|
Networking Asia / Africa / Southeast Europe |
|||
|
|
|||
|
|||
Labour Market, Reintegration into Employment, Regulation of Labour, Setting Up a Business, Bank- and Credit System
Zimbabwe’s economy is currently going through very difficult challenges. The economy is characterised by high inflation (currently at about 360 %) and still rising, unemployment rate (recently at about 70 %), shortages of basic commodities including staple food, fuel shortages, foreign currency shortages, company closures and generally decline in the living standards of the majority of the population.
This has resulted in the growing crime rate, a thriving black market where one can obtain almost anything at exorbitant prices. Recently the banks have also run out of banknotes. This means that you can no longer walk into a bank and withdraw the required amount of cash. Long queues outside banks and building societies have become the order of the day.
Because of the harsh economic conditions, Zimbabwe has seen a brain drain never experienced before. Professionals such as doctors, nurses, teachers, pharmacists, engineers etc. are leaving the country in big numbers to seek employment elsewhere. The popular destinations are South Africa, United Kingdom, United States of America, Botswana, Australia and New Zealand.
As a result of this exodus, there is an acute shortage of manpower in these fields although at the same time there is high unemployment. Unskilled people, especially school leavers are also leaving the country and these are employed in other countries as nurse aides, farm labourers, house servants, cleaners etc. There are also University and College graduates performing menial jobs in other countries.
When submitting a job application, one is usually required to submit an application letter, a Curriculum Vitae (CV) and certified copies of academic and professional qualifications (with 2 or 3 contractible referees). If the application is via internet, you might be required to fill an application form on line and attach a CV or any other information as required by the advertiser.
After submitting an application, one has to wait for a response, but these days, only short-listed job candidates are responded to and this is usually stated in the job advertisement. The advert will also state the closing day for the submission of applications. It is very important to observe the closing date as late applications will usually not be considered.
If short-listed, the applicant will be invited to attend a job interview. This invitation can be in writing, through E-mail, by fax or by telephone. The invitation will state the date, time and venue of the interview. It is very important to be punctual for the interview.
One needs to prepare well for the interview and learn as much as possible about the job and the company. In Zimbabwe it is a requirement that when attending an interview, one should be presentable i.e. one should be smartly dressed. It is courteous even if not asked for, to acknowledge an invitation to a job interview and confirm that you will definitely be able to attend the interview. If on the other hand you are not able to attend the interview at the stated date or time, you can request for a re-scheduling of the interview. You should do this well before the date of the interview and not leave it to the last minute. The decision to re-schedule the interview will rest entirely with the prospective employer.
The structure of the interview differs from company to company. The most common practice is to have a panel of three to four interviewers for a verbal interview, but you might have only one interviewer. The language used for most formal interviews is English.
Apart from an oral or verbal interview where you are asked questions, you might be required to undergo a written test and you might be required to take a psychometric test. Psychometric tests are now commonly used as part of the interview. You might also be required to attend more than one interview for one job, depending on the nature of the job or on the company/organisation.
During an interview you are usually given an opportunity either to ask any questions you might have or to discuss remuneration package. References are usually required before the interview or after one has passed the interview. Sometimes a reference from the current employer is also required. For government uniformed forces and other ministries, strict security checks are made before one is offered a job. If one is successful, a letter of offer is sent out and one has to accept or decline the job offer.
Sources of job advertisements in Zimbabwe are daily and weekly newspapers , journals, notice boards and occasionally TV and Radio. With the increase in internet use by the general public, internet adverts are now very popular. The advantage about internet is that one can access job adverts from any part of the world and there are provisions to apply on line.
It is possible for a job seeker to place a job advertisement in a newspaper, stating his qualifications, experience etc. It should be noted that newspaper adverts are quite expensive and a job seeker has to have adequate financial resources for this.
For public service jobs, the Public Service Commission has a list of vacancies within the civil service and the service is free. One needs to complete an application form, indicating the type of job and preferred Government Ministry. However, after completing the form one needs to make a regular check with the Public Service Commission. Do not wait for the Public Service Commission to contact you because you might wait for a very long time. The Public Service Commission also advertises international jobs on behalf of the UN, AU, SADC etc. and interested individuals are advised to visit the Public Service Commission offices to get more details on these vacancies.
