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Democratic Republic of the Congo

Executive Summary

The Democratic Republic of the Congo (DRC) is the largest country in Sub-Saharan Africa and one of the richest in the world in terms of natural resources. With 80 million hectares (197 million acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people. Despite its potential, the DRC often cannot provide adequate food, security, infrastructure, and health care to its estimated 100 million inhabitants, of which 75 percent live on less than two dollars a day.

The ascension of Felix Tshisekedi to the presidency in 2019 and his government’s commitment to attracting international, and particularly U.S. investment, have raised the hopes of the business community for greater openness and transparency. In January 2021, the DRC government (GDRC) became eligible for preferential trade preferences under the Africa Growth and Opportunity Act (AGOA), reflecting progress made on human rights, anti-corruption, and labor. Tshisekedi created a presidential unit to address business climate issues. In late 2020 Tshisekedi ejected former President Joseph Kabila’s party from the ruling coalition and in April 2021 he appointed a new cabinet.

Overall investment is on the rise, fueled by multilateral donor financing and private domestic and international finance. The natural resource sector has historically attracted the most foreign investment and continues to attract investors’ attention as global demand for the DRC’s minerals grows. The primary minerals sector is the country’s main source of revenue, as exports of copper, cobalt, gold, coltan, diamond, tin, and tungsten provide over 95 percent of the DRC’s export revenue. The highly competitive telecommunications industry has also experienced significant investment, as has the energy sector through green sources such as hydroelectric and solar power generation. Several breweries and bottlers, some large construction firms, and limited textiles production are active. Given the vast needs, there are commercial opportunities in aviation, road, rail, border security, water transport, and the ports. The agricultural and forestry sectors present opportunities for sustainable economic diversification in the DRC, and companies are expressing interest in developing carbon credit markets to fund investment.

Overall, businesses in the DRC face numerous challenges, including poor infrastructure, a predatory taxation system, and corruption. The COVID-19 pandemic slowed economic growth and worsened the country’s food security, and the Russia’s attacks on Ukraine have raised global prices on imported foods and gasoline. Armed groups remain active in the eastern part of the country, making for a fragile security situation that negatively affects the business environment. Reform of a non-transparent and often corrupt legal system is underway. While laws protecting investors are in effect, the court system is often very slow to make decisions or follow the law, allowing numerous investment disputes to last for years Concerns over the use of child labor in the artisanal mining of copper and cobalt have served to discourage potential purchasers. USG assistance programs to build capacity for labor inspections and enforcement are helping to address these concerns.

The government’s announced priorities include greater efforts to address corruption, election reform, a review of mining contracts signed under the Kabila regime, and improvements to mining sector revenue collection. The economy experienced increased growth in 2021 based on renewed demand for its minerals.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 169 of 180
Global Innovation Index N/A N/A
U.S. FDI in partner country ($M USD, historical stock positions) 2021 $25
World Bank GNI per capita (USD) 2020 $550

1. Openness To, and Restrictions Upon, Foreign Investment

The ascension of Felix Tshisekedi to the Presidency in January 2019 and his welcoming attitude toward foreign direct investment (FDI), particularly from the United States, have raised hopes that the GDRC can impose and monitor investor-friendly policies. FDI-friendly laws exist, but the judicial system is slow to protect investors’ rights and is susceptible to political pressure and corruption. Investors hope that Tshisekedi can create a more favorable environment by improving the rule of law and tackling corruption. The DRC’s rich endowment of natural resources, large population, and generally open trading system offer significant potential opportunities for U.S. investors. For more than a decade, the DRC has undertaken reforms related to investment in order to make its business environment competitive and attractive including reforms to the investment code, the mining code, the insurance code, the agricultural Act, the Act on the liberalization of electricity, and the telecommunications code. The GDRC has also promoted improvements in the tax, customs, parafiscal, non-tax and foreign exchange regimes, which are applicable to collaboration agreements and cooperation projects, as well as the decree on the strategic partnership on value chains, the Industrial Property Act, the Public-Private Partnership Act, the Competition Act, and the Special Economic Zones Act.

The main regulations governing FDI are found in the Investment Code Act (No. 004/2002 of February 21, 2002). Current regulations reserve the practice of small-scale commerce and retail commerce in DRC to nationals and prohibit majority ownership by foreigners of agricultural enterprises. The ordinance of “August 8, 1990” clearly states that “small business may only be carried out by Congolese”. Foreign investors must limit themselves to import trade and wholesale and semi-wholesale trade. Investors fear that the ban on foreign agricultural ownership will stifle any attempt to revive the agrarian sector.

The National Investment Promotion Agency (ANAPI) is the official investment agency, providing investment facilitation services for initial investments above $200,000. It is mandated to promote the positive image of the DRC and specific investment opportunities; advocate for the improvement of the business climate in the country; and provide administrative support to new foreign investors who decide to establish or expand their economic activities on the national territory. More information is available at .

The GDRC maintains an ongoing dialogue with investors to hear their concerns. There are several public and private sector forums that address the government on the investment climate in specific sectors. In 2019, the GDRC created the Business Climate Unit (CCA) to monitor and improve the business enabling environment in the DRC, and to interface with the business community. In June 2020, the CCA presented a roadmap for reforms. In December 2021, the CCA developed a digital tool for monitoring and evaluating reforms and missions within the public administration, to allow the highest authorities, including the President of the Republic and the Prime Minister, to follow in real time the progress of the implementation of reforms by the various ministers. The Public-Private mining group Financial and Technical Partners (PTF) represents countries with significant mining investments in the DRC. On March 1, 2022, the GDRC created, by decree, the Agency for the Steering, Coordination and Monitoring of Cooperation Agreements between the DRC and its Private Partners (APCSC). This agency will oversee the implementation of cooperation agreements that the DRC has concluded with private companies, particularly in the areas of basic infrastructure and natural resources. The APCSC serves as an interface between the various parties and entities interested in projects resulting from collaboration or cooperation agreements in basic infrastructure and natural resources, including the GDRC, private companies and/or groups of companies, as well as any joint venture or monitoring structure created for the purpose of exploring, exploiting, or marketing natural resources and/or carrying out infrastructure work. The Federation of Congolese Enterprises (FEC), a private sector organization that partners with the government and workers’ unions, maintains a dialogue on business interests with the government.

The GDRC provides the right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity.

Foreign ownership or control is possible except in certain excepted sectors. The DRC law reserves small-scale commerce and retail trade to Congolese nationals and there is a foreign ownership limit of 49 percent for agricultural concerns, which limits agricultural investment. Many investors note that in practice the GDRC requires foreign investors to hire local agents and participate in joint ventures with the government or local partners. The new telecommunications law enacted in 2022 includes a 25 percent ownership requirement.

Some foreign investors in the mining sector note that the 2018 mining code raised royalty rates from two to ten percent, raising tax rates on “strategic” metals, and imposing a surcharge on the “super profits” of mining companies. The code also removed a stability clause that protected investors from any new taxes or duties for ten years. The Tshisekedi government has indicated that it is prepared to reopen discussions on the mining code.

The GDRC does not maintain an organization to screen inbound investment. The Presidency and the ministries serve this purpose de facto. In May 2021 President Tshisekedi announced his intention to review the content of and compliance with mining contracts signed under former President Kabila, a process that is still ongoing.

In the past five years, has the GDRC not been subject to a third-party investment policy review (IPR) through a multilateral organization such as the Organization for Economic Co-operation and Development (OECD), World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD) or the UN Working Group on Business and Human Rights. Cities with high custom clearance traffic use Sydonia , which is an advanced software system for custom administrations in compliance with ASYCUDA WORLD. (ASYCUDA is a large technical assistance software program recommended by UNCTAD for custom clearance management.)

The international NGO The Sentry published a report in November 2021 on a multi-million-dollar embezzlement and bribery operation using money intended to support infrastructure development. The NGO Global Witness reported in 2019 that a DRC-based bank was involved in laundering money for Congolese officials.

The GDRC operates a “one-stop-shop” for Business Creation (GUCE) that brings together all the government entities involved in the registration of a company in the DRC with an electronic tracking system of the business creation file online. The goal is to permit the quick and simple registration of companies through one office in one location. In October 2020, President Tshisekedi instructed the government to restructure GUCE in order to ease its work with the various state organizations involved in its operation. More information is available at .

In December 2021, the GDRC attempted to make the GUCE more efficient for companies by implementing a system that allows for online business registration. Using the GUCE’s online portal, companies fill out a “single form,” which integrates all of the services involved in the process of creating a company including the Notary’s Office, the Registry of the Commerce and Personal Property Credit Register, the Administration of Tax Authority (DGI), a Center for Ordination of the General Directorate of Administrative, State, Judicial and Participation Revenues (DGRAD), the Administration of the National Economy, the National Fund of Social Security (CNSS), the Administration of the Environment, the National Office of Employment (ONEM), the National Institute of Professional Preparation (INPP), the General Inspection of Work; and a representation of Municipal Entities. Businesses may also need to obtain an operating permit as required by some city councils. The registration process should now take three days, but in practice it can take much longer. Some businesses have reported that the GUCE has significantly shortened and simplified the overall business registration process.

The GDRC does not promote or incentivize outward investment.

There are currently no government restrictions preventing domestic investors from investing abroad, and there is currently no blacklist of countries with which domestic investors are prevented from doing business.

4. Industrial Policies

The 2002 Investment Code provides for attractive customs and tax exemptions for investors who submit their investment plan to ANAPI. Once the project is approved by ANAPI within a period not exceeding 30 days, the investor benefits from the following customs, fiscal and parafiscal advantages: (1) exemption from import duties and taxes on machinery, materials, and equipment (excluding the 2% administrative tax and VAT (to be paid upstream by the promoter, but to be refunded by the tax authorities); (2) exemption from income tax; (3) exemption from property tax; and (4) exemption from proportional duties when setting up a limited liability company or increasing its share capital.

The duration of the advantages granted is from three to five years depending on the economic region where the investment is located: three years for economic region A (Kinshasa, the Capital); four years for economic region B (Bas-Congo, cities of Lubumbashi, Likasi, Kolwezi); and five years for economic region C (everywhere else).

The conditions for accessing the benefits of the Investment Code are simple; establishment as an economic entity under Congolese law; the overall cost of the planned investment (all expenses included) must be at least $200,000 (or at least $10,000 for SMEs/SMIs); commitment to respect environmental regulations; commitment to respect labor regulations; and a guarantee the investment has a value-added rate of at least 35%. There are no additional incentives for businesses owned by underrepresented investors such as women.

The GDRC does not issue guarantees or jointly finance foreign direct investment projects.

Aside from the incentives offered in the Investment Code, the GDRC does not offer additional incentives for clean energy investments (including renewable energy, energy storage, energy efficiency, clean hydrogen, carbon sequestration, low-carbon transport, and fuels, and other decarbonization technologies). A group of off-grid electricity producers is pushing the government to provide an exemption from import taxes for off-grid solar products brought into the DRC.

The DRC does not have any areas designated as Free Trade Zones or Duty-Free Zones. The DRC is a signatory to the SADC but is not a SADC Free Trade Area member. In February 2022, the DRC deposited its instrument of ratification and became the 42nd country to ratify the African Continental Free Trade Agreement (AFCFTA). The agreement aims to facilitate imports and exports among member countries with reduced or zero tariffs, free market access and market information, and the elimination of trade barrier, and provides numerous benefits to SMEs. In March 2022, the DRC joined the East African Community (EAC) as the seventh member, massively expanding the territory of this trading bloc, giving it access to the Atlantic Ocean and greatly increasing the number of francophones in what was originally a club of former British colonies. The GDRC is committed to experimenting with Special Economic Zones (SEZ). It is in this context that it promulgated in 2014, the Law n°14/022 fixing the regime of SEZ in the DRC.

To date, six areas for the creation of SEZs have been defined: the Industrial Zone of the Kinshasa Area, comprising the City Province of Kinshasa; Kongo Central Province, and the former Province of Bandundu; the Industrial Zone of the Kasaï Area, comprising the Provinces of Kasaï, Kasaï Central, Eastern Kasaï, Lomami and Sankuru; the Industrial Zone of the former Katanga Province; the Industrial Zone of Great Kivu; the Industrial Zone of the former Eastern Province; and the Industrial Zone of the former Equateur Province. According to the provisions of article 6 of this law, the administration of the SEZs in the DRC is the responsibility of a public establishment called the “Agency of Special Economic Zones (AZES).”

With a view to attracting and promoting investments in SEZs, the GDRC, in accordance with the provisions of the law on SEZs, issued Decree No. 20/004 of March 5, 2020, which sets out the advantages and facilities to be granted to investors operating in SEZs in DRC.

  • For developers: a total exemption from property, furniture, and business taxes on profits for 10 years, renewable once after evaluation; a 50 percent reduction in the tax rate set from the 21st year; a total exemption from import duties and taxes on machinery, tools and new or used equipment, capital goods, etc. for 10 years, etc.
  • For companies: a total exemption from property, movable and professional taxes on profits for 5 years, renewable once after evaluation; a reduction of 50 percent of the tax rate from the 11th year; an application of the exceptional depreciation system; a total exemption from import duties and taxes on machinery, tools, and equipment, new or used, and capital goods for 10 years; an exemption from export duties and taxes on finished products for 10 years.

On November 4, 2020, the GDRC launched the construction of the first Special Economic Zone – Maluku SEZ in Kinshasa, with the aim of attracting foreign investment and stimulating the creation of local businesses. This SEZ offers tax and regulatory advantages for investors and entrepreneurs including a 5-to-10-year tax exemption. More information is available at .

