The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
Zimbabwe presents a challenging, and yet potentially rewarding, investment climate. The country’s skilled labor, high literacy rate, mineral wealth, agricultural potential, bountiful wildlife, and natural landscapes present commercial opportunities for U.S. firms. Sectors that currently attract the most investor interest include agriculture (tobacco in particular), mining, energy, and tourism. Authorities estimate the economy grew by four percent in 2022 while the International Monetary Fund (IMF) estimates Zimbabwe’s economy grew by 3.5 percent in 2021.
The Government of Zimbabwe (GOZ) adopted an “open for business” policy in 2018 to encourage more foreign direct investment (FDI). For example, the GOZ set an ambitious $12 billion target for the mining sector by the end of 2023 and is calling for increased investment in renewable energy. Despite these pronouncements, the Zimbabwe government has not implemented enough investor-friendly policies to attract robust investment and corruption remains a major concern. FDI into Zimbabwe remains below regional peers.
Debt also hinders Zimbabwe’s economic growth and development. Zimbabwe owes over $14 billion ($6.3 billion of which is in arrears and penalties) to international financial institutions and bilateral creditors, equating to about 66 percent of the country’s GDP. The country’s high external debt (public and private) limits its ability to access official development assistance at concessional rates. Domestic banks do not offer financing for periods longer than two years, with most financing limited to 180 days or less.
To ease doing business, the government formed the Zimbabwe Investment and Development Agency (ZIDA) in 2020, intended as a one-stop-shop to promote and facilitate both domestic and foreign investment in Zimbabwe. Zimbabwe’s incentives to attract FDI include tax breaks for new investment by foreign and domestic companies and making capital expenditures on new factories, machinery, and improvements fully tax deductible. The government waives import taxes and surtaxes on capital equipment. It has made gradual progress in improving the business environment by reducing regulatory costs, but policy inconsistency and weak institutions have continued to frustrate businesses. Corruption remains rife and there is little protection of property rights, particularly with respect to agricultural land. Historically, the government has committed to protect property rights but has also expropriated land without compensation.
The government in February 2023 reduced the proportion of foreign exchange that businesses surrender to the Reserve Bank of Zimbabwe (RBZ) at the interbank rate after selling goods and services in foreign currency on the domestic market from 20 percent of the receipts to 15 percent. It also reduced the proportion that exporters must surrender from 40 percent of foreign currency earnings at the unfavorable interbank rate to 25 percent.
The 2020 Finance Act (No 2) amended the Indigenization Act to remove language designating diamonds and platinum as the only minerals subject to indigenization (requiring majority ownership by indigenous Zimbabweans), ending indigenization requirements in all sectors. The government has issued statements to reassure investors that no minerals will be subject to indigenization, including diamonds and platinum.
The United States has targeted financial sanctions on 60 individuals and 39 entities from Zimbabwe. The U.S. Government imposed these sanctions because of the actions and policies of certain members of the Government of Zimbabwe and other persons that undermine democratic institutions or processes in Zimbabwe, violate human rights, or facilitate corruption. U.S. companies can do business with Zimbabwean individuals and companies not on the specially designated nationals (SDN) list.