1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The government has a clear desire to attract greater FDI in order to improve the country’s competitiveness. The government encourages public-private partnerships in order to enhance technological development, while also emphasizing the need to improve the investment climate by restoring the rule of law and sanctity of contracts. Implementation has been limited.
Zimbabwe’s Indigenization and Economic Empowerment law limits the amount of shares owned by foreigners in the diamonds and platinum sectors to 49 percent with specific indigenous organizations owning the remaining 51 percent. The government has signaled it intends to remove these restrictions. There are also smaller sectors “reserved” for Zimbabweans.
The Zimbabwe Investment Authority (ZIA) promotes and facilitates both foreign direct investment and local investment. ZIA facilitates and processes investment applications for approval. ZIA’s website is . The country encourages companies to register with ZIA and the process currently takes approximately 90 days. The government has announced plans for a more powerful, streamlined entity (a “one-stop shop”) – the Zimbabwe Investment Development Authority (ZIDA).
While the new government of President Emerson Mnangagwa commits to prioritizing investment retention, there are as of yet no mechanisms and formal structures through which this is done.
Limits on Foreign Control and Right to Private Ownership and Establishment
While there is a right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity, foreign ownership of businesses in the diamonds and platinum sectors is limited to 49 percent (or less in certain reserved sectors), as outlined above.
In 2007, the government passed the Indigenization and Economic Empowerment Act, which required that “indigenous Zimbabweans” (i.e. black Zimbabweans) own at least 51 percent of all enterprises valued over USD 500,000. A March 2018 amendment to the law limits these restrictions to the diamond and platinum sectors.
Foreign investors are free to invest in the non-resource sectors without any restrictions as the government aims to achieve technology transfer, create employment, and achieve value addition. The government further reserves certain sectors such as passenger busses, taxis and car hire services, employment agencies, grain milling, bakeries, advertising, dairy processing and estate agencies for Zimbabweans.
The country screens FDI through the Zimbabwe Investment Authority (ZIA) in liaison with relevant line ministries to confirm compliance with the country’s investment regulations. Once an investor meets the criteria, ZIA issues the company or entity with an investment certificate.
According to the country’s laws, U.S. investors are not especially disadvantaged or singled out by any of the ownership or control mechanisms relative to other foreign investors. In its investment guidelines, the government states its commitment to non-discrimination between foreign and domestic investors and among foreign investors.
Other Investment Policy Reviews
In the past three years, the government has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) or the United Nations Conference on Trade and Development (UNCTAD).
The government expressed its desire to reduce the time it takes to start up a business. It has also committed itself to improving the transparency and predictability of its policies and to dealing decisively with corruption.
Zimbabwe does not have a fully online registration process. One is able to begin the process and conduct a name search online via the ZimConnect web portal. The Zimbabwe Investment Authority (ZIA) is the country’s investment promotion body set up to facilitate both foreign direct investment and local investment. ZIA’s website is . According to the World Bank, it takes on average 32 days to start a business and requires nine distinct processes, with costs greater than an individual’s average annual income.
Zimbabwe does not promote or incentivize outward investment because of the tight foreign exchange constraint. Any outward investment requires approval by exchange control authorities.
2. Bilateral Investment Agreements and Taxation Treaties
Zimbabwe has investment treaties with 35 countries but ratified only ten of these treaties, including those with the Netherlands, Denmark, Yugoslavia, China, Germany, Russia, South Africa, and Switzerland. Two other investment agreements with India and Iran are awaiting ratification before they go into effect. In spite of these agreements, the government has failed to protect investments undertaken by nationals from these countries, particularly with regard to land. In 2009, for example, an army officer seized a farm belonging to a German national but the government did not intervene, despite its assurance that Zimbabwe would honor all obligations and commitments to international investors. Some claimants protected by investment treaties have pursued arbitration through the International Centre for Settlement of Investment Disputes. The German Pezold family won a landmark USD 196 million judgment, but has received only partial payment.
The United States does have a Trade and Investment Framework Agreement (TIFA) with the Common Market for Eastern and Southern Africa (COMESA), of which Zimbabwe is a member. This TIFA provides a mechanism to talk about disputes, although the protection offered by the TIFA is much more limited than protection typically provided by a bilateral investment treaty.
The United States does not have a bilateral taxation and/or investment treaty with Zimbabwe.
5. Protection of Property Rights
The government enforces interests in residential and commercial properties in cities although this is not the case with agricultural land. Mortgages and liens do exist for urban properties although liquidity constraints have led to a fall in the number of mortgage loans. According to the World Bank’s 2019 Doing Business Report, Zimbabwe is ranked 109 out of 190 countries in terms of registering property. The recording of mortgages is generally reliable. With regard to agricultural land, the government provides and protects the usage rights of indigenous people, and it is currently in the process of developing new 99-year leases that will guarantee use, with the government retaining ownership of all agricultural land. Current 99-year leases have not been strong enough for banks to accept them as collateral.
Intellectual Property Rights
Zimbabwe follows international patent and trademark conventions, and it is a member of the World Intellectual Property Organization (WIPO). Generally, the government seeks to honor intellectual property ownership and rights, although a lack of expertise and manpower as well as corruption limit its ability to enforce these obligations. Pirating of videos, music, and computer software is common.