In August 2021, the GDRC presented its Industrialization Master Plan (PDI) accompanied by a cost estimate of the structuring and industrializing infrastructures. The transport and communication infrastructure package (airport, rail, river, lake, maritime, road and energy), together with the densification of Special Economic Zones, is estimated at $58.3 billion.

The GDRC does not follow “forced localization,” the policy in which foreign investors must use domestic content in goods or technology. The DRC does not have specific legislation on data storage or limits on the transmission of data.

There are no known enforcement procedures for performance requirements in the DRC.

Investors benefiting from the Investment Code regime must guarantee the investment has a value-added rate of at least 35%

The GDRC does not require IT companies to hand over encryption data. Cellular phone companies must meet technology performance requirements to maintain their license.

According to officials, the Ministry of Digitalization is developing measures to prevent or restrict companies from freely transmitting customer data or data to other companies outside the economy/country. These measures may go beyond the requirements for data transferred within the country.

On November 25, 2020, President Tshisekedi enacted Law No. 20/017 on telecommunications and information and communication technologies. This law provides in its articles 126 to 133 the right to privacy and the protection of personal data in telecommunications and information technology and communication. This protection of privacy is secured by the right to secrecy of correspondence for all users of telecommunications networks and services and information and communication technologies (ICT). The law thus prohibits any interception, listening, recording, transcription and disclosure of correspondence without prior authorization from the General Prosecutor’s Office of the Court of Cassation. The authorization from the Public Prosecutor’s Office of the Court of Cassation, for a renewable period of three months, must demonstrate the facts in a judicial file, and it must include all the identification elements of the targeted link, the offence that justifies the interception, as well as its duration. The Post and Telecommunications Regulatory Authority of Congo (ARPTC) ensures the regulation and control of personal data protection.

5. Protection of Property Rights

The DRC Constitution protects private property without discriminating between foreign and domestic investors. Despite this provision, the GDRC recognized the lack of enforcement protecting property rights. The Congolese law on real property rights lists provisions for mortgages and liens. Real property (buildings and land) is protected and registered by the Office of the Registrar of Mortgages of the Ministry of Land Affairs. The registration of real property does not fully protect owners, as records are often incomplete and disputes over land transactions are common. Many property owners do not have a clear and recorded title to their property. In May 2021, the Ministry of Land Affairs presented the GDRC with its plan to digitize the land registry and secure land and property titles in the DRC. This plan will make it possible to digitize the entire land registry, to establish land security for investors and individuals alike, to electronically store all data collected in a database accessible to all public authorities, and to resolve land conflicts, which make up 80 percent of the cases handled.

Article 61 of Law No. 73-021 of 1973 on the general property regime, the land and real estate regime, and the system of securities, as amended and supplemented by Law No. 80-008 of 1980, provides that “a concession is a contract by which the State recognizes the right of use of land to a community, a natural person, or a legal entity of private or public law, under the terms and conditions provided for in the present law and its implementing regulations. However, a perpetual concession is only available to Congolese individuals. Foreigners and legal entities can only have access to an ordinary concession, which cannot exceed 25 years. However, the latter is renewable at the discretion of the State. In the event of non-renewal, the law provides for compensation for the concessionaire in certain cases (long lease, surface area). This compensation may not exceed 75 percent of the current and intrinsic value of the buildings incorporated into the land. Land is owned and managed by the GDRC. Government officials with the status of Registrars of Real Property Titles issue certificates of registration to individuals in their respective land districts.

Less than 10 percent of land has a clear property title, but the GDRC is in the process of promoting and encouraging people to regularize property titles by buying a final title called a “Record Certificate” (Certificat d’Enregistrement).

Ownership interest in personal property (e.g., equipment, vehicles, etc.) is protected and registered through the Ministry of the Interior’s Office of the Notary.

Intellectual Property Rights (IPR) are legally protected in the DRC, but enforcement of IPR regulations is limited and IP theft is common. Law n°82-001 of 1982 on Intellectual Property (IP) organizes the procedure of IP protection. The registration is done in three steps with the General Secretariat of the Ministry of Industry, which is the competent body for intellectual property in the DRC: (1) filing the file – after paying the official fees, the applicant must file his file. When the file is filed, the applicant receives a filing number that specifies the day and time of filing. This number is used to prove the earlier filing of the IP. (2) Examination of the application and (3) registration of the application. This administrative procedure can take between six and nine months. The applicant can carry out the procedure alone or be accompanied and assisted by an Industrial Property Agent.

The law provides several tools to protect IP against those who want to appropriate or use it without the owner’s consent; in particular, the infringement action or the opposition, which makes it possible to defeat IP violations. The protection of the registered trademark is valid for a renewable period of ten years from the date of filing. The patent allows to benefit on the Congolese territory from a monopoly of exploitation on an innovation for a limited period of 20 years. The registration of a design or model offers a five-year protection that can be renewed only once. The GDRC has yet to join the African Intellectual Property Organization (OAPI), which offers greater protection of trademarks (a protection valid in 16 African countries).

In the past year, no new IP-related laws or regulations have been enacted and no reform bills are underway. The country is a signatory to agreements with international organizations such as the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO) and is subject to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The country tracks and reports seizures of counterfeit goods but does not keep a public record of IPR violations. Information on these seizures is often reported by the Congolese Office of Control (OCC) – [Office Congolais de Contrôle]- which is responsible for enforcing laws, regulations, and standards on the conformity of products, goods, procedures and services.

The DRC is not listed in USTR’s Special 301 report.

The DRC is not listed in the notorious market report.

6. Financial Sector

The government welcomes investment including by foreign portfolio investors. A small number of private equity firms are actively investing in the mining industry. The institutional investor base is not well developed, with only an insurance company and a state pension fund as participants. There is no market for derivatives in the country. Cross-shareholding and stable shareholding arrangements are also not common. Credit is allocated on market terms, but there are occasional complaints about unfair privileges extended to certain investors in profitable sectors such as mining and telecommunications.

There is no domestic stock market. Although reforms have been initiated, the Congolese financial system remains small, heavily dollarized, characterized by fragile balance sheets, and difficult to use. Further reforms are needed to strengthen the financial system, sustain its expansion, and stimulate economic growth. Inadequate risk-based controls, weak regulatory enforcement, low profitability, and over-reliance on demand deposits undermine the resilience of the financial system. The DRC’s capital market remains underdeveloped and consists primarily of the issuance of Treasury bonds.

The Central Bank refrains from making restrictions on payments and transfers for current international transactions.

It is possible for foreign companies to borrow from local banks, but their options are limited. Loan terms are generally limited to 3-6 months, and interest rates are typically 16-21 percent. The inconsistent legal system, the often-burdensome business climate, and the difficulty of obtaining interbank financing discourage banks from making long-term loans. Opportunities for financing large projects in the national currency, the Congolese franc (CDF), are limited.

The Congolese financial system is comprised of 15 licensed banks, a national insurance company (SONAS), the National Social Security Institute (INSS), one development bank, SOFIDE (Société Financière de Development), a savings fund (CADECO), roughly 21 microfinance institutions and 72 cooperatives, 81 money transfer institutions which are concentrated in Kinshasa, Kongo Central, former Bandundu, North and South Kivu and the former Katanga provinces, 4 electronic money institutions, and 48 foreign exchange offices.

While the financial system is improving, it is fragmented and dominated by so-called “local” banks. With very different profiles (international, local, pan-African, networked, corporate, etc.) and approaches that diverge fundamentally in terms of management, governance, and terms of management and risk appetite, the so-called “local” commercial banks continue to dominate the banking sector. Pan-African banks are increasing their share, especially with the recent acquisition of the Banque Commerciale du Congo by the Kenyan Equity Group.

The Central Bank controls monetary policy and regulates the banking system. Banks are mainly concentrated in the provinces of Kinshasa, Kongo Central, North and South Kivu, and Haut Katanga. The banking penetration rate is about 7.6 percent, or about 5.3 million accounts, which places the country among the least banked nations in the world.

Mobile banking has the potential to significantly increase the banking customer base, as an estimated 35 million Congolese use cell phones. In the last five years, there has been an evolution and consolidation of prudential ratios or risk indicators of the banking sector and the introduction of alternative channels for financial service delivery and inclusion, such as Agency Banking and Mobile Banking. Mobile money continues to play an increasingly important role in financial inclusion in the DRC, as mobile money is a lever for economic and social inclusion. Over the past ten years, mobile money subscriptions in the DRC have increased by 20 percent per year.

There is no debt market. The financial health of DRC banks is fragile, reflecting high operating costs and exchange rates. In 2021 asset quality measures taken by the Central Bank allowed banks to absorb the economic impact of the COVID-19 pandemic. Fees charged by banks are a major source of revenue.

Statistics on non-performing loans are not available because many banks only record the balance due and not the total amount of their non-performing loans.

The financial system is primarily based on the banking sector, with total assets estimated at US$ 5.2 billion. Of the five largest banks, four are local and one is controlled by foreign holding companies. The five largest banks hold nearly 65 percent of bank deposits and more than 60 percent of total bank assets, or about $ 3.1 billion.

The country has an operating central banking system with Citigroup as the only correspondent bank.

All foreign banks or branches need to be accredited by the Central Bank, are considered Congolese banks with foreign capital, and fall under the provisions and regulations covering the credit institutions’ activities in the DRC.

There are no restrictions on a foreigner’s ability to establish a bank account in the DRC.

The DRC has no declared Sovereign Wealth Fund (SWF), although the 2018 Mining Code refers to creating a future fund “FOMIN” that will be capitalized by a percentage of mining revenues. In October 2021, the Extractive Industries Transparency Initiative Technical Secretariat organized a workshop to develop the FOMIN decree as well as tools for managing the shares of mining royalties accruing to the provinces and local entities.


Executive Summary

Gabon is a historically stable country in a volatile region and has significant economic advantages: a small population (roughly 2 million), an abundance of natural resources, and a strategic location in the Gulf of Guinea. After taking office in 2009, President Ali Bongo Ondimba introduced reforms to diversify Gabon’s economy away from oil and traditional investment partners, and to position Gabon as an emerging economy. Gabon promotes foreign investment across a range of sectors, particularly in oil and gas, infrastructure, timber, ecotourism, and mining. Gabon’s government depends on revenues from hydrocarbons.

The Gabonese investment climate is marked by impediments related to establishing a new business, connecting to utilities, such as electricity and water, and transferring company ownership. Many companies also report difficulties in obtaining loans. Banks and other financiers struggle to release funds, especially to small and medium-sized enterprises (SMEs), due to a lack of guarantees and missing documentation. However, several business incubators active in the country are attempting to facilitate business activities. Gabon ranks 38th in Africa for the protection of minority investors and 43rd for the payment of taxes.

Gabon adopted a new hydrocarbon code and a new mining code in July 2019, to provide a modernized basis for the legal, institutional, technical, economic, customs, and tax regimes governing these sectors and to spur investment through a more stable business climate.

Economic conditions in Gabon continued to weaken throughout 2020. The COVID-19 pandemic caused two shocks to the Gabonese economy, prompting it to enter into a recession. First, the decline in global demand and the corresponding collapse in oil prices hit government revenues and the economy hard. Second, domestic demand plummeted as a result of the government’s actions taken to halt the pandemic, such as through border closures and a national curfew.

A renewed wave of illnesses that began in January 2021 compounded this situation. Gabon officially launched its national vaccination campaign against COVID-19 in March 2022; a total of 499,247 doses of COVID vaccines have been administered. Assuming every person requires two doses, the number of doses is seen as enough to have vaccinated about 11.5% of the country’s population (World-coronavirus-tracker)

On July 2021, the IMF Executive Board approved a USD $553.2 million, 36-month arrangement under an Extended Fund Facility (EFF) for Gabon. The Board’s approval allowed for an immediate disbursement of US$115.25 million for budget support. The program aims to support the short-term response to the COVID-19 crisis and lay the foundations for green and inclusive private sector-led growth and a strong and sustainable recovery to benefit all Gabonese. A combined first and second review of the EFF was undertaken in May 2022.

Historically, the mining, oil and petroleum, and wood sectors have attracted the most investment in Gabon. To attract more investors in those key sectors Gabon created a Special Economic Zone (SEZ) at Nkok near Libreville in 2010. This 1,350-hectare project targets local and foreign investors, provides priority access to electricity and water and on-site legal and financial services, and is near the deep-sea port of Owendo. Originally set up through a partnership between Olam International Ltd, the Gabonese government, and the Africa Finance Corporation, it operates with a mandate to develop infrastructure, enhance industrial competitiveness, and build a business-friendly ecosystem. However, corruption, bureaucratic red tape, and the lack of transparency, including through the inconsistent application of customs regulations, remain impediments to investment. Many international companies, including U.S. firms, continued to report difficulties in receiving timely payments from the government, and some oil companies have closed down operations altogether.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2020 124 of 180
Global Innovation Index 2020 N/A
U.S. FDI in partner country ($M USD, historical stock positions) 2019 -172.0
World Bank GNI per capita 2020 7,030

1. Openness To, and Restrictions Upon, Foreign Investment

Gabon’s 1998 investment code conforms to the Central African Economic and Monetary Community’s (CEMAC) investment regulations and provides the same rights to foreign companies operating in Gabon as to domestic firms.

Gabon’s domestic and foreign investors are protected from expropriation or nationalization without appropriate compensation, as determined by an independent third party. Certain sectors, such as mining, forestry, petroleum, agriculture, and tourism, have specific investment codes, which encourage investment through customs and tax incentives.

Gabon established the Investment Promotion Agency (ANPI-Gabon) with the assistance of the World Bank in 2014. Its mission is to promote investment and exports, support SMEs, manage public-private partnerships (PPPs), and help companies establish themselves. It is designed to act as the gateway for investment into the country and to reduce administrative procedures, costs, and waiting periods.

