, Vandalism, and Arson Against the Firm (% of Sales) |
0.5 |
0.6 |
0.3 |
0.5 |
1.7 |
1.4 |
| % of Firms Formally Registered when Started Operations in the Country |
94.7 |
93.7 |
94.9 |
97.2 |
81.8 |
86.1 |
Innovation and Workforce Indicators
| Indicator |
Zimbabwe |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| % of Firms With Internationally Recognized Quality Certification |
18.0 |
11.3 |
15.1 |
47.1 |
14.8 |
12.3 |
| % of Firms with Annual Financial Statement Reviewed by External Auditor |
54.5 |
40.8 |
58.9 |
88.4 |
44.0 |
38.2 |
| % of Firms Using their own Website |
31.0 |
15.8 |
37.1 |
66.1 |
19.0 |
18.0 |
| % of Firms Using Email to Communicate with Clients/suppliers |
79.1 |
67.8 |
86.7 |
97.3 |
47.4 |
44.5 |
| Average Number of Temporary Workers |
10.5 |
1.5 |
6.5 |
52.0 |
5.5 |
6.9 |
| Average Number of Permanent, Full Time Workers |
53.7 |
10.6 |
42.0 |
228.1 |
27.4 |
32.2 |
| % of Full Time Female Workers |
23.4 |
25.9 |
20.7 |
22.0 |
24.5 |
21.9 |
Summary
The Enterprise Surveys highlight that Zimbabwe's business environment is challenging, with significant obstacles in infrastructure, regulations, and corruption. Despite this, there is a relatively high level of formal registration and access to financial services. The data also shows a moderate level of informality and a need for improvements in legal institutions and innovation. Overall, the surveys provide valuable insights for policymakers and researchers aiming to enhance the business climate in Zimbabwe.