Recruitment into the Uniformed Forces (Zimbabwe Defence Forces, Airforce of Zimbabwe, Zimbabwe Republic Police and Zimbabwe Prison Service) is carried out by the relevant Force. Advertisements are usually placed in newspapers, TV and Radio and interested persons are advised to approach the provincial offices nearest to them for registration.
There are several private employment agencies which offer services free of charge. All one needs to do is to register with these agencies and submit a detailed Curriculum Vitae. When a suitable vacancy arises the agency contacts the individual. It is therefore necessary to give all your contact details. It is also advisable to visit or phone these agencies from time to time to make a follow-up.
These employment agencies are widely used and are quite acceptable. Sometimes these agencies conduct job interview and employment selection on behalf of companies/organisations. The employment agencies also place job advertisements in newspapers.
It is possible to approach individual companies or organisations for employment opportunities although this method is not very effective. There is also a possibility of approaching individuals within organisations or other influential personalities for assistance to secure employment. This method, however, has an element of corruption because you might be asked to pay a bribe.
Zimbabwe’s welfare services are very limited. The Department of Social Welfare in the Ministry of Public Service, Labour and Social Welfare is supposed to look after the underprivileged members of the society such as the disabled, orphans and abandoned children and the aged, but this department is under-funded and cannot cope with the ever growing numbers of people needing welfare services. As a result, there is a growing number of destitutes, street kids and adult beggars. There is also a growing number of school dropouts due to lack of school fees.
In 1993 the Government established a National Social Security Authority under the Pension and other Benefits Scheme Notice of 1993. Ideally, this scheme is supposed to cater for the unemployed. However, the benefits covered by this scheme does not include unemployment benefit. The scheme covers mainly pension and employees’ compensation scheme which is paid when an employee is injured at work. This means that when an employee loses his job or is retrenched through no fault of his, he is not covered. In short, when one is able-bodied and unemployed or is looking for a job, he receives nothing from the state. One is left to fend for himself.
There is a number of entrepreneurial resource organisations in this country to help the budding businessperson. These range from an array of private organisations to government institutions, each with assistance at different stages of business development. They are the Small Enterprise Development Corporation (SEDCO), Ministry of Youth and Gender, Barclays Bank Small to Medium Enterprise Window, Commercial Bank of Zimbabwe Small to medium Enterprise Window, International Labour Organisation (I.L.O.) and Empretec Zimbabwe.
Small Enterprise Development Corporation is a micro finance establishment with financial experts who assist entrepreneurs go through their business plans to review funding and operational mechanisms and give business advice to see the ventures through. This is also the general function of the Banks’ Small to Medium Enterprise Windows where winning business plans are financed under government’s indigenous empowerment initiative.
The International Labour Organisation has modules on Starting Your Business (S.Y.B.), Improving Your Business (I.Y.B.), Expanding your Business (E.Y.B.) to help individuals set up business. The National University of Science and Technology in Bulawayo through its Business School offers tailor-made programmes to the business community through its Partners With Industry drive, to offer Management Development Programmes to both start-ups as well as established businesses upon consultation.
Empretec Zimbabwe, a UNDP/ZIC initiative, is a leading authority on entrepreneurship with offices in both Harare and Bulawayo. Empretec offers an Entrepreneurship Development Workshop (EDW) and an Intra-preneurship Workshop (IWD), in addition to these there are Introduction to Entrepreneurship and Business Management Workshops which are of a shorter duration.
EDW is a tailor-made programme geared towards imparting Personal Entrepreneurship Competencies to aspiring business people. This programme has managed to create a new breed of dynamic, highly motivated, self confident and focused Zimbabwean Entrepreneurs. Participants are carefully selected to participate in the program. The EDW is a highly intensive workshop that enables participants to consciously build and practice competencies of successful entrepreneurs hence inspiring a deep desire for growth among the participants.