Gabonese authorities have made efforts to prioritize investment. In 2017, the High Council for Investment was established to promote investment and boost the economy. This body provides a platform for dialogue between the public and private sectors, and its main objectives are to improve the economy and create jobs.

Foreign investors are largely treated in the same manner as their Gabonese counterparts regarding the purchase of real estate, negotiation of licenses, and entering into commercial agreements. There is no general requirement for local participation in investments (see local labor requirements below). Many businesses find it useful to have a local partner who can help navigate the subjective aspects of the business environment.

There are no limits on foreign ownership or control. However, the Government of Gabon automatically owns a 20 percent stake in all petroleum development in the nation, with Gabon Oil able to purchase up to an additional 15 percent. The standard practice is for the Gabonese President to review foreign investment contracts following the completion of ministerial-level negotiations.

The President has taken an active interest in meeting with investors. The lack of a standardized procedure for new entrants to negotiate deals with the government can lead to confusion and time-consuming negotiations. Moreover, the centralization of decision-making by a few senior officials who are exceedingly busy can delay the process. As a result, new entrants often find the process of finalizing deals time-consuming and difficult to navigate.

Gabon has been a World Trade Organization (WTO) member since 1995. In June 2013, Gabon conducted an investment policy review with the WTO. The government has not conducted any investment policy reviews through the Organization for Economic Co-operation and Development (OECD) or the United Nations Conference on Trade and Development (UNCTAD) since 2017.

The government encourages investments in those economic sectors that contribute the greatest share to Gross National Product (GNP), including oil and gas, mining, and wood harvesting and transformation through customs and tax incentives. For example, oil and mining companies are exempt from customs duties on imported machinery and equipment specific to their industries. The Tourism Investment Code, enacted in 2000, provides tax incentives to foreign tourism investors during the first eight years of operation. The SEZ at Nkok offers tax incentives to industrial investors; the government has mused on the possibility of increasing the number of SEZs in a move to attract further investment.

ANPI-Gabon covers more than 20 public and private agencies, including the Chamber of Commerce, National Social Security Fund (CNSS), and National Health Insurance and Social Security (CNAMGS). It aims to attract domestic and international investors through improved methods of approving and licensing new companies and to support public-private dialogue. It has a single window registration process that allows domestic and foreign investors to register their businesses in 48 hours. There are, however, no special mechanisms for equitable treatment of women and underrepresented minorities in Gabon.

ANPI-Gabon’s website address is: 

One of ANPI-Gabon’s primary goals is to promote outward investments and exports. The Gabonese government does not restrict domestic investors from investing abroad.

5. Protection of Property Rights

Secured interest in property is recognized, and the recording system is relatively reliable.

There are no specific regulations for foreign and/or non-resident investors regarding land lease or acquisition. Laws in Gabon for private and commercial property do not provide any restrictions on nationality for the possession and ownership of property in Gabon.

Almost 85 percent of Gabon’s area (and possibly 95 percent or more) is legally owned by the state. Only 14,000 private land titles, mostly tiny urban parcels, appear to have been registered in Gabon according to a 2012 report (the most recent year for which such records exist). Urban areas constitute no more than one percent of total land area. The government created the National Agency for Urban Planning, Surveys, and the Land Registry in 2011.

If legally purchased property is unoccupied by the owner, property ownership can revert to others.

The Ministry of Commerce manages patents and copyrights in Gabon. Gabon is a member of the African Intellectual Property Office (OAPI), based in Yaoundé, Cameroon. OAPI aims to ensure the publication and protection of patent rights, encourage creativity and technology transfer, and create favorable conditions for research. As a member of OAPI, Gabon acceded to international agreements on patents and intellectual property (IP), including the Paris Convention, the Bern Convention, and the Convention Establishing the World Intellectual Property Organization.

During the past year, no IP related laws or regulations were enacted. Gabon does not report on seizures of counterfeit goods, so related data is not available. Gabon is not on the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

6. Financial Sector

There is no law prohibiting or limiting foreign investment in Gabon. Aside from the preference in employment given to Gabonese workers, from a general corporate law perspective, there are no specific legislative requirements. Regardless of the type of company, there must be one resident representative on the management board of all Gabonese companies. However, this resident representative can be a non-Gabonese citizen.

The Government of Gabon automatically owns a 20 percent stake in all petroleum development in the nation, with Gabon Oil able to purchase up to an additional 15 percent. The standard practice is for the Gabonese President to review foreign investment contracts following the completion of ministerial-level negotiations.

The contracting company can assign its rights and obligations under any hydrocarbon’s contracts to a third party, subject to the prior approval of the Ministry of Oil and Hydrocarbons and the Ministry of Economy. The state is entitled to the right of first refusal on application to assign these rights to a third party, excluding assignments between the contracting company and its affiliates. The Gabonese government encourages and supports foreign portfolio investment, but Gabon’s capital markets are poorly developed. Gabon is the home to the Central Africa Regional Stock Exchange, which began operation in August 2008. Additionally, the Bank of Central African States is in the process of consolidating the Libreville Stock Exchange into a single CEMAC zone stock exchange to be based in Douala, Cameroon; this process began in July 2019.

On June 25, 1996, Gabon formally notified the IMF that they accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement. These sections provide that members shall not impose or engage in certain measures, namely restrictions on making payments and transfers for current international transactions, discriminatory currency arrangements, or multiple currency practices, without the approval of the IMF.

Foreign investors are authorized to obtain credit on the local market and have access to a variety of credit instruments offered by local banks without restriction.

The banking sector is composed of seven commercial banks and is open to foreign institutions. The industry is highly concentrated, with three of the largest banks accounting for 77 percent of all loans and deposits. The lack of diversification in the economy has constrained bank growth in the country, given that the financing of the oil sector is largely undertaken by foreign international banks. Access to banking services outside major cities is limited.

According to data from the Gabonese General Directorate for the Economy and Fiscal Policy, the term resources of the banking sector fell by 8% in the first half of 2020, due in particular to the negative impact of COVID-19 on economic activity. These resources stood at 552.1 billion FCFA at the end of June 2020, compared to 600 billion a year earlier.

The Gabonese banking sector remains weak due to its difficulty in financing the private sector as a result of unreliable and often incomplete documentation presented by new companies. In addition, interest rates offered by banks are very high – around 15 percent – discouraging individuals and businesses.

BGFI Bank Gabon is the largest Gabonese bank in both deposits and loans with approximatively 45 percent of the market share and a balance sheet total of over 3,000 billion FCFA, according to the Professional Association of Gabon Credit Institutions (APEC). The Bloomfield Investment Corporation financial rating agency gave the BGFI Bank a mark of A+ in recognition for its financial strength and management system.

Gabon shares a common Central Bank (Bank of Central African States) and a common currency, the Communauté Financière Africaine (CFA) Franc, with the other countries of CEMAC. The CFA is pegged to the euro.

Foreign banks are allowed to establish operations in the country. There is one U.S. bank (Citigroup) present in Gabon. There are no restrictions on a foreigner’s ability to establish a bank account in the local economy.

Gabon’s financial system is shallow and financial intermediation levels remain low. Basic documents are required for applying for a residency permit in Gabon.

Gabon created a Sovereign Wealth Fund (SWF) in 2008. Initially called the Fund for Future Generations (Fonds des Génerations Futures) and later changed to the Sovereign Funds of the Gabonese Republic (Fonds Souverains de la République Gabonaise), the current iteration of Gabon’s SWF is referred to as Gabon’s Strategic Investment Funds (Fonds Gabonaises d’Investissements Stratégiques, or FGIS). As of September 2013, the most recent FGIS report, the FGIS had USD 2.4 billion in assets and was actively making investments. Further details are not available.

Gabon’s SWF accepted the Santiago principles and joined the IMF-hosted International Working Group on SWFs on January 2022.

7. State-Owned Enterprises

Government-appointed civil servants manage Gabonese State-Owned Enterprises (SOEs), which operate primarily in energy, extractive industries, and public utilities. SOEs generally follow OECD guidelines on corporate governance, which usually consists of a board of directors under the authority of the related ministry. That ministry determines the board members, who may be government officials or members of the general public. The SOEs often consult with their ministry before undertaking any important business decisions. The corresponding ministry in each sector prepares and submits the budget of each SOE each year. Independent auditors examine the SOEs’ activities each year, conducting audits according to international standards. Auditors do not publish their reports, but rather submit them to the relevant ministry.

There is no published list of SOEs.

There are no specific laws or rules that offer preferential treatment to SOEs. Although private enterprises may compete with public enterprises under open market access conditions, SOEs often have a competitive advantage in the industries in which they operate.

Gabon does not have an active privatization program. However, when there is a privatization program foreign investors are usually invited to participate. The bidding process for these programs is easy to understand, non-discriminatory, and transparent.


Executive Summary

Ghana’s economy had expanded at an average of seven percent per year since 2017 until the coronavirus pandemic reduced growth to 0.4 percent in 2020, according to the Ministry of Finance. Between 2017 and 2019, the fiscal deficit narrowed, inflation decreased, and GDP growth rebounded, driven primarily by increases in oil production. Ghana saw a 9 percent growth rate in the first quarter of 2019 and closed that year with a 6.5 percent GDP growth rate.  Indicating a recovery from the pandemic, the Ghana Statistical Service reported a 6.6 percent growth rate in the third quarter of 2021, marking the fastest growth in GDP since the pandemic began.  The International Monetary Fund (IMF) expected growth to rebound to 4.7 percent in 2021 from the shock of COVID-19 and by 6.2 percent in 2022. The economy remains highly dependent on the export of primary commodities such as gold, cocoa, and oil, and consequently is vulnerable to slowdowns in the global economy and commodity price shocks. In November 2020, Ghana launched the 100 billion cedi (about $13 billion) Ghana COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) Program to address the effects of the virus on the economy. In 2020, the government also launched Ghana’s National Adaptation Plan Process by which it expects to develop strategies to build resilience against the impacts of both climate change and crises such as COVID-19. In general, Ghana’s investment prospects remain favorable, as the Government of Ghana seeks to diversify and industrialize through agro-processing, mining, and manufacturing.  It has made attracting foreign direct investment (FDI) a priority to support its industrialization plans and to overcome an annual infrastructure funding gap.

Challenges to Ghana’s economy include high government debt, particularly energy sector debt, low internally generated revenue, and inefficient state-owned enterprises.  Ghana has a population of 31 million, with over 14 million potential taxpayers, but only six million of whom filed their annual tax returns.  As Ghana seeks to move beyond dependence on foreign aid, it must develop a solid domestic revenue base.  On the energy front, Ghana has enough installed power capacity to meet current demand, but it needs to reduce the cost of electricity by improving the management of its state-owned power distribution system.

Among the challenges hindering foreign direct investment are: costly and difficult financial services, lack of government transparency, corruption, under-developed infrastructure, a complex property market, costly and intermittent power and water supply, the high costs of cross-border trade, a burdensome bureaucracy, and an unskilled labor force.  Enforcement of laws and policies is weak, even where good laws exist on the books.  Public procurements are sometimes opaque, and there are often issues with delayed payments.  In addition, there have been troubling trends in investment policy over the last six years, with the passage of local content regulations in the petroleum, power, and mining sectors that may discourage needed future investments.

Despite these challenges, Ghana’s abundant raw materials (gold, cocoa, and oil/gas), relative security, and political stability, as well as its hosting of the African Continental Free Trade Area (AfCFTA) Secretariat make it stand out as one of the better locations for investment in sub-Saharan Africa.  There is no discrimination against foreign-owned businesses.  Investment laws protect investors against expropriation and nationalization and guarantee that investors can transfer profits out of the country, although international companies have reported high levels of corruption in dealing with Ghanaian government institutions.  Among the most promising sectors are agribusiness and food processing; textiles and apparel; downstream oil, gas, and minerals processing; construction; and mining-related services subsectors.

The government has acknowledged the need to strengthen its enabling environment to attract FDI, and is taking steps to overhaul the regulatory system, improve the ease of doing business, and restore fiscal discipline.

Table 1: Key Metrics and Rankings 
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 73 of 180 
Global Innovation Index 2021 112 of 132 
U.S. FDI in Ghana ($M USD, historical stock positions) 2020 USD 429 million 
World Bank GNI per capita 2020 USD 2,340 

1. Openness To, and Restrictions Upon, Foreign Investment 

The Government of Ghana has made increasing FDI a priority and acknowledges the importance of having an enabling environment for the private sector to thrive.  Officials are implementing regulatory and other reforms such as automation and digitalization of government processes and enhancing GIPC’s own support services, to improve the ease of doing business and make investing in Ghana more attractive. The 2013 Ghana Investment Promotion Center (GIPC) Act requires the GIPC to register, monitor, and keep records of all business enterprises in Ghana.  Sector-specific laws further regulate investments in minerals and mining, oil and gas, industries within Free Zones, banking, non-bank financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate.  Some sector-specific laws, such as in the oil and gas sector and the power sector, include local content requirements that could discourage international investment.  Foreign investors are required to satisfy the provisions of the GIPC Act as well as the provisions of sector-specific laws.  GIPC leadership has pledged to collaborate more closely with the private sector to address investor concerns, but there have been no significant changes to the laws.  More information on investing in Ghana can be obtained from GIPC’s website,

Most of Ghana’s major sectors are fully open to foreign capital participation. U.S. investors in Ghana are treated the same as other foreign investors.  All foreign investment projects must register with the GIPC.  Foreign investments are subject to the following minimum capital requirements: USD 200,000 for joint ventures with a Ghanaian partner, who should have at least 10 percent of the equity; USD 500,000 for enterprises wholly owned by a non-Ghanaian; and USD 1 million for trading companies (firms that buy or sell imported goods or services) wholly owned by non-Ghanaian entities.  The minimum capital requirement may be met in cash or capital goods relevant to the investment.  Trading companies are also required to employ at least 20 skilled Ghanaian nationals.

