Zimbabwe is a country with both tremendous potential and tremendous challenges. The country has a population of 16 million with a highly skilled labor force and an 89 percent literacy rate. Its favorable climate, mineral wealth, agricultural potential, bountiful wildlife, and stunning natural landscapes present many commercial opportunities for U.S. firms. Agriculture, construction, energy, mining, biotech, health, and tourism represent the most promising market opportunities in Zimbabwe, although opportunities also exist in consumer goods, services, and franchising. The government has removed indigenization (local ownership) requirements on foreign direct investment in most sectors and has created special economic zones offering incentives to attract investment. Commercial corridors and trade routes exist in the following areas:
- Zimbabwe-South Africa: Beitbridge, on the Zimbabwe-South African border and along the trade route to Durban, has an import-export ecosystem dominated by import-export clearance firms.
- Zimbabwe-Mozambique: Mutare, on the border with Mozambique along the trade route to Beira port, is dominated by the wood, timber, and allied industries.
- Victoria Falls: The Victoria Falls special economic zone has been designated as an International Financial Services Center which caters to customers outside Zimbabwe. The town of Victoria Falls is home to a foreign exchange-denominated stock exchange and boasts of a tourism-financial services ecosystem. It also has several tourist attractions including Victoria Falls and game parks.
Zimbabwe is also a fragile state with weak institutions and governance, rife with corruption, and mired in debt, exacerbated by constrained external relations and limited access to concessional external financing. These conditions have led to an underperforming economy with 72 percent of Zimbabweans living below the poverty line. Although still relatively functional, Zimbabwe’s infrastructure has deteriorated since the late 1990s. Zimbabwe is a dual currency economy, using both U.S. dollars and Zimbabwe dollars (ZWL or Zim dollar), and it suffers from a persistent shortage of foreign exchange. This shortage frustrates the ease of doing business with international vendors who demand USD payment and hinders the ability for international investors to easily repatriate profits.
Zimbabwe owes over $14 billion ($6.3 billion of which is in arrears and penalties) to various international creditors. Of the total debt, the country owes $5.8 billion to bilateral creditors and $2.6 billion to multilateral creditors. The country’s high external debt limits its ability to access official development assistance at concessional rates. The Financial Action Task Force (FATF) removed Zimbabwe from its grey list in March 2022, having been on the list since October 2019 due to the country’s weak anti-money laundering and combatting terrorism finance regime. De-risking by international banks has resulted in very few international correspondent banking relationships.
The future growth of market opportunities in Zimbabwe depends largely on whether the government follows through on long-promised political and economic reforms. While companies regularly praise Zimbabwe’s bountiful natural resources and human capital, the country’s macroeconomic instability, its weak investment climate, poor human rights record, and government restrictions on democratic space have prevented Zimbabwe from living up to its economic potential.
The United States maintains targeted financial sanctions against 99 selected individuals and entities (none in the financial sector) whose actions facilitated corruption or undermined human rights and democracy, but this does not prohibit trade and investment nor banking relationships with Zimbabwe.
Political parties, labor organizations, and civil society groups sometimes encounter state-sponsored intimidation and repression from government security forces and Zimbabwe African National Union – Patriotic Front (ZANU-PF) – linked activists. Disagreements between and within political parties occasionally result in violence targeting political party members. Political tensions persist since the end of Robert Mugabe’s rule in November 2017, including disputed and discredited presidential elections in 2018 and 2023.
In 2020 and 2021, the government arrested and detained journalists, several leaders of opposition parties, and trade union activists for organizing demonstrations against corruption and allegedly violating bail conditions. Several political and civil society activists have faced long periods of pretrial detention while authorities have convicted others for organizing lawful protests. Main opposition Citizens Coalition for Change (CCC) Deputy National Chairman remains in prison awaiting trial on trumped up charges of incitement to public violence. Sikhala has spent over 400 days in prison and authorities have denied him bail on numerous occasions. Political tensions also prevailed during campaigns for the March 2022 by-elections. In February 2022, ZANU-PF-affiliated youths allegedly killed CCC rally attendee Mboneli Ncube and injured 22 others after they stormed a CCC rally in Kwekwe. The CCC also reported attacks targeted at its activists and supporters across the country.
Although the August 2023 general election was generally peaceful, human rights groups reported cases of intimidation by ruling party officials and members of a shadowy group called Forever Associates Zimbabwe (FAZ) which reportedly has links to the country’s intelligence services. The post-election environment was also characterized by isolated incidents of arrests, beatings and arson targeted at CCC candidates and election agents.
Political uncertainty remains high. Violent crime, such as assault, smash and grabs, and home invasion, is common. Armed robberies perpetrated by serving members of the army and police have increased. The polarization of the police forces coupled with the weaponization of the law to advance the ruling party’s interests remains an impediment to professionalism in the police force. Similarly, some members of the police force who have tried to be professional in dealing with politically motivated crimes have been intimidated and victimized by the police commanders. Local police lack the resources to respond effectively to serious criminal incidents. Incidents of violence have typically not targeted investment projects.
For additional background information on the political and economic environment visit: https://www.state.gov/countries-areas/zimbabwe/