IDW is targeted at the privatised commercialised public enterprises and the restructured corporates given the harsh economic climate and increasing retrenchments which are a result. It seeks to change the mindsets and attitudes of employees in the organisations so that they adopt an entrepreneurial approach in their operations
The other short courses prepare one to be an entrepreneur, outlining key questions in business as well as common start up problems, promoting of the business and seeking opportunities in the business environment. They also touch on customer care issues, cash flow forecasting, costing and pricing, record keeping and management accounts, to name but a few.
E-Mail:
empbyo@consultant.com
Website:
http://www.empretec.co.zw
Small businesses run by one man or family type kind of business. This form requires an operating license, which comes with the compliance to trade regulations i.e. Adequate premises and staffing, in the operation of say a Bottle store the applicant should be free of any criminal record.
Advantage
Disadvantage
This should constitute two to twenty members. It is a requirement by law that a lawful ‘partnership agreement’ stating the levels of contribution which determines the profit sharing and salaries to be paid in the business. It should be clear what succession policy is in place in the event of death of a partner.
Co-operative society, which consists of five to ten members must have a registration certificate and be governed by the by-laws of Co-operatives, which spell out procedures, rules for all co-operatives including issues of profit sharing.
Co-operative companies, like that formed by a lager group of say farmers, are affiliated as board members and others buy membership so as not to limit the number of people on the management team.
Of necessity has to be registered by the government through a registrar of companies’ officer. It should name a proposed director, it is required that there be no less than six nominees in order of preference. The registrar of companies carries out a name search through lists of registers of names in the country. If there is a similar name appears then there is a need to come up with another.
Companies are registered at the Company Registration Deeds Office in Harare and Bulawayo. There one can get modalities of registration. Besides that there are several companies offering assistance in company registration and these can be accessed through classified advertisements in almost all the newspapers.
A Memorandum of Association defines all areas of business the company can go into and this is usually broad so as to cater for a wide array of opportunities that may be ventured into later on.
An Article of Association defines procedures and processes of a company e.g. Will the company have a Board Of Directors and if so, how many directors, it also defines their duties as well as those of office bearers. It also explains the meetings, intervals, requirements of meetings, the structure and the role of top management and their responsibilities.
In general, fees charged are 20 % of nominal capital of company.
In setting up business there are a number of options available to potential business people.
A business license is required depending on what kind of business one is doing. It is actually a legal status denoting entity. One must generally have a good understanding of the local authorities and government’s bye-laws, rules and regulations governing one’s type of business.
One must acquire suitable business premises and approach the local authority stating one’s intent. The authority will then advise the applicant of the procedures to be followed. The office will then flight a legal advertisement notifying the public of the application of the business license stating the kind of business, the location of the business premises and the person in charge of business. Thereafter objections may be lodged on the establishment of such a business citing reasons, or the license may be granted if unopposed.
Applications are processed by the local authority e.g. City Council or District Council. Applications can be processed in 30 days to 6 months depending on the nature of location of business.
Intellectual property rights include patents, trademarks, copyrights and trade secrets and these assets to the entrepreneur. All businesses are governed by law and legal expertise required will vary based on factors as to whether the new venture is a start up, a consumer or industrial product, import or export.
Basically there are Utility and Design Patents, the former is granted for 17 years and covers protection of new useful and unobvious manufacturing processes and the latter is granted for 14 years and covers issues pertaining to appearance of an object.
The entrepreneur should confirm the existence of a patent. This can be accomplished by reviewing information even if the patent is known to exist, he entrepreneur should find out what exactly it entails. If there is some doubt a patent search is necessary and here the entrepreneur should consider hiring a patent attorney to perform a more thorough search.
Currently the copyright law is undergoing amendment, and is being debated in parliament. The amendment is an improvement of the old law which did not require registration of patents. The old law required that comes with the new product and proved it was his, then automatic recognition was accorded. If one saw an infringement on his right, the onus was on him to seek redress either in court or out of court. The new law will seek one to deposit rights in the patent office and if there are infringements a dispute settlement court would intervene.
The account structure is decided by the company itself. The company submits the account signatories. Businesses are usually offered a current (cheque) account although some banks offer savings or special accounts.
