Besides corruption, our poor national ease of doing business score is arguably one of the two or three factors that politicians and citizens alike can openly point out as contributors to our mostly stagnant economy without the conversation becoming too uncomfortable for some.

The Zimbabwean government has never been shy about creating as many laws and regulations as it deems fit and most of these enjoy smooth sailing from the desks of their creators straight into the law books. This is because the small but sometimes crucial issues that affect businesses have historically never been contentious within our law-making bodies. This means that for the past four decades, various legislators have been wantonly creating rules that not only affect existing businesses but also make it difficult to implement certain business models.

Nowadays the newest and most novel of business models come from the technology sector. Let us explore some of the most internationally successful of these that are unlikely to be  minting any local millionaires in the near future.

Virtual banking

A direct bank sometimes called a branchless, virtual or online bank is one without any branch network. It only offers its services remotely via the internet, telephone, mobile, mail or through an independent banking agent network. It may also provide ATM access to its customers through other banks using interbank alliances. Because of the lack of physical branches, most of these banks have far lower overhead costs than conventional banks allowing them to offer higher interest rates to depositors and low ones for loans.

In Zimbabwe, a bunch of laws primarily created to suppress money laundering, demand that financial institutions have a certain amount of verifiable information about their clients. These KYC (know your customer) requirements make the initial onboarding of clients onto an online service difficult and takes away one of these banks’ clearest advantages. KYC regulation is not unique to Zimbabwe but the approach to wholly online business or lack thereof from above prohibits businesses from operating completely online.

Cryptocurrency exchanges

A cryptocurrency or digital currency exchange is a business that provides an online platform that allows customers to trade cryptocurrencies such as bitcoin for fiat currencies. These exchanges make revenue either by acting as market makers that take the bid-offer spreads as transaction commissions for their service or simply charging fees.

A few years ago a local company, Golix, established one such exchange and contributed significantly in bringing bitcoin and other cryptocurrencies into the (local) public eye.  The company raised thousands and was probably headed to become one of Zim’s biggest tech startup success stories before the central bank yanked the rug from underneath their feet.

Even before the RBZ had a solid position or policy regarding cryptocurrencies, their officials were muttering ominous warnings when asked to comment on them. Then one day, using the same anti-money laundering mandate stated above as justification, the RBZ pounced: within a few weeks banks were instructed to stop working with any businesses dealing in cryptocurrencies. A few court battles initiated by Golix proved to be nothing more than momentary hurdles for an RBZ on the warpath.

Peer-to-peer money lending

P2P lending is the practice of lending money to individuals or businesses through an online service that matches lenders with borrowers. Since these services operate online they have low overhead costs which allow to provide their service for cheap. The offered loans accumulate interest (which is how lenders are incentivised). The interest is usually determined by the lenders themselves bidding to offer the lowest rate in a reverse auction.

Lenders can earn higher returns than the savings and investment products offered by banks. Borrowers can also borrow at rates lower than those offered by banks and microfinance institutions. The P2P lending companies themselves earn revenue by taking a fee for providing the matchmaking platform and credit checking the borrowers. This fee is usually in the form of a one time fee collected from borrowers for each funded loan.

Lending and borrowing is not limited to individuals, businesses and other organizations can also participate as either. The P2P lending companies are also responsible for servicing the loans (i.e collecting payments) – for a fee of course.

Zimbabwean law prohibits unlicensed persons from offering loans accompanied by interest. Due to the uniqueness of this particular business model, without a lawyer to guide you, its legal standing may be too murky and risky for a bootstrapping startup. Without any piece of legislation directly dealing with P2P, the law is open to interpretation by both the entrepreneur and the people who will try to put him/her behind bars.

Online gambling

The global online gambling market is estimated to be worth around 40 billion USD. Unlike the previous three entries, this one is illegal and highly regulated even in the most progressive corners of the world. Sports betting, virtual poker, lottos are just some of the moneymakers in this industry.

To be fair Zimbabwe has more accommodating laws concerning gambling than some countries which instead prefer to outrightly ban it. However, in a surprising feat of foresight by the lawmakers of yesteryear, the current law limits all betting to the confines of the physical premises of the bookmakers effectively preventing or limiting most types of internet betting even though it predates the internet.

There is a saying making rounds which suggests that it is better to ask for forgiveness than permission. However, it must be pointed out that many have futilely asked for the same in courtrooms but it will come as no surprise that our legal system is for the most part not designed to handle apologies. So in your entrepreneurial ventures and innovating you should be alert and aware in case you are doing the legal equivalent of flying too close to the sun.