Ghana’s investment code excludes foreign investors from participating in eight economic sectors:  petty trading; the operation of taxi and car rental services with fleets of fewer than 25 vehicles; lotteries (excluding soccer pools); the operation of beauty salons and barber shops; printing of recharge scratch cards for subscribers to telecommunications services; production of exercise books and stationery; retail of finished pharmaceutical products; and the production, supply, and retail of drinking water in sealed pouches.  Sectors where foreign investors are allowed limited market access include: telecommunications, banking, fishing, mining, petroleum, and real estate.

Ghana has not conducted an investment policy review (IPR) through the OECD recently. UNCTAD last conducted an IPR in 2003.

The WTO last conducted a Trade Policy Review (TPR) in May 2014.  The next review is scheduled for May 4-6, 2022. The 2014 TPR concluded that the 2013 amendment to the investment law raised the minimum capital that foreigners must invest to levels above those specified in Ghana’s 1994 GATS horizontal commitments and excluded new activities from foreign competition.  However, it was determined that overall, this would have minimal impact on dissuading future foreign investment due to the size of the companies traditionally seeking to do business within the country.  An executive summary of the findings can be found at: .

Although registering a business is a relatively easy procedure and can be done online through the Registrar General’s Department (RGD) at , businesses have noted that the process involved in establishing a business is lengthy and complex, and requires compliance with regulations and procedures of at least four other government agencies, including GIPC, Ghana Revenue Authority (GRA), Ghana Immigration Service, and the Social Security and National Insurance Trust (SSNIT). In 2019, Ghana passed a new Companies Act, 2019 (Act 992), which among other things, created a new independent office called the Office of the Registrar of Companies, responsible for the registration and regulation of all businesses.  A new office is expected to be in place which would separate the registration process for companies from the Registrar General’s Department; the latter would continue to serve as the government’s registrar for non-business transactions such as marriages.  The new law also simplifies some registration processes by scrapping the issuance of a certificate to commence business and the requirement for a company to state business objectives, which limited the activities in which a company could engage.  The law also expands the role of the company secretary, which now requires educational qualifications with some background in company law practice and administration or having been trained under a company secretary for at least three years.  Foreign investors must obtain a certificate of capital importation, which can take 14 days.  The local authorized bank must confirm the import of capital with the Bank of Ghana, which confirms the transaction to GIPC for investment registration purposes.

Per the GIPC Act, all foreign companies are required to register with GIPC after incorporation with the RGD.  Registration can be completed online at  While the registration process is designed to be completed within five business days, but there are often bureaucratic delays.

The Ghanaian business environment is unique, and guidance can be extremely helpful.  In some cases, a foreign investment may enjoy certain tax benefits under the law or additional incentives if the project is deemed critical to the country’s development.  Most companies or individuals considering investing in Ghana or trading with Ghanaian counterparts find it useful to consult with a local attorney or business facilitation company.  The United States Embassy in Accra maintains a list of local attorneys, which is available through the U.S. Foreign Commercial Service ( ) or U.S. Citizen Services (

Specific information about setting up a business is available at the GIPC website:   

Ghana Investment Promotion Centre
Post: P. O. Box M193, Accra-Ghana
Note: Omit the (0) after the country code when dialing from abroad.
Telephone: +233 (0) 302 665 125, +233 (0) 302 665 126, +233 (0) 302 665 127, +233 (0) 302 665 128, +233 (0) 302 665 129, +233 (0) 244 318 254/ +233 (0) 244 318 252

Note that mining or oil/gas sector companies are required to obtain licensing/approval from the following relevant bodies:

Petroleum Commission Head Office
Plot No. 4A, George Bush Highway, Accra, Ghana
P.O. Box CT 228 Cantonments, Accra, Ghana
Telephone: +233 (0) 302 953 392 | +233 (0) 302 953 393

Minerals Commission
Minerals House, No. 12 Switchback Road, Cantonments, Accra
P. O. Box M 248
Telephone: +233 (0) 302 772 783 /+233 (0) 302 772 786 /+233 (0) 302 773 053

Ghana has no specific outward investment policy.  It has entered into bilateral treaties, however, with a number of countries to promote and protect foreign investment on a reciprocal basis.  Some Ghanaian companies have established operations in other West African countries and there are a number of active Ghanaian investments in the United States in the food processing and personal care sectors.

4. Industrial Policies 

Investment incentives differ slightly depending upon the law under which an investor operates.  For example, while all investors operating under the Free Zone Act are entitled to a ten-year corporate tax holiday, investors operating under the GIPC law are not.  Tax incentives vary depending upon the sector in which the investor is operating.

All investment-specific laws contain some incentives.  The GIPC law allows for import and tax exemptions for plant inputs, machinery, and parts imported for the purpose of the investment.  Chapters 82, 84, 85, and 89 of the Customs Harmonized Commodity and Tariff Code zero-rate these production items.  In 2015, the Government of Ghana imposed a new five percent import duty on some items that were previously zero-rated to conform to the new Economic Community of West African States (ECOWAS) common external tariff.

The Ghanaian tax system is replete with tax concessions that considerably reduce the effective tax rate.  The minimum incentives are specified in the GIPC law and are not applied in an ad hoc or arbitrary manner.  Once an investor has been registered under the GIPC law, the investor is entitled to the incentives provided by law.  The government has discretion to grant an investor additional customs duty exemptions and tax incentives beyond the minimum stated in the law.

The GIPC website ( ) provides a thorough description of available incentive programs.  The law also guarantees an investor all the tax incentives provided for under Ghanaian law.  For example, rental income from commercial and residential property is exempt from tax for the first five years after construction.  Similarly, income from a company selling or leasing out premises is income tax exempt for the first five years of operation.  Rural banks and cattle ranching are exempt from income tax for ten years and pay eight percent thereafter.

The corporate tax rate is 25 percent, and this applies to all sectors, except income from non-traditional exports (eight percent tax rate), companies principally engaged in the hotel industry (22 percent rate), and oil and gas exploration companies (35 percent tax rate).  For some sectors there are temporary tax holidays.  These sectors include Free Zone enterprises and developers (0 percent for the first ten years and 15 percent thereafter); real estate development and rental (0 percent for the first five years and 25 percent thereafter); agro-processing companies (0 percent for the first five years, after which the tax rate ranges from 0 percent to 25 percent depending on the location of the company in Ghana), and waste processing companies (0 percent for seven years and 25 percent thereafter).  In December 2019, to attract investments under the Ghana Automotive Development Policy, corporate tax holidays among other import duty and value-added tax exemptions were granted to manufacturers or assemblers of semi-knocked-down vehicles (0 percent for three years) and complete knocked down vehicles (0 percent for ten years).  Tax rebates are also offered in the form of incentives based on location.  A capital allowance in the form of accelerated depreciation is applicable in all sectors except banking, finance, commerce, insurance, mining, and petroleum.  Under the Income Tax Act, 2015 (Act 896), all businesses can carry forward tax losses for at least three years.

Ghana has no discriminatory or excessively burdensome visa requirements.  While ECOWAS nationals do not require a visa to enter Ghana for 90 days, they need a work and residence permit to live and work in Ghana.  The current fees for work and residence permit for ECOWAS nationals is USD 500 while that for non-ECOWAS nationals is USD 1,000.  A foreign investor who invests under the GIPC Act is automatically entitled to a specific number of visas/work permits based on the size of the investment.  When an investment of USD 50,000 but not more than USD 250,000 or its equivalent is made in convertible currency or machinery and equipment, the enterprise can obtain a visa/work permit for one expatriate employee.  An investment of USD 250,000, but not more than USD 500,000, entitles the enterprise to two visas/work permits.  An investment of USD 500,000, but not more than USD 700,000, allows the enterprise to bring in three expatriate employees.  An investment of more than USD 700,000 allows an enterprise to bring in four expatriate employees.  An enterprise may apply for extra visas or work permits, but the investor must justify why a foreigner must be employed rather than a Ghanaian.  There are no restrictions on the issuance of work and residence permits to Free Zone investors and employees.  Overall, the process of issuing work permits is not very transparent.

Free Trade Zones (called Free Zones in Ghana) were first established in May 1996, with one near Tema Steelworks, Ltd., in the Greater Accra Region, and two other sites located at Mpintsin and Ashiem near Takoradi in the Western Region.  The seaports of Tema and Takoradi, as well as the Kotoka International Airport in Accra and all the lands related to these areas, are part of the Free Zone.  The law also permits the establishment of single factory zones outside or within the areas mentioned above.  Under the law, a company qualifies to be a Free Zone company if it exports more than 70 percent of its products.  Among the incentives for Free Zone companies are a ten-year corporate tax holiday and zero import duty.

To make it easier for Free Zone developers to acquire the various licenses and permits to operate, the Ghana Free Zones Authority ( ) provides a “one-stop approval service” to assist in the completion of all formalities.  A lack of resources has limited the effectiveness of the Authority.  Foreign employees of Free Zone businesses require work and residence permits.

In most sectors, Ghana does not have performance requirements for establishing, maintaining, and expanding a business.  Investors are not required to purchase from local sources or employ prescribed levels of local content, except in the mining sector, the upstream petroleum sector, and the power sector, which are subject to substantial local content requirements.  Similar legislation is being drafted for the downstream petroleum sector, and a National Local Content Policy is being debated by Cabinet that may extend to a broad array of sectors of the economy, but there is no clear timeline for its approval.

Generally, investors are not required to export a specified percentage of their output, except for Free Zone enterprises which, in accordance with the Free Zone Act, must export at least 70 percent of their products.  Government officials have intimated that local content requirements should be applied to sectors other than petroleum, power, and mining, but no local content regulations have been promulgated for other sectors.

As detailed earlier in this report, there are a few areas where the GOG does impose performance requirements, including the mining, oil and gas, insurance, and telecommunications sectors.

5. Protection of Property Rights 

The legal system recognizes and enforces secured interest in property.  However, the process to get clear title over land is difficult, complicated, and lengthy.  It is important to conduct a thorough search at the Lands Commission to ascertain the identity of the true owner of any land being offered for sale.  Investors should be aware that land records can be incomplete or non-existent and, therefore, clear title may be impossible to establish.  Ghana passed a new land law, Land Act, 2020 (Act 1036), which revised, harmonized, and consolidated laws on land to ensure sustainable land administration and management.  The new law makes it possible to transfer and create or register interests in land by electronic means to speed up conveyancing, supports decentralized land service delivery, and includes provisions relating to property rights of spouses by ensuring that spouses are deemed to be party to the interest in land that is jointly acquired during the marriage.  These changes are expected to improve accessibility and secured tenure.

Mortgages exist, although there are only a few thousand due to factors such as land ownership issues and scarcity of long-term finance.  Mortgages are regulated by the Home Mortgages Finance Act, 2008 (Act 770), which has enhanced the process of foreclosure.  A mortgage must be registered under the Land Act, 2020 (Act 1036), for it to take effect.  Registration with the Land Title Registry is a reliable system of recording the transaction.

The protection of intellectual property rights (IPR) is an evolving area of law in Ghana.  There has been progress in recent years to afford protection under both local and international law.  Ghana is a party to the Universal Copyright Convention, the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty (PTC), the Singapore Trademark Law Treaty (STLT), and the Madrid Protocol Concerning the International Registration of Marks.  Ghana is also a member of the World Intellectual Property Organization (WIPO), the English-speaking African Regional Intellectual Property Organization (ARIPO), and the World Trade Organization (WTO).  In 2004, Ghana’s Parliament ratified the WIPO internet treaties, namely the WIPO Copyright Treaty and the WIPO Performance and Phonograms Treaty.  Ghana also amended six IPR laws to comply with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), including:  copyrights, trademarks, patents, layout-designs (topographies) of integrated circuits, geographical indications, and industrial designs.  Except for the copyright law, implementing regulations necessary for fully effective promulgation have not been passed.

The Government of Ghana launched a National Intellectual Property Policy and Strategy in January 2016, which aimed to strengthen the legal framework for protection, administration, and enforcement of IPR and promote innovation and awareness, although progress on implementation stalled.  Enforcement remains weak, and piracy of intellectual property continues.  Although precise statistics are not available for many sectors, counterfeit computer software is regularly available at street markets, and counterfeit pharmaceuticals have found their way into public hospitals.  Counterfeit products have also been discovered in such disparate sectors as industrial epoxy, cosmetics, drinking spirits, and household cleaning products.  Based on cases where it has been possible to trace the origin of counterfeit goods, most have been found to have been produced outside the region, usually in Asia.  IPR holders have access to local courts for redress of grievances, although the few trademark, patent, and copyright infringement cases that U.S. companies have filed in Ghana have reportedly moved through the legal system slowly.

Ghana is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

Please contact the following at Mission Ghana if you have further questions regarding IPR issues:

U.S. Embassy, Economic Section
No. 24 Fourth Circular Road, Cantonments, Accra, Ghana
Tel: +233(0) 302 741 000 (Omit the (0) after the area code when dialing from abroad)

The United States Embassy in Accra maintains a list of local attorneys, which is available through the U.S. Foreign Commercial Service ( or U.S. Citizen Services (

American Chamber of Commerce Ghana
No. 10 Mensah Wood Avenue, East Legon, Accra.P.O. Box CT2869, Cantonments-Accra, Ghana
Tel: +233 (0) 302 247 562/ +233 (0) 307 011 862 (Omit the (0) after the area code when dialing from abroad)

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at 

6. Financial Sector 

Private sector growth in Ghana is constrained by financing challenges.  Businesses continue to face difficulty raising capital on the local market.  While credit to the private sector has increased in nominal terms, levels as percentage of GDP have remained stagnant over the last decade, and high government borrowing has brought interest rates above 20 percent and crowded out private investment.