Account and transactions fees are as follows: (Barclays Bank 22-07-2003)
| Action | Min $ | Max $ | % |
| Cheque deposits | 350 | 5 000 | 0.33 |
| Cash deposits | 375 | 5 000 | 0.50 |
| Cash withdrawal | 150 | 10 000 | 0.35 |
| Cheque transaction | 135 | 325 | 0.35 |
Overdraft facilities are negotiable on need. Currently the minimum lending rate is 80 % plus charges set depending on each case. The banks charge a penalty for "Return to Drawer Cheques" and this penalty varies from one bank to the next, with Barclays charging $ 2 000 per cheque.
Offices can be located wherever one is carrying out business. This is typical of industrial companies. Others prefer the Central Business District for accessibility of clients and service providers. Nowadays people use residence as offices to cut costs.
Office accommodation is available in the city centre either as a single room, a number of rooms, a whole floor or building. Prices vary according to the quality of the building and services, as such one can get small office accommodation for as little as $ 50 000 per month.
Estate agents deal with all forms of accommodation, leading estate agents are John Pocock, CB Richard Ellis and or Holland and Redfern. Another alternative would be to search through the classifieds in the local press. Information on lease agreements is available at no cost from agents, it details duration and conditions of the lease as well as periodic reviews of rentals payable and other additional information on demand.
Buying of buildings for purposes of converting them for office use is not tightly monitored by the local authorities as our cities are not very developed to incorporate comprehensive plans for office parks though this concept is cropping up in Harare and setting up here will need compliance with business conducted in that park. This means it is relatively easy to convert a residential dwelling to a business office with prior notification of the owner of the premise of course.
All tax is calculated according to the type of company. A company pays 30 % of profits + 3 % Aids levy. The three percent being 3 % of the 30 % tax paid.
When an engineering company initially starts up, there are special initial allowances on capital equipment, these being:
This is the tax on Supplies of goods and services which are taxed at any of the following rates as the case may be
Goods include any corporeal movable and immovable goods property but exclude money, mortgage bonds and revenue stamps. A service is the performance of an act and includes assignment, cession and surrender of any right. It excludes the supply of goods, money or revenue stamps.
Exempt supplies are supplies of goods and services on which VAT is not levied. No input tax credit may be claimed on the goods and services acquired for the purpose of making exempt supplies. A trader who exclusively makes exempt supplies is not required to register for VAT purposes. Examples of exempt supplies are:
Zero rated supplies are taxable supplies that are taxed at the rate of zero percent. The suppliers can include both goods and services. A trader in zero rated supplies may claim input tax on the goods and services acquired for the purpose of making the zero rated supplies. Example of zero rated supplies are:
Standard rated supplies are supplies of goods and services on which VAT is levied at the rates of 15 %. The rate applies to good and services which are neither exempt, zero rated nor higher rated.
Higher rated supplies are supplies of goods and services on which VAT is levied at the rate of 25 %. Examples of higher rated supplies are:
Brings into account gross income benefits or advantages of any kind that are received or enforced by an employee in connection with his/her employment ( i.e. benefits in respect of services rendered).
Some of the benefits that are normally granted to employees are: Motor vehicles, housing, school fees, telephone, holiday, servants, security, groceries, tax assistance, etc. Valuation benefits are taxed with reference to the cost to the employer. In other words, the value to be ascribed to as a benefit is the cost incurred by the employer on that benefit
The final deduction system (F.D.S.) was introduced with effect from 1 January 2000, to replace the pay as you earn (P.A.Y.E.) system.
The Final Deduction System is the system whereby the employer is directed to withhold P.A.Y.E. from the employee’s remuneration in such a way as to ensure that the amount so withheld in any year of assessment is as nearly the same as the income tax liability for the employee concerned.
Insurance coverage, policies, and rates will generally vary from one business concern to the next, and in each case depend on what is to be insured. It should be noted though that due the unstable political climate currently prevailing in our country insurance companies no longer cover damages which arise from politically motivated violence. This development has left many companies’ properties at great risk.
Buildings may be insured against fire and other natural disasters, whereas furniture and fittings may be insured against theft and such damage as may not arise from wear and tear. Other property such as motor vehicles and equipment may also be insured as above.
All these agencies can be looked up in the local directories.
