The SIs and their effect on business

The government of Zimbabwe has taken to using Statutory Instruments (SI) to drive economic policy. The Zimbabwe Legal Information Institute (ZIMLII) defines statutory instruments (SI) as “any proclamation, rule, regulation, by-law, order, notice or other instrument having the force of law, made by the President or any other person or body under any enactment.”

SIs can be on any activity within the nation, but lately, it has been focused on business. The SIs have dealt with a multitude of issues, but their most recent focus has been on currency issues. Zimbabwe is facing high inflation and a weak currency, which are wreaking havoc on the economy.

The Zimbabwean government is desperately trying to shore up its economic policies, which many believe act against market forces. Government institutions are weak and lack resources, so their only form of power is through regulation. SIs give officials extra powers and oversight over various aspects of the economy. This has ultimately led to more bureaucracy and regulatory red tape that formal businesses have to comply with. This has led to a compliant small business becoming even smaller, as those who cannot comply either close down or shift their operations into the informal sector.

The most controversial SIs have dealt with the Zimbabwean currency, but there have been a lot more that affect how businesses operate, for example;

• Statutory Instrument 145 of 2019, which made the Grain Marketing Board the sole buyer of maize meal in Zimbabwe
• Statutory Instrument 142 of 2019, which ended Zimbabwe’s multi-currency monetary policy
• Statutory Instrument 249 of 2019, which then compelled exporter to pay for electricity in foreign currency.
• Statutory Instrument 235 of 2019, which effectively dealt a blow to any retailer selling electric geysers, since it only caters to solar geysers

The reliance on SIs by the Zimbabwean government has resulted in uncertainty in the market. All the major SIs came without notice or warning, so business operations were immediately affected. In the month of September 2019, the government released an average of one SI every day. This has naturally made business planning even harder and has resulted in a business community that is hesitant to invest further in Zimbabwe.

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