Capital markets and portfolio investment are gradually evolving.  The longest-term domestic bonds are 20 years, with Eurobonds ranging up to 41-year maturities.  Foreign investors are permitted to participate in auctions of bonds only with maturities of two years or longer.  In January 2022, foreign investors held about 16.6 percent (valued at USD 5 billion) of the total outstanding domestic securities.  In 2015, the Ghana Stock Exchange (GSE) added the Ghana Fixed-Income Market (GFIM) –, a specialized platform for secondary trading in debt instruments to improve liquidity.

The rapid accumulation of debt over the last decade, and particularly the past three years, has raised debt sustainability concerns.  Ghana received debt relief under the Heavily Indebted Poor Country (HIPC) initiative in 2004, and began issuing Eurobonds in 2007.  In February 2020, Ghana sold sub-Saharan Africa’s longest-ever Eurobond as part of a $3 billion deal with a tenor of 41 years.  At the end of December 2021, total public debt, roughly evenly split between external and domestic, stood at 80 percent of GDP, according to the Bank of Ghana, partly as a result of the economic shock of COVID-19 as revenue declined and expenditures spiked.

The Ghana Stock Exchange (GSE) has 36 listed companies.  Both foreign and local companies are allowed to list on the GSE.  The Securities and Exchange Commission regulates activities on the Exchange.  There is an eight percent tax on dividend income.  Foreigners are permitted to trade stocks listed on the GSE without restriction.  There are no capital controls on the flow of retained earnings, capital gains, dividends, or interest payments.  The GSE composite index (GGSECI) has exhibited mixed performance.

Banks in Ghana are relatively small, with the largest in the country in terms of operating assets, Ecobank Ghana Ltd., holding assets of about USD 2.3 billion in 2020.  The Central Bank’s minimum capital requirement for commercial banks is 400 million (USD 57 million), effective December 2018.  As a result of the reforms and subsequent closures and mergers of some banks from 2017 to 2019, the number of commercial banks dropped from 36 to 23.  Eight are domestically controlled, and the remaining 15 are foreign controlled.  In total, there are over 1,500 branches distributed across the sixteen regions of the country.

Overall, the banking industry in Ghana is well capitalized with a capital adequacy ratio of 19.6 percent as of December 2021, above the 11.5 percent prudential and statutory requirement.  The non-performing loans ratio increased from 14.8 percent in December 2020 to 15.2 percent as of December 2021.  Lending in foreign currencies to unhedged borrowers poses a risk, and widely varying standards in loan classification and provisioning may be masking weaknesses in bank balance sheets.  The BoG has almost completed actions to address weaknesses in the non-bank deposit-taking institutions sector (e.g., microfinance, savings and loan, and rural banks) and has also issued new guidelines to strengthen corporate governance regulations in the banks.

Recent developments in the non-banking financial sector indicate increased diversification, including new rules and regulations governing the trading of Exchange Traded Funds.  Non-banking financial institutions such as leasing companies, building societies, and village savings and loan associations have increased access to finance for underserved populations, as have rural and mobile banking.  Currently, Ghana has no “cross-shareholding” or “stable shareholder” arrangements used by private firms to restrict foreign investment through mergers and acquisitions, although, as noted above, the Payments Systems and Services Act, 2019 (Act 987), does require a 30 percent Ghanaian company or Ghanaian holding by any electronic payments service provider, including banks or special deposit-taking institutions.

Ghana’s main sovereign wealth fund is the Ghana Petroleum Fund (GPF), which is funded by oil profits and flows to the Ghana Heritage Fund and Ghana Stabilization Fund.  The Petroleum Revenue Management Act (PRMA), 2011 (Act 815), spells out how revenues from oil and gas should be spent and includes transparency provisions for reporting by government agencies, as well as an independent oversight group, the Public Interest and Accountability Committee (PIAC).  Section 48 of the PRMA requires the Fund to publish an audited annual report by the Ghana Audit Service.  The Fund’s management meets the legal obligations. Management of the Ghana Petroleum Fund is a joint responsibility between the Ministry of Finance and the Bank of Ghana.  The minister develops the investment policy for the GPF, and is responsible for the overall management of GPF funds, consults regularly with the Investment Advisory Committee and Bank of Ghana Governor before making any decisions related to investment strategy or management of GPF funds.  The minister is also in charge of establishing a management agreement with the Bank of Ghana for the oversight of the funds.  The Bank of Ghana is responsible for the day-to-day operational management of the Petroleum Reserve Accounts (PRAs) under the terms of Operation Management Agreement.

For additional information regarding Ghana Petroleum Fund, please visit the 2020 Petroleum Annual Report at: .

7. State-Owned Enterprises 

Ghana has 94 State-Owned Enterprises (SOEs), 51 of which are wholly owned, while 43 are partially owned.  While the president appoints the CEO and full boards of most of the wholly owned SOEs, they are under the supervision of line ministries.  Most of the partially owned investments are in the financial, mining, and oil and gas sectors.  To improve the efficiency of SOEs and reduce fiscal risks they pose to the budget, in 2019 the government embarked on an exercise to tackle weak corporate governance in the SOEs as well as created the State Interests and Governance Authority (SIGA), a single institution, to monitor all SOEs, replacing both the State Enterprises Commission and the Divestiture Implementation Committee.

As of December 2021, only a handful of large SOEs remain, mainly in the transportation, water, banking, power, and extractive sectors.  The largest SOEs are Electricity Company of Ghana (ECG), Volta River Authority (VRA), Ghana Water Company Limited (GWCL), Ghana Ports and Harbor Authority (GPHA), Ghana National Petroleum Corporation (GNPC), Ghana National Gas Company Limited (GNGC), Ghana Airport Company Limited (GACL), Consolidated Bank Ghana Limited (CBG), Bui Power Authority (BPA), and Ghana Grid Company Limited (GRIDCo).  Many of these receive subsidies and assistance from the government.  The list of SOEs can be found at: .

While the Government of Ghana does not actively promote adherence to the OECD Guidelines, SIGA oversees corporate governance of SOEs and encourages them to be managed like Limited Liability Companies to be profit making.  In addition, beginning in 2014, most SOEs were required to contract and service direct and government-guaranteed loans on their own balance sheet.  The government’s goal is to stop adding these loans to “pure public” debt, paid by taxpayers directly through the budget.

Ghana has no formal privatization program.  The government has announced its intention, however, to prioritize the creation of public-private partnerships (PPPs) to restructure and privatize non-performing SOEs, although progress to implement this goal has been slow.  Procuring PPPs is allowed under the National Policy on Public Private Partnerships in Ghana, which was adopted in June 2011.  The Public Private Partnership Act, 2020 (Act 1039) was passed in December 2020.


Executive Summary

Kenya has a positive investment climate that has made it attractive to international firms seeking a location for regional or pan-African operations.  The novel coronavirus pandemic has negatively affected the short-term economic outlook, but the country remains resilient in addressing the health and economic challenges.  In July 2020 the U.S. and Kenya launched negotiations for a Free Trade Agreement, the first in sub-Saharan Africa.  Despite this progress, U.S. businesses operating in Kenya still face aggressive tax collection attempts, burdensome bureaucratic processes, and significant delays in receiving necessary business licenses.  Corruption remains pervasive and Transparency International ranked Kenya 128 out of 180 countries in its 2021 Global Corruption Perception Index – reflecting modest progress over the last decade but still well below the global average.

Kenya has strong telecommunications infrastructure and a robust financial sector and is a developed logistics hub with extensive aviation connections throughout Africa, Europe, and Asia.  In 2018, Kenya Airways initiated direct flights to New York City in the United States.  Mombasa Port is the gateway for East Africa’s trade.  Kenya’s membership in the East African Community (EAC), the Africa Continental Free Trade Area (AfCFTA), and other regional trade blocs provides it with preferential trade access to growing regional markets.

In 2017 and 2018 Kenya instituted broad reforms to improve its business environment, including passing the Tax Laws Amendment (2018) and the Finance Act (2018), which established new procedures and provisions related to taxes, eased the payment of taxes through the iTax platform, simplified registration procedures for small businesses, reduced the cost of construction permits, and established a “one-stop” border post system to expedite the movement of goods across borders.  However, the Finance Act (2019) introduced taxes to non-resident ship owners, and the Finance Act (2020) enacted a Digital Service Tax (DST).  The DST, which went into effect in January 2021, imposes a 1.5 percent tax on any transaction that occurs in Kenya through a “digital marketplace.”  The oscillation between business reforms and conflicting taxation policies has raised uncertainty over the Government of Kenya’s (GOK) long-term plans for improving the investment climate.

Kenya’s macroeconomic fundamentals remain among the strongest in Africa, averaging five to six percent gross domestic product (GDP) growth since 2015 (excepting 2020due to the negative economic impact of the COVID-19 pandemic), five percent inflation since 2015, improving infrastructure, and strong consumer demand from a growing middle class.  There is relative political stability and President Uhuru Kenyatta has remained focused on his “Big Four” development agenda, seeking to provide universal healthcare coverage, establish national food and nutrition security, build 500,000 affordable new homes, and increase employment by growing the manufacturing sector.

Kenya is a regional leader in clean energy development with more than 90 percent of its on-grid electricity coming from renewable sources.  Through its 2020, second Nationally Determined Contribution to the Paris Agreement targets, Kenya has prioritized low-carbon resilient investments to reduce its already low greenhouse gas emissions a further 32 percent by 2030.  Kenya has established policies and a regulatory environment to spearhead green investments, enabling its first private-sector-issued green bond floated in 2019 to finance the construction of sustainable housing projects.

American companies continue to show strong interest to establish or expand their business presence and engagement in Kenya.  Sectors offering the most opportunities for investors include:  agro-processing, financial services, energy, extractives, transportation, infrastructure, retail, restaurants, technology, health care, and mobile banking.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 128 of 180
Global Innovation Index 2021 85 of 131
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $339
World Bank GNI per capita 2020 $11,067.86


1. Openness To, and Restrictions Upon, Foreign Investment

Kenya has enjoyed a steadily improving environment for FDI.  Foreign investors seeking to establish a presence in Kenya generally receive the same treatment as local investors, and multinational companies make up a large percentage of Kenya’s industrial sector.  The government’s export promotion programs do not distinguish between goods produced by local or foreign-owned firms.  The primary regulations governing FDI are found in the Investment Promotion Act (2004).  Other important documents that provide the legal framework for FDI include the 2010 Constitution of Kenya, the Companies Ordinance, the Private Public Partnership Act (2013), the Foreign Investment Protection Act (1990), and the Companies Act (2015).  GOK membership in the World Bank’s Multilateral Investment Guarantee Agency (MIGA) provides an opportunity to insure FDI against non-commercial risk.  In November 2019, the Kenya Investment Authority (KenInvest), the country’s official investment promotion agency, launched the Kenya Investment Policy (KIP) and the County Investment Handbook (CIH) ( which aim to increase inflow of FDI in the country.  The KIP intends to guide laws being drafted to promote and facilitate investments in Kenya.

KenInvest’s ( mandate is to promote and facilitate investment by helping investors understand and navigate local Kenya’s bureaucracy and regulations.  KenInvest helps investors obtain necessary licenses and developed eRegulations, an online database, to provide businesses with user-friendly access to Kenya’s investment-related regulations and procedures (

KenInvest prioritizes investment retention and maintains an ongoing dialogue with investors.  All proposed legislation must pass through a period of public consultation, which includes an opportunity for investors to offer feedback.  Private sector representatives can serve as board members on Kenya’s state-owned enterprises.  Since 2013, the Kenya Private Sector Alliance (KEPSA), the country’s primary alliance of private sector business associations, has had bi-annual round table meetings with President Kenyatta and his cabinet.  President Kenyatta also chairs a cabinet-level committee focused on improving the business environment.  The American Chamber of Commerce has also increasingly engaged the GOK on issues regarding Kenya’s business environment.

The government provides the right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity.  To encourage foreign investment, in 2015, the GOK repealed regulations that imposed a 75 percent foreign ownership limit for firms listed on the Nairobi Securities Exchange, allowing such firms to be 100 percent foreign owned.  However, also in 2015, the government established regulations requiring Kenyan ownership of at least 15 percent of the share capital of derivative exchanges, through which derivatives, such as options and futures, can be traded.

Kenya’s National Information and Communications Technology (ICT) policy guidelines, published in August 2020, adjusted the requirement for Kenyan ownership in foreign ICT companies from 20 to 30 percent, and broadened its applicability within the telecommunications, postal, courier, and broadcasting industries.  Affected companies have 3 years to comply with the new requirement.  The Mining Act (2016) reserves mineral acquisition rights to companies registered and established in Kenya, whether local or foreign owned.  Mineral dealership licenses are only issued to Kenyan citizens or to corporations where at least 60 percent shareholding is held by Kenyan citizens.  The Private Security Regulations Act (2016) restricts foreign participation in the private security sector by requiring at least 25 percent Kenyan ownership of private security firms.  The National Construction Authority Act (2011) and the 2014 National Construction Authority regulations impose local content restrictions on “foreign contractors,” defined as companies incorporated outside Kenya or with more than 50 percent ownership by non-Kenyan citizens.  The definition excludes companies owned by foreigners but incorporated in Kenya.  The act requires foreign contractors enter subcontracts or joint ventures assuring that at least 30 percent of the contract work is done by local firms and locally unavailable skills transferred to a local person.  The Kenya Insurance Act (2010) limits foreign capital investment in insurance companies to two-thirds, with no single person holding more than a 25 percent ownership share.