It is a legal requirement that in the engaging of staff, companies follow transparent procedures for recruiting and selecting staff, failure to do so constitute an unfair labour practice. For those companies that cannot carry out the processes on their own, there is an option of engaging employment agencies to present them with a desired pool of qualified personnel for them to select from. These can be found in the classified advertisements in all the leading newspapers. Government employment exchanges and labour offices are also there to compliment employment agencies. They provide a pool of candidates in the semi skilled and unskilled labour markets as these are not covered by private agencies which mainly cater for the professionals.
There are basically four types of employment: One can either be engaged as a permanent worker, contract worker, part time worker or a free lance.
The first fills a permanent position in the company and as such is entitled to full benefits under the company’s conditions of service. The second type of worker is one hired on a contract basis, meaning the work is irregular, duration of employment has a defined period and all obligation arising therein are payable in full upon completion of the contract. The third type of worker is engaged on a part-time basis that is their work is apportioned in such a way that it does not follow the regular work pattern and is as such a special type of contract employment. Here the work is defined but the hours of engagement are irregular. The last is freelance, which clearly represents a performance contract with obligations arising from both parties to the agreement to offer a consistent service for an agreed price in perpetuity.
Fringe benefits are set by the employer to encourage and sustain a certain level of performance in his staff. These vary with different work setups but basically centre around personal comforts as the provision of tea and subsidised lunches to spacious and friendly office environments to luxury company vehicles. One social spending the employer may venture into community sponsorships which would merely be social responsibility with a bias to increase presence in a market and a chance to plough back into the community. This though is not compulsory, social spending in the form of contributory pensions is compulsory.
Government has tightened labour laws in this area, an employer may not terminate employment for more than five employees within a period of six months shall give written notice to the work council of his intention. No employer shall retrench any employee without affording the employee the notice of termination to which the employee is entitled. Amended Labour Relations Act 2003 chapter 28, section 12C.
As per labour law, employees have four fundamental rights, they are entitled to membership of trade unions and workers committees, they are protected against discrimination, and they have a right to fair labour standards and lastly a right to democracy in the workplace.
Salaries are generally determined at industry level for menial jobs which stipulate minimum wages. Otherwise within a company structures as guide by laid down conditions of service apply and these should have been reached through negotiation between workers’ representatives and the employer.
Zimbabwe has a compulsory social security scheme in the form of the National Social Security Scheme (NSSA) of 1990. Compulsory contributions of 3 % of one’s basic salary and the company contributes the same amount. The benefits thereof are a fixed sum in the form of a funeral grant, retirement pension and cover for injuries on duty.
Companies are not limited to this compulsory scheme as various industries have established pension funds to which employees make contributions, these are regulated by government instruments and they vary from one industry to the next. These are in the form of Local Authorities Pension Fund, Mining Pension Fund to name a few.
Zimbabwe has a very well developed Financial Sector. Its economy is agro-based and there is a well developed industry base comprising of agro-based industry, tourism, service sector, manufacturing concerns plus financial institutions.
The financial institution can be placed in the following categories:
All these are directly supervised by the Ministry of Finance through the Reserve Bank of Zimbabwe. To operate the institution need an authorised Dealers license issued by the Ministry. For the purpose of this assignment we will dwell on the 3 groups which are the Commercial Banks, Venture Capitalists and the Micro Finance institutions, who lend to Small to Medium Scale Enterprises.
There are altogether about 17 commercial banks currently operating in Zimbabwe. Of these the majority have lending programmes for Small to Medium Scale Enterprises. Below is a list of some such commercial banks but the list is by no means exhaustive.
Target Groups: Small companies, sole proprietors, Co-operatives, NGOs, Partnerships
Most of these banks have branches throughout the country but situated in major towns, cities and business centres.
As Commercial Banks these institutions mostly lend by way of straight loans and overdrafts. The loans mostly cover capital expenditure item purchases while overdrafts assist in working capital requirements.
