Foreign direct investment (FDI) in Zimbabwe

FDI in Figures

FDI flows to Zimbabwe are far below the country's potential. According to the UNCTAD's World Investment Report 2023, FDI inflows amounted to USD 342 million in 2022, up by 36.6% on the year but still significantly below the pre-crisis level (USD 745 million in 2018). In the same year, the total stock of FDI reached USD 6.5 billion, around 19.7% of the country’s GDP. FDI is mainly directed towards the mining sector (diamonds, gold, nickel, platinum), infrastructure, the wood industry, health care, water and sanitation, financial services, tourism, manufacturing and agriculture. China is the first investor in Zimbabwe. Russia, Iran and India are also important investors in the country. Data from the Zimbabwe Investment and Development Agency (ZIDA) show that the country attracted USD 8 million in announced projects in 2023, the majority of which were directed to the mining and energy sectors.

In 2020, the Zimbabwean government established the Zimbabwe Investment and Development Agency (ZIDA) to streamline and facilitate investment, both domestic and foreign, as a single point of contact. Zimbabwe offers incentives such as tax breaks for new investments by foreign and domestic companies, full tax deductibility for capital expenditures on new factories, machinery, and improvements, as well as waiving import taxes and surtaxes on capital equipment. Although progress has been made in reducing regulatory costs, policy inconsistency and weak institutions continue to pose challenges for businesses. Corruption remains widespread, and property rights, especially concerning agricultural land, are inadequately protected, with instances of land expropriation without compensation. While foreign and domestic private entities have the right to establish and own businesses and engage in remunerative activities, foreign ownership in certain sectors such as passenger transport, employment agencies, milling, advertising, dairy processing, and real estate is restricted. Zimbabwe screens FDI through the Zimbabwe Investment and Development Agency (ZIDA), collaborating with relevant line ministries to ensure adherence to national laws and regulations. The country ranks 117th among the 132 economies on the Global Innovation Index 2023, 149th out of 180 in the 2023 Corruption Perception Index, and 172nd out of 184 on the latest Index of Economic Freedom.

What to consider if you invest in Zimbabwe

Strong Points

Zimbabwe's strong points in terms of attracting FDI include:

- abundant mineral resources (platinum, gold, diamond, nickel);
- agricultural wealth (maize, tobacco, cotton);
- potential for tourism development;
- membership of the Southern African Development Community (SADC);
- normalisation of relations with the international community.

Weak Points

The factors hindering foreign investment in Zimbabwe include:

- economic and financial situation hit by a long period of hyperinflation;
- shortage of cash;
- under-investment in infrastructures (especially energy infrastructure);
- precarious food and health situation: the majority of the population depends on international aid;
- AIDS prevalence rate among the highest in Africa and in the world.

Government Measures to Motivate or Restrict FDI

While the government of Zimbabwe has implemented since 2009 a number of measures designed to attract foreign direct investment (FDI), many of its macroeconomic policies, such as the indigenization and economic empowerment laws, acted as significant deterrents. Following recent political changes, the new government amended indigenization, or local ownership laws, to reduce the restriction to only the diamond and platinum sectors; other sectors are now open to unrestricted foreign ownership. Moreover the government has announced its commitment to improving transparency and removing corruption.

Zimbabwe’s incentives to attract FDI include tax breaks for new investment by foreign and domestic companies and allowing capital expenditures on new factories, machinery, and improvements to be fully tax deductible. The government also waives import taxes and surtaxes on capital equipment. Tax inventives may be obtain in certain sectors such as pharmaceuticals, energy, construction, agriculture and mining. To learn more about inventives for investment, please visit Zimra website.

Bilateral investment conventions signed by Zimbabwe

Zimbabwe has signed 32 bilateral agreements. For more details, please see the UNCTAD website.