In 2019, the World Trade Organization conducted a trade policy review for the East Africa Community (EAC), of which Kenya is a member (

In 2011, the GOK established KenTrade to address trading partners’ concerns regarding the complexity of trade regulations and procedures.  KenTrade’s mandate is to facilitate cross-border trade and to implement the National Electronic Single Window System.  In 2017, KenTrade launched InfoTrade Kenya (, which provides a host of investment products and services to prospective investors.  The site documents the process of exporting and importing by product, by steps, by paperwork, and by individuals, including contact information for officials responsible for relevant permits or approvals.

In February 2019, Kenya implemented a new Integrated Customs Management System (iCMS) that includes automated valuation benchmarking, release of green-channel cargo, importer validation and declaration, and linkage with iTax.  The iCMS enables customs officers to efficiently manage revenue and security related risks for imports, exports and goods on transit and transshipment.

The Movable Property Security Rights Bill (2017) enhanced the ability of individuals to secure financing through movable assets, including using intellectual property rights as collateral.  The Nairobi International Financial Centre (NIFC) Act (2017) seeks to provide a legal framework to facilitate and support the development of an efficient and competitive financial services sector in Kenya.  The act created the Nairobi International Financial Centre Authority to establish and maintain an efficient financial services sector to attract and retain FID.  The Kenya Trade Remedies Act (2017) provides the legal and institutional framework for Kenya’s application of trade remedies consistent with World Trade Organization (WTO) law, which requires a domestic institution to receive complaints and undertake investigations in line with WTO Agreements.  To date, however, Kenya has implemented only 7.5 percent of its commitments under the WTO Trade Facilitation Agreement, which it ratified in 2015.  In 2020, Kenya launched the Kenya Trade Remedies Agency to investigate and enforce anti-dumping, countervailing duty, and trade safeguards, to protect domestic industries from unfair trade practices.

The Companies (Amendment) Act (2017) clarified ambiguities in the original act and ensures compliance with global trends and best practices.  The act amended provisions on the extent of directors’ liabilities and disclosures and strengthens investor protections.  The amendment eliminated the requirements for small enterprises to hire secretaries, have lawyers register their firms, and to hold annual general meetings, reducing regulatory compliance and operational costs.

The Business Registration Services (BRS) Act (2015) established the Business Registration Service, a state corporation, to ensure effective administration of laws related to the incorporation, registration, operation, and management, of companies, partnerships, and firms.  The BRS also devolves certain business registration services to county governments, such as registration of business names and promoting local business ideas/legal entities- reducing registration costs.  The Companies Act (2015) covers the registration and management of both public and private corporations.

In 2014, the GOK established a Business Environment Delivery Unit to address investors’ concerns.  The unit focuses on reducing the bureaucratic steps required to establish and do business.  Its website ( offers online business registration and provides detailed information regarding business licenses and permits, including requirements, fees, application forms, and contact details for the respective regulatory agencies.  In 2013, the GOK initiated the Access to Government Procurement Opportunities program, requiring all public procurement entities to set aside a minimum of 30 percent of their annual procurement spending facilitate the participation of youth, women, and persons with disabilities (

Kenya’s iGuide, an investment guide to Kenya (, developed by UNCTAD and the International Chamber of Commerce, provides investors with up-to-date information on business costs, licensing requirements, opportunities, and conditions in developing countries.  Kenya is a member of UNCTAD’s international network of transparent investment procedures.

The GOK does not promote or incentivize outward investment.  Despite this, Kenya is evolving into an outward investor in tourism, manufacturing, retail, finance, education, and media. Kenya’s outward investment has primarily been in the EAC, due to the preferential access afforded to member countries, and in a select few central African countries.  The EAC allows free movement of capital among its six member states – Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda.

4. Industrial Policies

Kenya provides both fiscal and non-fiscal incentives to foreign investors (  The minimum foreign investment to qualify for GOK investment incentives is USD 100,000.  Investment Certificate benefits, including entry permits for expatriates, are outlined in the Investment Promotion Act (2004).  Investment incentives are revised annually through the government’s budget policy statement and the Finance Act based on government’s strategic priorities at a given time.

The government allows all locally-financed materials and equipment for use in construction or refurbishment of tourist hotels to be zero-rated for purposes of VAT calculation – excluding motor vehicles and goods for regular repair and maintenance.  The National Treasury principal secretary, however, must approve such purchases.  In a measure to boost the tourism industry, one-week employee vacations paid by employers are a tax-deductible expense.  In 2018, the Kenya Revenue Authority (KRA) exempted from VAT certain facilities and machinery used in the manufacturing of goods under Section 84 of the East African Community Common External Tariff Handbook.  VAT refund claims must be submitted within 12 months of purchase.

The Finance Act (2014) amended the Income Tax Act (1974) to reintroduce capital gains tax on transfer of property.  Under this provision, gains derived from the sale or transfer of property by an individual or company are subject to a five percent tax.  Capital gains on the sale or transfer of property related to the oil and gas industry are subject to a 37.5 percent tax.  The Finance Act (2014) also reintroduced the withholding VAT system by government ministries, departments, and agencies.  The system excludes the Railway Development Levy (RDL) imports for persons, goods, and projects; the implementation of an official aid-funded project; diplomatic missions and institutions or organizations gazetted under the Privileges and Immunities Act (2014).

Kenya’s Export Processing Zones (EPZ) and Special Economic Zones (SEZ) offer special incentives for firms operating within their boundaries.  By the end of 2019, Kenya had 74 EPZs, with 137 companies and 60,383 workers contributing KES 77.1 billion (about USD 713 million) to the Kenyan economy.  Companies operating within an EPZ benefit from the following tax benefits:  a 10-year corporate-tax holiday and a 25 percent tax thereafter; a 10-year withholding tax holiday; stamp duty exemption; 100 percent tax deduction on initial investment applied over 20 years; and VAT exemption on industrial inputs.

About 54 percent of EPZ products are exported to the United States under AGOA.  The majority of the exports are textiles – Kenya’s third largest export behind tea and horticulture – and more recently handicrafts.  Eighty percent of Kenya’s textiles and apparel originate from EPZ-based firms.  Approximately 50 percent of the companies operating in the EPZs are fully-owned by foreigners – mainly from India – while the rest are locally owned or joint ventures with foreigners.

While EPZs aim to encourage production for export, Special Economic Zones (SEZ) are designed to boost local economies by offering benefits for goods that are consumed domestically and for export.  SEZs allow for a wider range of commercial ventures, including primary activities such as farming, fishing, and forestry.  The 2016 Special Economic Zones Regulations state that the Special Economic Zone Authority (SEZA) maintain an open investment environment to facilitate and encourage business by establishing simple, flexible, and transparent procedures for investor registration.  The 2019 draft regulations include customs duty exemptions for goods and services in the SEZs and no trade related restrictions on the importation of goods and services into the SEZs.  The rules also empower county governments to set aside public land to establish industrial zones.

Companies operating in the SEZs receive the following benefits:  all SEZ produced goods and services are exempted from VAT; the corporate tax rate for enterprises, developers, and operators reduced from 30 percent to 10 percent for the first 10 years and 15 percent for the next 10 years; exemption from taxes and duties payable under the Customs and Excise Act (2014), the Income Tax Act (1974), the EAC Customs Management Act (2004), and stamp duty; and exemption from county-level advertisement and license fees.  There are currently SEZs in Mombasa (2,000 sq. km), Lamu (700 sq. km), Kisumu (700 sq. km), Naivasha (1,000 acres), Machakos (100 acres) and private developments designated as SEZs include Tatu City (5,000 acres) and Northlands (11,576 acres) in Kiambu.  The Third Medium Term Plan of Kenya’s Vision 2030 economic development agenda calls for a feasibility study for an SEZ at Dongo Kundu in Mombasa, and the GOK is also considering establishing an SEZ near the Olkaria geothermal power plant.

The Public Procurement and Asset Disposal Act (2015) offers preferences to firms owned by Kenyan citizens and to products manufactured or mined in Kenya.  The “Buy Kenya, Build Kenya” policy mandates that 40 percent of the value of each GOK procurement be sourced locally.  Tenders funded entirely by the government, with a value of less than KES 50 million (approximately USD 500,000), are reserved for Kenyan firms and goods.  If the procuring entity seeks to contract with non-Kenyan firms or procure foreign goods, the act requires a report detailing evidence of an inability to procure locally.  The act also calls for at least 30 percent of government procurement contracts to go to firms owned by women, youth, and persons with disabilities.  The act further reserves 20 percent of county procurement tenders to residents of that county.

The Finance Act (2017) amends the Public Procurement and Asset Disposal (PPAD) Act (2015) to introduce Specially Permitted Procurement as an alternative method of acquiring public goods and services.  The new method permits state agencies to bypass existing public procurement laws under specific circumstances.  Procuring entities are allowed to use this method where market conditions or behavior do not allow effective application of the 10 methods outlined in the Public Procurement and Disposal Act.  The act gives the National Treasury Cabinet Secretary the authority to prescribe the procedure for carrying out specially permitted procurement.  The 2020 PPAD regulations exempt government to government (G2G Exemption) procurements from PPAD Act requirements.  G2G Exemption procurements must:  provide a plan for local technology transfer; reserve 50 percent of the positions for Kenyans; and locally source 40 percent of inputs.

The Data Protection Act (DPA) (2019) restricts the transfer of data in and out of Kenya without consent from the Data Protection Commissioner (DPC) and the data owner, functionally requiring data localization.  Entities seeking to transfer data out of Kenya must demonstrate to the DPC that the destination for the data has sufficient security and protection measures in place.  The 2019 DPA gives discretion to the Ministry of Information Communication Technology Cabinet Secretary to prescribe localization requirements for data centers or servers, including strategic interests, protection of government revenue, and “certain nature of strategic processing.”  The DPA authorizes the DPC to investigate data breaches and issue administrative fines of up to USD 50,000 and/or imprisonment of up to 10 years, depending on the severity of the breach.

5. Protection of Property Rights

The constitution prohibits foreigners or foreign owned firms from owning freehold interest in land in Kenya.  However, unless classified as agricultural, there are no restrictions on foreign-owned companies leasing land or real estate.  The cumbersome and opaque process to acquire land raises concerns about security of title, particularly given past abuses related to the distribution and redistribution of public land.  The Land (Extension and Renewal of Leases) Regulations (2017) prohibited automatic lease renewals and tied renewals to the economic output of the land, requiring renewals to be beneficial to the economy.  If legally purchased property remains unoccupied, the property ownership can revert to other occupiers, including squatters.

The constitution, and subsequent land legislation, created the National Land Commission (NLC), an independent government body mandated to review historical land injustices and provide oversight of government land policy and management.  The creation of the NLC also introduced coordination and jurisdictional confusion between the NLC and the Ministry of Lands.  In 2015, President Kenyatta commissioned the National Titling Center and promised to significantly increase the number of title deeds.  From 2013 to 2018, an additional 4.5 million title deeds have been issued, however 70 percent of land in Kenya remains untitled.  Due to corruption at the NLC, land grabbing, enabled by the issuance of multiple title registrations, remains prevalent.  Ownership of property legally purchased but unoccupied can revert to other parties.

Mortgages and liens exist in Kenya, but the recording system is unreliable – Kenya has only about 27,993 recorded mortgages as of 2019 in a country of 47.6 million people – and there are complaints that property rights and interests are seldom enforced.  The legal infrastructure around land ownership and registration has changed in recent years, and land issues have delayed several major infrastructure projects.  The 2010 Kenyan Constitution required all existing land leases to convert from 999 years to 99 years, giving the state the power to review leasehold land at the expiry of the 99 years, deny lease renewal, or confiscate the land if it determines the land had not been used productively.  In 2010, the constitution also converted foreign-owned freehold interests into 99-year leases at a nominal “peppercorn rate” sufficient to satisfy the requirements for the creation of a legal contract.  However, the implementation of this amendment remains somewhat ambiguous.  In July 2020, the Ministry of Lands and Physical planning released draft electronic land registration regulations to guide land transactions.

The major intellectual property enforcement issues in Kenya related to counterfeit products are corruption, lack of enforcement of penalties, insufficient investigations and seizures of counterfeit goods, limited cooperation between the private sector and law enforcement agencies, and reluctance of brand owners to file complaints with the Anti-Counterfeit Agency (ACA).  The prevalence of “gray market” products – genuine products that enter the country illegally without paying import duties – also presents a challenge, especially in the mobile phone and computer sectors.  Copyright piracy and the use of unlicensed software are also common.  Kenya’s score in the 2021 International Property Rights Index, which assesses intellectual and physical property rights, decreased marginally from 5.0 in 2020 to 4.98 in 2021, though its relative ranking improved, rising from 10 to 8 of 28 countries in Africa, and from 86 to 85 of 129 globally.

The Presidential Task Force on Parastatal Reforms (2013) proposed that the three intellectual property agencies – the Kenya Industrial Property Institute (KIPI), the KECOBO and the Anti-Counterfeit Authority (ACA) – be merged into one government-owned entity, the Intellectual Property Office of Kenya.  A task force on the merger, comprising staff from KIPI, ACA, KECOBO, and the Ministry of Industrialization, Trade and Enterprise Development is drafting the instruments of the merger, including consolidating intellectual property laws, and updating the legal framework and processes.

To combat the import of counterfeits, the Ministry of Industrialization and the Kenya Bureau of Standards (KEBS) decreed in 2009 that all locally manufactured goods must have a KEBS import standardization mark (ISM).  Several categories of imported goods, specifically food products, electronics, and medicines, must have an ISM.  Under this program, U.S. consumer-ready products may enter Kenya without altering the U.S. label but must also have an ISM.  Once the product qualifies for Confirmation of Conformity, KEBS issues the ISMs for free.  KEBS and the Anti-Counterfeit Agency conduct random seizures of counterfeit imports, but do not maintain a clear database of their seizures.