Capital expenditure loans are usually repayable over 1 to 5 years (12 to 60 months) period. Interest on loan is charged at BMLR (Banks Minimum Lending Rate) which is currently hovering around 80 % per annum plus Bank’s Margin which ranges from 1 % to 20 % resulting in an effective interest of say 80 % + 8 % viz. 88 % per annum. The margin is determined by combined factors such as, level of Risk perceived, borrowers own equity contribution, business sector, available collateral and repayment period, e.g. interest margin would be lower on those borrowers venturing into manufacturing projects, horticultural projects and all export oriented ventures. However interest on loans is calculated on a reducing balance and collected on a monthly basis.
Most if not all these banks provide Start Up Capital based on perceived viability of the business to be undertaken. For purposes of assessment the banks would require:
Under the Banking Act, Building Societies can only lend for mortgage purposes. That is long term loans for purchase of fixed properties such as houses, flats, factories, shops, office blocks etc. They can also provide loans for putting up buildings, extensions and renovations. Their loan repayment terms can go up to as long as 35 years. A deposit of 30 % is usually required and interest rates range from 40 % to 53 % p.a. However with deregulation building societies now can lend for purposes other than just property purchases provided the loans are secured by mortgage bond over fixed properties.
Agribank specialises in loans to Large Scale and Small Scale commercial farmers, Communal farmers plus newly resettled farmers under the Land Redistribution Act.
Housed within the Reserve Bank of Zimbabwe. This is a brainchild of member Commercial Banks plus the Reserve Bank of Zimbabwe and the Zimbabwe Development Bank who are all shareholders in the company.
Its main objective is to provide collateral guarantee to those SMEs with viable businesses but would fail to borrow due to lack of collateral.
They provide a Guarantee of 50 % of the loan under their main/general scheme (CGC 50 % Guarantee Scheme). Under a 2nd scheme known as CGC/Cida (Credit Guarantee Company in conjunction with Cida) they provide a Guarantee of up to 75% on any business whose major shareholder is a woman or a group of women. (Cida - Canadian International Development Agency)
For both schemes interest is subsidised at a rate of Bank’s Minimum Lending Rate plus 1 % margin. Repayment period ranges from 12 months to 36 months but sometimes 60 months.
Loans are available to all commercial sector projects except for agricultural projects.
Applications for loans are to be submitted through any of the member Commercial Banks. CGC also provides assistance in formulation of business plans and project proposals. Training for entrepreneurs is also available from CGC but through a joint effort with The International Labour Organisation (ILO) Start and Improve Your Business Programme. These work hand in hand with accredited private trainer consultants, who are spread throughout the country.
Targets manufacturing and Agro based industrial companies. They provide loans plus order financing and invoice factoring. Interest rate at currently plus or minus 95 % p.a. Minimum loan at $ 1 million. Repayment period is strictly 12 months.
Application Processing fees are $ 100 000 payable on approval of loan.
Targets groups: Manufacturing, Agro Industrial Companies, Mining and food processing businesses.
Provide finance by purchasing up to 49 % equity stake in the applicant company. They however can finance up to 7 5% of the companies financial requirements. They offer 3 types of investments:
For Owners shares they receive a dividend only when the company makes a profit. For Preference shares they expect a fixed dividend but can opt to allow the dividend to accrue.
Loans are given to only those companies in which the Venture Capitalist has equity holdings.
Small Enterprise Development Programme (Sedco)
Targets groups: Cooperatives, Small companies and sole traders.
There is a vast array of Micro Finance Institutions that lend for purposes of enterprise projects. Most of these are fairly new outfits. The majority of them operate under an umbrella body, the Zimbabwe Association of Micro Finance Institutions (ZAMFI). Zamfi plays the role of a coordinator, lobbyist.
Represented in all major cities, towns and business centres throughout Zimbabwe.
In their "Lease to Own Project" CSFS assists clients in procuring machinery by helping to source the equipment and providing the loan funds to pay for it. Client then leases the machinery until it is fully paid for.
| website sponsored by: Bundesamt für die Anerkennung ausländischer Flüchtlinge (BAFl) through European Refugee Fund (ERF), and Zentralstelle für Arbeitsvermittlung (ZAV) through Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) |
| website administered by: AGEF gGmbH, Berlin, info@agef.de , www.reintegration.net, www.agef.net |