Zimbabwe - Country Commercial Guide
Market Challenges
Last published date:

Exchange Rate Management

The exchange rate is not fully market determined. The Zim dollar has lost 98 percent of its value relative to the U.S. dollar since the Government of Zimbabwe (GOZ) adopted an auction system in 2020 to allocate limited foreign exchange. The Reserve Bank of Zimbabwe (RBZ) has taken steps to liberalize the exchange rate, most recently in June 2023 by supporting the establishment of a wholesale interbank market for foreign exchange.  Nevertheless, the authorities have not fully liberalized the exchange rate and a parallel market for foreign exchange exists, where the Zimbabwe dollar depreciates faster than the interbank rate.  The volatile Zimbabwe dollar complicates planning while high interest rates increase local borrowing costs.  The depreciation of the Zimbabwe dollar continues to motivate people to buy U.S. dollars as they feared a repeat of the negative effects of the 2008 hyperinflation and the 2019 reintroduction of the Zim dollar, which wiped out pensions and savings. 

Foreign Exchange Shortages

Zimbabwe suffers from a shortage of foreign exchange.  To address the shortage, the GOZ implements a foreign currency retention system where exporters must convert a proportion of their export receipts (currently 25 percent) into local currency at the official interbank market rate.  This acts as a tax on exporters particularly when there is a significant gap between the interbank and parallel market rates.  Exporters consistently lose money when forced to exchange U.S. dollars at the interbank rate. International firms have also faced challenges repatriating profits. 

Policy Inconsistency 

The GOZ’s frequent pattern of introducing and re-introducing ad hoc trade restrictions, such as exchange controls and local content policy to protect inefficient domestic producers, makes business difficult for the private sector.  The government frequently changes policies and applies them inconsistently, often based on political or personal grounds, challenging business planning.  Zimbabwe’s regulatory environment remains complex, and businesses face hurdles registering and operating in the country. 

Access to Finance 

De-risking by international banks has resulted in very few international correspondent banking relationships despite FATF’s decision to remove Zimbabwe from its grey list in March 2022.  In addition, Zimbabwe’s high external debt of approximately $14.4 billion limits its ability to access official development assistance at concessional rates and credit from international capital markets. 


High levels of corruption, lack of rule of law, and Reserve Bank of Zimbabwe quasi-fiscal activities have all contributed to Zimbabwe’s macroeconomic instability.  Endemic corruption presents a serious challenge to businesses operating in Zimbabwe and U.S. firms have identified corruption as an obstacle to foreign direct investment, with many corruption allegations stemming from opaque procurement processes.  Zimbabwe ranked 157 out of 180 countries on Transparency International’s corruption perception index for 2022. 

Electricity shortages 

Zimbabwe experiences blackouts caused by old and unreliable electricity generating plants that have outlived their economic life, as well as from insufficient power supplies.  Zimbabwe’s installed power generation capacity of 2,800MW falls short of the approximately 5,000MW it needs to fully support existing industry and households, and the country must import electricity from Zambia and Mozambique to address the shortage.  Most companies have installed diesel generators which ultimately raise the cost of production.

Compensation of Former Farm Owners

Despite the government’s agreement to pay $3.5 billion to commercial farmers for improvements made on expropriated farms during the government’s Fast-Track Land Reform program in the early 2000s, agricultural investments remain risky.  As of June 2022, the GOZ had paid a token $1 million in compensation to former commercial farmers, but it lacks a credible plan to make the remaining payments and has pushed back its 2021 deadlines.