Kenya is not included on the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local intellectual property offices, please see the World Intellectual Property Organization’s country profiles at

6. Financial Sector

Though relatively small by Western standards, Kenya’s capital markets are the deepest and most sophisticated in East Africa.  The 2021 Morgan Stanley Capital International Emerging and Frontier Markets Index, which assesses equity opportunity in 27 emerging economies, ranked the Nairobi Securities Exchange (NSE) as the best performing exchange in sub-Saharan Africa over the last decade.  The NSE operates under the jurisdiction of the Capital Markets Authority of Kenya.  It is a full member of the World Federation of Exchanges, a founding member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA).  The NSE is a member of the Association of Futures Markets and is a partner exchange in the United Nations-led Sustainable Stock Exchanges initiative.  Reflecting international confidence in the NSE, it has always had significant foreign investor participation.  In July 2019, the NSE launched a derivatives market that facilitates trading in future contracts on the Kenyan market.  The bond market is underdeveloped and dominated by trading in government debt securities.  The government’s domestic debt market, however, is deep and liquid.  Long-term corporate bond issuances are uncommon, limiting long-term investment capital.

In November 2019, Kenya repealed the interest rate capping law passed in 2016, which had slowed private sector credit growth.  There are no restrictions on foreign investors seeking credit in the domestic financial market.  Kenya’s legal, regulatory, and accounting systems generally align with international norms.  In 2017, the Kenya National Treasury launched the world’s first mobile phone-based retail government bond, locally dubbed M-Akiba.  M-Akiba has generated over 500,000 accounts for the Central Depository and Settlement Corporation, and The National Treasury has made initial dividend payments to bond holders.

The African Private Equity and Venture Capital Association (AVCA) 2014-2019 report on venture capital performance in Africa ranked Kenya as having the second most developed venture capitalist ecosystem in sub-Saharan Africa.  The report also noted that over 20 percent of the venture capital deals in Kenya, from 2014-2019, were initiated by companies headquartered outside Africa.

The Central Bank of Kenya (CBK) is working with regulators in EAC member states through the Capital Market Development Committee (CMDC) and East African Securities Regulatory Authorities (EASRA) on a regional integration initiative and has successfully introduced cross-listing of equity shares.  The combined use of both the Central Depository and Settlement Corporation (CDSC) and an automated trading system has aligned the Kenyan securities market with globally accepted standards.  Kenya is a full (ordinary) member of the International Organization of Securities Commissions Money and Banking System.

Kenya has accepted the International Monetary Fund’s Article VIII obligation and does not provide restrictions on payments and transfers for current international transactions.

In 2021, the Kenyan banking sector included 42 commercial banks, one mortgage finance company, 14 microfinance banks, nine representative offices of foreign banks, eight non-operating bank holdings, 69 foreign exchange bureaus, 19 money remittance providers, and three credit reference bureaus, which are licensed and regulated by the CBK.  Fifteen of Kenya’s commercial banks are foreign owned.  Major international banks operating in Kenya include Citibank, Absa Bank (formerly Barclays Bank Africa), Bank of India, Standard Bank, and Standard Chartered.  The 12 commercial banks listed banks on the Nairobi Securities Exchange owned 89 percent of the country’s banking assets in 2019.

The COVID-19 pandemic has significantly affected Kenya’s banking sector.  According to the CBK, in 2020, 32 out of 41 commercial banks restructured loans to accommodate affected borrowers.  Non-performing loans (NPLs) reached 14.6 percent by the end of 2021 – a three percent year-on-year increase.

In March 2017, following the collapse of Imperial Bank and Dubai Bank, the CBK lifted its 2015 moratorium on licensing new banks.  The CBK’s decision to restart licensing signaled a return of stability in the Kenyan banking sector.  In 2018, Societé Generale (France) also set up a representative office in Nairobi.  Foreign banks can apply for license to set up operations in Kenya and are guided by the CBK’s 2013 Prudential Guidelines.

In November 2019, the GOK repealed the interest rate capping law through an amendment to the Banking Act.  This amendment has enabled financial institutions to use market-based pricing for their credit products.  While this change has slightly increased the cost of borrowing for some clients, it effectively ensures the private sector uninterrupted access to credit.

The percentage of Kenya’s total population with access to financial services through conventional or mobile banking platforms is approximately 80 percent.  According to the World Bank, M-Pesa, Kenya’s largest mobile banking platform, processes more transactions within Kenya each year than Western Union does globally.  The 2017 National ICT Masterplan envisages the sector contributing at least 10 percent of GDP, up from 4.7 percent in 2015.  Several mobile money platforms have achieved international interoperability, allowing the Kenyan diaspora to conduct financial transactions in Kenya from abroad.

In 2019, the National Treasury published the Kenya Sovereign Wealth Fund policy and the draft Kenya Sovereign Wealth Fund Bill (2019), both of which remain pending.  The fund would receive income from any future privatization proceeds, dividends from state corporations, oil and gas, and minerals revenues due to the national government, revenue from other natural resources, and funds from any other source.  The Kenya Information and Communications Act (2009) provides for the establishment of a Universal Service Fund (USF).  The purpose of the USF is to fund national projects that have significant impact on the availability and accessibility of ICT services in rural, remote, and poor urban areas.

7. State-Owned Enterprises

In 2013, the Presidential Task Force on Parastatal Reforms (PTFPR) published a list of all state-owned enterprises (SOEs) and recommended proposals to reduce the number of State Corporations from 262 to 187 to eliminate redundant functions between parastatals; close or dispose of non-performing organizations; consolidate functions wherever possible; and reduce the workforce — however, progress is slow (  SOEs’ boards are independently appointed and published in Kenya Gazette notices by the Cabinet Secretary of the ministry responsible for the respective SOE.  The State Corporations Act (2015) mandated the State Corporations Advisory Committee to advise the GOK on matters related to SOEs.  Despite being public entities, only SOEs listed on the Nairobi Securities Exchange publish their financial positions, as required by Capital Markets Authority guidelines.  SOEs’ corporate governance is guided by the constitution’s chapter 6 on Leadership and Integrity, the Leadership and Integrity Act (2012) (L&I) and the Public Officer Ethics Act (2003), which establish integrity and ethics requirements governing the conduct of public officials.

In general, competitive equality is the standard applied to private enterprises in competition with public enterprises.  Certain parastatals, however, have enjoyed preferential access to markets. Examples include Kenya Reinsurance, which enjoys a guaranteed market share; Kenya Seed Company, which has fewer marketing barriers than its foreign competitors; and the National Oil Corporation of Kenya (NOCK), which benefits from retail market outlets developed with government funds.  Some state corporations have also benefited from easier access to government guarantees, subsidies, or credit at favorable interest rates.  In addition, “partial listings” on the Nairobi Securities Exchange offer parastatals the benefit of accessing equity financing and GOK loans (or guarantees) without being completely privatized.

In August 2020, the executive reorganized the management of SOEs in the cargo transportation sector and mandated the Industrial and Commercial Development Corporation (ICDC) to oversee rail, pipeline and port operations through a holding company called Kenya Transport and Logistics Network (KTLN).  ICDC assumes a coordinating role over the Kenya Ports Authority (KPA), Kenya Railways Corporation (KRC), and Kenya Pipeline Company (KPC).  KTLN focuses on lowering the cost of doing business in the country through the provision of cost effective and efficient transportation and logistics infrastructure.

SOE procurement from the private sector is guided by the Public Procurement and Asset Disposal Act (2015) and the published Public Procurement and Asset Disposal Regulations (2020) which introduced exemptions from the Act for procurement on bilateral or multilateral basis, commonly referred to as government-to-government procurement; introduced E-procurement procedures; and preferences and reservations, which gives preferences to the “Buy Kenya Build Kenya” strategy (

Kenya is neither party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO) nor an Observer Government.

The Privatization Act (2003) establishes the Privatization Commission (PC) that is mandated to formulate, manage, and implement Kenya’s Privatization Program.  GOK has been committed to implementing a comprehensive public enterprises reform program to increase private sector participation in the economy.  The privatization commission ( is fully constituted with a board responsible for the privatization program.  The PC has 26 approved privatization programs ( ).  In 2020, the GOK began the process of privatizing some state-owned sugar firms through a public bidding process, including foreign investors.


Executive Summary

The Kingdom of Lesotho is a country open to and eagerly seeking foreign direct investment (FDI). Government, business, labor, and civil society leaders all strongly agree that attracting FDI is vital to Lesotho’s future. In 2021 the government of the Kingdom of Lesotho (GOKL) undertook many promising initiatives to make doing business in Lesotho easier. However, in 2020 GOKL took or proposed measures that concerned foreign entrepreneurs and investors. These included measures that treat foreign-owned businesses differently than in the past and which suggest to some foreign observers a turn towards economic nationalism.

Among the important reforms undertaken in 2020, GOKL introduced new e-licensing and e-registration platforms that promise to greatly reduce the time for business creation and licensing. New protocols for customs procedures promise to streamline importing and exporting. And at the highest levels GOKL has announced that to help Lesotho recover from the COVID-19 pandemic, GOKL will focus on making Lesotho an attractive destination for FDI.

While GOKL clearly recognizes the importance of FDI and has continued to enact policies to make foreign investment easier, 2020 also saw the rollout of rules intended to protect local entrepreneurs from foreign competition in designated sectors. In recent years, many migrants from Asia and other parts of Africa have started businesses in these designated sectors and the current government has announced aggressive measures to reverse this trend. These sectors—such as small retail food sales and basic auto repair—are dominated by local small and micro enterprises but some do have participation by medium-sized foreign-owned firms.

Although these regulations will have a negative effect on some foreign investors, they will have low impact on overall FDI because most businesses in the designated sectors are relatively small. However, the government has also enacted other regulations, such as requiring foreign investors to renew their business licenses yearly instead of every three years, a condition that many foreign investors describe as onerous to the point of impossibility given the bureaucratic challenges.

Moreover, recent policy debates within the government around proposals to mandate a minimum percentage of local ownership enterprises earmarked for the locals have caused real concern. In February, the government implemented the regulations in the used car motor dealership sector causing barriers to entry for investors. Uncertainty concerning the execution of the regulations in other sectors remains.

Lesotho’s economy and FDI were badly affected by COVID-19 in 2021, with several foreign-owned textile factories closing or cutting back on operations due to the global downtrend in demand. The government introduced measures to reduce the impact of COVID-19 on the private sector. Other challenges included corruption; while not pervasive, corruption is a problem with Transparency International’s Corruption Perceptions Index ranking Lesotho as 83rd out of 180 countries. Foreign investors are requested to adhere to international labor standards, however, there were reported instances of Gender Based Violence and Harassment (GBVH) in some textiles factories. The government, in collaboration with the stakeholders, is working to address GBV. Despite these challenges, GOKL is refining the services it offers foreign investors, and Lesotho retains advantages such as ready access to the South African and regional markets as well as lower labor, electricity, and communications costs than neighboring countries. Lesotho also has a government that remains focused on providing jobs to its citizens, and which has publicly proclaimed its eagerness to work with foreign investors—especially those ready to partner with locals.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perception Index 2021 96 of 180
Global Innovation Index 2015 118 of 141
U.S. FDI in partner country ($M USD, historical stock positions) 2019 $3 million
World Bank GNI per capita 2021 $11,067


1. Openness To, and Restrictions Upon, Foreign Investment

The Government of Lesotho (GOKL) is generally open to FDI and successive governments have tried to attract FDI as a key component of national development. However, recent years have seen increasing critiques in Lesotho’s press and politics of foreign investors who repatriate their profits rather than reinvesting in Lesotho. This has resulted in a series of populist polices and policy proposals intended to protect opportunities for local investors and entrepreneurs, but which may inadvertently dampen Lesotho’s attractiveness as a destination for foreign investment. Lesotho follows World Trade Organization (WTO) laws and regulations, but local law makes some distinctions between local and foreign investors in some industries (see “Limits on Foreign Control and Right to Private Ownership and Establishment”).

Lesotho’s investment promotion agency, the Lesotho National Development Corporation (LNDC), is responsible for the initiation, facilitation, and promotion of Lesotho as an attractive investment destination.  LNDC also undertakes investment project appraisals, provides pre-investment and after-care services, risk management, trade and investment research, and strategic planning.  It also ensures investors’ compliance with the country’s legal frameworks.  Through LNDC, the government actively encourages investment in manufacturing, mining, and agriculture sectors. LNDC also implements the country’s industrial development policies.

LNDC provides the support services described above to foreign investors and regularly publishes information on investment opportunities and the services it offers to foreign investors.  Furthermore, LNCDC offers incentives such as long-term loans, tax incentives, factory space at discounted rental rates, assistance with work permits and licenses, and logistical support for relocation.  LNDC maintains an ongoing dialogue with foreign and domestic investors by attending annual trade and investment forums both locally and internationally. In August 2020 to March 2021, the government launched the LNDC COVID-19 Partial Guarantee Scheme. To date, USD 2.1 million were approved to assist businesses to mitigate the impacts of COVID-19. For, more information on LNDC, please visit:  . 

