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 2024, FDI inflows amounted to USD 588 million in 2023, up by 48.9% on the year but still significantly below the pre-crisis level (USD 745 million in 2018). At the end of the same year, the total stock of FDI reached USD 7.14 billion, around 22.2% 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. According to the Zimbabwe Investment Development Agency (ZIDA), foreign investor interest in Zimbabwe grew, with 200 investment licences issued in Q4 2024, up 19% from 149 in Q4 2023. This rise was attributed to the new online DIY Licensing Portal, which processed 98.1% of applications. Despite more licences, the total committed investment for Q4 2024 dropped significantly to USD 4.59 billion, a 60.12% decrease from USD 11.5 billion in Q4 2023, due to high-value projects in 2023. The mining sector led with 91 licences, followed by manufacturing with 47. In value, real estate attracted USD 2 billion (43.6% of total investment), while energy secured USD 1.04 billion (22.76%).

In 2018, Zimbabwe adopted an “open for business” policy to attract FDI and removed the requirement for majority indigenous ownership in 2020 to encourage new technologies, create jobs, and promote manufacturing. The Zimbabwe Investment and Development Agency (ZIDA) is a one-stop shop for domestic and foreign investment. Incentives include tax breaks for new investments and capital expenditures on factories, machinery, and improvements. While the government has made some progress in reducing regulatory costs, issues like policy inconsistency, weak institutions, and corruption continue to hinder businesses. Property rights, particularly regarding agricultural land, remain poorly protected, with occasional expropriation without compensation. In May 2023, the government lifted the 15% surrender requirement on domestic foreign currency earnings, allowing traders to retain 100% of their sales proceeds. In November 2023, the government standardized foreign currency retention at 75% for all exporters, removing special allowances for some sectors. Zimbabwe screens FDI through the ZIDA, collaborating with relevant line ministries to ensure adherence to national laws and regulations. Both foreign and domestic private entities can establish and own businesses and engage in any remunerative activity, although foreign ownership is restricted in certain sectors, including passenger buses, taxis, car hire services, employment agencies, grain milling, bakeries, advertising, dairy processing, and estate agencies. The country ranks 118th among the 133 economies on the Global Innovation Index 2024, 158th out of 180 in the 2024 Corruption Perception Index, and 173rd 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.