It does not appear that the government enacted new IP related laws or regulations over the past year. The country does not publish information on the seizures of counterfeit goods.
Zimbabwe is not included in the United States Trade Representative (USTR) Special 301 Report or Notorious Markets List
7. State-Owned Enterprises
Zimbabwe has 107 state-owned enterprises (SOEs), defined as companies wholly-owned by the state. A list of the SOEs appears . Many SOEs support vital infrastructure, including energy, mining, and agribusiness, for example. As a result, competition within the sectors where SOEs operate tends to be limited. However, the government of Zimbabwe (GOZ) invites private investors to participate in infrastructure projects through public-private partnerships (PPPs). Most SOEs have public function mandates, although in more recent years, they perform hybrid activities of satisfying their public functions while making profits. SOEs should have independent boards, but in some instances such as the recent case of the Zimbabwe Mining Development Corporation (ZMDC), the government allows the entities to function without boards.
Zimbabwe does not appear to subscribe to the Organization for Economic Cooperation and Development (OECD) guidelines on corporate governance of SOEs. SOEs operate under the same taxes and same value added tax rebate policies as private sector companies. The SOEs face a number of challenges that include persistent power outages, mismanagement, lack of maintenance, inadequate investment, a lack of liquidity and access to credit, and debt overhangs. As a result, SOEs have performed poorly in recent years. Few SOEs produce publicly available financial data and even fewer provide audited financial data. This has imposed significant costs on the rest of the economy.
Although the government committed itself to privatize most SOEs across the economic sectors since the start of the privatization program in the 1990s, it only successfully privatized two parastatals. In 2018, the government agreed to privatize 48 SOEs but currently, it has targeted five SOEs in the telecommunications sector, postal services, and financial sector for immediate reform. It encourages foreign investors to take advantage of the privatization program to invest in the country, although inter-SOE debts of nearly USD 1 billion pose challenges for privatization plans because they further weaken the entities’ balance sheets. According to the recently published investment guidelines, the government is still working out the modalities for disposing part of its shareholding to the private sector.
8. Responsible Business Conduct
Following dollarization in 2009, there has been increased awareness of standards for responsible business conduct (RBC), driven by the private sector through the Standards Association of Zimbabwe. The private sector developed the National Corporate Governance Code of Zimbabwe (ZimCode), which is a framework designed to guide Zimbabwean companies on RBC. An industrial advocacy group, the Confederation of Zimbabwe Industries, has a standing committee on business ethics and standards that drives ethical conduct within the Zimbabwean private sector. The organization has developed its own charter according to OECD guidelines, highlighting good corporate governance and ethical behavior. The Zimbabwean government has not taken any measures to encourage RBC and it does not take RBC policies or practices into its procurement decisions.
Firms that demonstrate corporate social responsibility do not automatically garner favorable treatment from consumers, employees, and government. With regard to indigenization, foreign companies receive formal indigenization credits of up to 31 percent for conducting CSR determined by the extent to which the activity achieves the government’s socio-economic objectives.
Although the Zimbabwean government has considered implementing the World Bank’s Extractive Industries Transparency Initiative (EITI) principles in order to strengthen accountability, good governance, and transparency in the mining sector, it has yet to launch an EITI program. However, the government has stated its intention to adopt a domestic initiative called the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI), though it has made little progress in implementing the initiative.
In 2005, the government enacted an Anti-Corruption Act that established a government-appointed Zimbabwe Anti-Corruption Commission (ZACC) to investigate corruption. The 2009 – 13 government of national unity (GNU) enhanced the institutional capacity of the ZACC with members appointed from civil society and the private sector. However, when the ZACC’s term of office expired, the new ZACC did not include civil society and private sector representatives. The government has a track record of prosecuting individuals selectively, focusing on those who have fallen out of favor with the ruling party and ignoring transgressions by members of the favored elite. Accusations of corruption seldom result in formal charges and convictions. Many corruption charges stem from opaque procurement processes.
While the laws to combat corruption exist, enforcement of the laws is weak as law enforcement agencies lack political will and resources. As a result, Transparency International ranked Zimbabwe 160 out of 175 countries and territories surveyed in 2018. The Mnangagwa government has committed itself to eradicate corruption. Since December 2017, ZACC has arrested and brought before the courts a number of high-ranking officials, mostly aligned to the Mugabe faction from the previous government. In spite of this, the courts have not sent many of the accused persons to prison.
Existing rules on the Zimbabwe Stock Exchange compel listed companies to disclose, through annual reports, minimum disclosure requirements.
The government also created a policy to improve accountability in the use of state resources through the introduction of the Public Finance Management Act in March 2010. Nevertheless, corruption remains endemic, especially within the diamond sector where production and export figures are largely unreliable. The government has introduced a diamond policy that focuses on ensuring the 100 percent government ownership of all alluvial diamonds in the ground and the involvement of the Zimbabwe Revenue Authority (ZIMRA) in the entire value chain of diamond production.
While Zimbabwe signed the United Nations Convention against Corruption on February 20, 2004 and ratified the treaty on February 20, 2007, it is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Resources to Report Corruption
Transparency International Zimbabwe
96 Central Avenue
P O Box CY 434, Causeway
+263 4 793 246/7
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
*Zimbabwe National Statistical Agency
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.