Lesotho is open to foreign investment and there are no economy-wide restrictions applied to foreign ownership and control. However, GOKL has passed laws and regulations intended to limit foreign ownership to large scale businesses in complex sectors while reserving small scale businesses in designated sectors exclusively for the indigenous citizens of Lesotho (“Basotho”). The Trading Enterprises Regulations of 2011 (TER 2011) and the Business Licensing and Registration Regulations of 2020 (BLRR 2020) reserve certain businesses for Basotho and limit foreign investors to operating these businesses as minority shareholders with a maximum of 49 percent shareholding. The reserved 47 businesses include acting as an agent of a foreign firm, barber, butcher, snack-bar operator, domestic fuel dealer, dairy shop proprietor, general café or dealer, greengrocer, broker, mini supermarket (floor area < 250m2), and hair and beauty salon.  Most businesses affected by these regulations are micro or small enterprises, but some mid-sized foreign owned firms will be affected. In 2021, the government amended the BLRR 2020 to allow foreign investors to continue to operate in the used motor dealership sector following a low number of Lesotho citizens willing to venture into the sector which requires high capital.

The Business Licensing and Registration Act 2019 (BLRA 2019) requires foreign investors to provide a capital of $123,152 or provide proof of investment of $123,152 during registration or renewal of their traders’ licenses or to have deposited $123,152 with a local institution. However, the Central Bank of Lesotho Act of 2000 stipulates a foreign investment minimum threshold of $250,000.  While pleased that the new law indicates a reduction in the minimum sum that they must invest, many foreign investors are concerned that this discrepancy was not clarified in the BLRA 2019 legislation.

BLRA 2019 requires foreign investors to renew their business identification card annually while locals are only required to renew their business identification cards after three years. Some foreign entrepreneurs operating in Lesotho have complained that the process of renewing their business identification cards annually is extremely onerous. BLRA 2019 also requires foreign investors to transfer technology and business expertise to local investors. Many foreign entrepreneurs operating in Lesotho complain that this requirement is poorly articulated and arbitrarily enforced.

The Mines and Minerals Act No.4 of 2005 restricts mineral permits for small-scale mining operations on less than 100m2 to local ownership.  Diamond mining, regardless of the size of the operation, is subject to the large-scale mines licensing regime, which has no restrictions on foreign ownership; however, GOKL reserves the right to acquire at least 20-35 percent ownership in any large-scale mine.  By law, the Ministry of Trade and Industry is instructed to screen foreign investments in a routine, nondiscriminatory manner to ensure consistency with national interests.

Cabinet approved Lesotho’s investment policy and it became law in early 2016.  The United Nations Conference on Trade and Development assisted with the development of the policy. (UNCTAD)  

The government has undertaken investment policy reviews in 2020 with the assistance of UNCTAD.

In 2016, the government launched a “One Stop Business Facilitation Centre” (OBFC), to make it easier to do business and facilitate FDI. OBFC places all services required for the issuance of licenses, permits, and imports and exports clearances under one roof.  The portal provides transparency and predictability to trade transactions and reduces the time and cost of trading across borders. The OBFC web site is  . 

The process of company registration includes: a work permit application with the Ministry of Labor and Employment, a visa application and resident permit with the Ministry of Home Affairs, a trader’s license with the Ministry of Trade and Industry, tax clearance with Lesotho Revenue Authority, a police clearance with the Ministry of Police and Public Safety, the Certificate of Occupancy with Maseru City Council and a medical clearance with the Ministry of Health.

In November 2020, the OBFC held a twin launch of e-Regulations and e-Licensing. The e-Regulations provides a clear step by step process to register a business. This also stipulates requirements, costs, time and contact details for registering a business. The e-Licensing allows foreign investors to apply online for obtaining a business license. This initiative has reduced instances of fraud and manipulation. It takes a maximum of 3 days to issue both industrial and traders licenses. For more information on e -licenses, please visit: . For more information on e-regulations please visit:  .

Lesotho provides incentives to investors who export outside the country. Export manufacturers obtain a full rebate of customs duty paid on their inputs imported to produce for markets outside Southern African Customs Union (SACU). The government does not restrict domestic investors from investing abroad.

The government facilitates quality standard processes and export permits for outward investment.  For AGOA exports, the Ministry of Trade and Industry, LNDC, and Lesotho Revenue Authority provide support including on export requirements.  Other agencies such as the U.S. Agency for International Development Southern Africa Trade Hub provide capacity to the government for the implementation of AGOA.  The government has assigned Lesotho Standards Authority to assist investors who export to the Republic of South Africa (RSA).

4. Industrial Policies

There are tax, factory space, and financial incentives available to manufacturing companies establishing themselves in Lesotho, such as: No withholding tax on dividends distributed by manufacturing firms to local or foreign shareholders, unimpeded access to foreign exchange, export finance facility, and long-term loans.  These incentives are applied uniformly to both domestic and foreign investors.  For more information, see    The incentives are specified in government administrative policies and regulations.

Lesotho does not have any free or foreign trade zones. Lesotho drafted a Free Trade Policy which was presented to Parliament. Labor-intensive textile manufacturing companies that export beyond the SACU market including those who export under the African Growth and Opportunity Act (AGOA) enjoy the benefits of free trade zones since they can import raw materials then export finished products duty and tax free.

The government imposes mandates for local employment with an exception on shareholders and investors.

Requirements for visas and residence permits are not intentionally discriminatory; however, procedures are lengthy and not integrated.  For executive positions, work permits to foreign nationals are generally issued and renewed without significant delay. For technical positions, firms have to provide justification based on local skill shortage.  The procedures for obtaining technical permits are transparent but foreign investors complain about excessive fees charged and long delays in processing.

Work permits for the manufacturing sector are issued at the OBFC, while all other sectors need to lodge their applications with the office of the Labor Commissioner.  The maximum period provided for a work permit is one year. The Ministry of Labor and Employment with the financial support of the U.S. government and the International Organization for Migration (IOM) is conducting research to improve the effectiveness of the work permit system. For more information on the requirements for visas, residence permits and work permits, please visit:  

The GOKL does not follow a policy of “forced localization” designed to force foreign investors to increase investment and/or employment in the local economy.  The government does not force foreign investors to establish and maintain data storage within Lesotho; however, foreign investors are required to keep records of local sales and employees’ remuneration locally for tax purposes.  The country drafted a localization program to guide businesses in adhering to domestic conduct. The country introduced the training incentive program which applies for both local and foreign investors. Training costs are allowable at 125 percent for tax purposes.

5. Protection of Property Rights

The right to private property is protected under the law.  Property rights and interests are enforced, and owners of property enjoy protection under the Lesotho Constitution of 1993. All foreign and domestic private entities may freely establish, acquire, and dispose of interests in business enterprises.  Under the Land Act of 2010, foreign nationals are permitted to buy and hold land provided they have a local partner with at least 20 percent ownership. Foreign Investors are eligible to hold rights under sublease agreements, which should not exceed duration of parent land leases being 90 years for residential leases, 60 years for commercial leases and 30 years for petroleum products respectively (section 32 of the Land Act).

Secured interests in property, both movable and real, are recognized and enforced under the Land Act of 2010.  The concept of a mortgage exists; and mortgages are protected under the Deeds Registry Act of 1967.  Secured interests, including mortgages, are recorded and filed by the Deeds Registry.

Land titles (leases) as well as secondary land transactions can be enforced in the Land Courts, Magistrate Courts, and the High Court.  For more information, please visit  

Through the support of the U.S. Millennium Challenge Corporation, the government of Lesotho significantly improved the process of registering land titles, peaking at 88 under the “Registering Property” index of the World Bank’s Doing Business Report in 2014. The Land Administration Authority (LAA) has commenced preparations to implement a digital platform whereby, customers would be able to apply for land leases and register deeds online. This new system would help issue leases within three weeks as opposed to a period of over 12 months current turn around. The initiative is expected to improve Lesotho’s investment environment.

Legal structures to protect intellectual property rights (IPR) in Lesotho are relatively strong.  Investors complain that enforcement is somewhat weak, but infringements and theft are not common.  Lesotho respects international IPR laws and is a member of the World Intellectual Property Organization (WIPO) as well as the African Intellectual Property Organization.

Protection of IPR is regulated by the Industrial Property Order of 1989 and the Copyright Act of 1989, which conform to the standards set out in the Paris and Berne Conventions, respectively.  The laws protect patents, industrial designs, trademarks, and grants of copyright, but they do not protect trade secrets or semiconductor chip lay-out design.  The Law Office is responsible for enforcement of the Industrial Property Order, while the Ministry of Tourism, Sports and Culture is responsible for enforcement of copyright (reflecting the law’s focus on protection of artistic works).

Two bills with IP related regulations are yet to be passed in Lesotho Parliament. The Ministry of Communications, Science and Technology in liaison with the Lesotho Communications Authority (LCA) have finalized the drafting of the Computer Crime and Cyber Security bill and the Electronic Transactions and Commerce bill.  If enacted, the bills will improve the protection of IPR by addressing cyber-crime and protecting electronic transactions. Lesotho is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at  

6. Financial Sector

Through the Central Bank of Lesotho (CBL), the GOKL promotes the development of financial markets in Lesotho. Lesotho’s capital market is relatively underdeveloped, with no secondary market for capital market transactions.  The Maseru Securities Market launched in 2016 under the wing of the CBL listed the first company on its stock exchange. The trading of government bonds; corporate bonds and company shares is strictly electronic— there is no physical building.  For now, bond trading is operated by the Central Bank of Lesotho. For the 2021/22 fiscal year, the government financed a fiscal deficit of approximately USD 326 million through external borrowing.

The government accepted the obligations of IMF Article VIII in 1997 and has removed restrictions on the making of payments and transfers for current international transactions.  However, the government has put a limit of USD 81,632 for international transactions. Foreign participation in government securities is allowed as long as foreign investors can open accounts with local banks through which funds can be collected.  Lesotho is part of the Common Monetary Area (CMA). The current account has been fully liberalized for all inward and outward cross-border transactions.  Transactions, however, over USD 272,108 for individuals and USD 34.0 million for businesses still need approval from the Central Bank.  A Central Bank Report reflected that private sector credit from the banking sector increased by 0.7 percent in November 2020 while a decline of 0.02 percent was registered in December 2020. On a year-to-year basis, credit rose by 0.01 percent.

Credit is allocated on market terms, and foreign investors are able to get credit on the local market.  Interest rates are quite high by global standards. LNDC does not provide credit to foreign investors but can acquire equity in foreign companies investing in strategic economic sectors.  The private sector has access to a limited number of credit instruments, such as credit cards, loans, overdrafts, checks, and letters of credit. In January 2016, Lesotho’s first credit bureau was launched and has been functional. In July 2020, the parliament passed the Secured Interest in Movable Property Act to allow movable property to be considered as collateral in requesting for credit from commercial banks.

Lesotho has a central bank and four commercial banks, including subsidiaries of South African banks (subject to measures and regulations under the Institutions Act of 2012) and the government-owned Lesotho Post Bank. Commercial banks in Lesotho are well-capitalized, liquid, and compliant with international banking standards; however, interest rates are high by global standards.  Three South African banks account for almost 92.5 percent of the country’s banking assets, which totaled over M21.6 billion (USD 1.5billion) by December 2021.  The share of bank nonperforming loans to total gross loans was approximately 4 percent in December 2021.  Foreigners are allowed to establish a bank account and may hold foreign currency accounts in local banks; however, they are required to provide a residence permit as a precondition for opening a bank account to comply with the “know your customer” requirements. The country did not lose correspondent banking relationships in the past three years.  Currently there are no banking relationships in jeopardy.

Foreign Exchange

The Lesotho loti is pegged to the South African rand. The currency fluctuates according to market forces. There are restrictions on converting or transferring funds associated with an investment into a freely usable currency and at a legal market-clearing rate.  Funds can only be converted into the world’s widely recognized currencies such as the U.S. dollar, British Pound, and the Euro. Incoming funds can be converted into the local currency if the investor does not have the Customer Foreign Currency (CFC) account. If the investor has a CFC account, such funds can remain foreign in that account without any obligation to convert to Maloti.

Remittance Policies

According to the CBL, there are no plans to change remittance policies.  The current average delay period for remitting investment returns such as dividends, return of capital, interest and principal on private foreign debt, lease payments, royalties, and management fees through normal legal channels is 30 days, provided the investor has submitted all the necessary documentation related to the remittance. There has never been a case of blockage of such transfers, and shortages of forex that could lead to blockage are unlikely given that the CBL maintains net international reserves at a target of 4.3 months of import cover.

Payments of royalties should seek approval from the Central Bank. Export proceeds should be repatriated into the country within the period of six months (180 days).

There is no sovereign wealth fund or asset management bureau in Lesotho.


Executive Summary

Liberia offers opportunities for investment, especially in natural resources such as mining, agriculture, fishing, and forestry, but also in more specialized sectors such as energy, telecommunications, tourism, and financial services. The economy, which was severely damaged by more than a decade of civil wars that ended in 2003, has been slowly recovering, but Liberia has yet to attain pre-war levels of development. Liberia’s largely commodities-based economy relies heavily on imports even for most basic needs like fuel, clothing, and rice – Liberia’s most important staple food. The COVID-19 pandemic disrupted many sectors of the economy, which contracted in 2019 and 2020. However, the World Bank and IMF expect per capita GDP to return to pre-COVID-19 levels by 2023. Growth will be driven mainly by the mining sector, although structural reforms are also expected to increase activity in agriculture and construction.

Low human development indicators, expensive and unreliable electricity, poor roads, a lack of reliable internet access (especially outside urban areas), and pervasive government corruption constrain investment and development. Most of Liberia lacks reliable power, although efforts to expand access to the electricity grid are ongoing through an extension from the Mount Coffee Hydropower Plant, connection to the West Africa Power Pool, and other internationally supported energy projects. Public perception of corruption in the public sector is high, as indicated by Liberia’s poor showing in Transparency International’s 2021 Corruption Perceptions Index, where Liberia ranked 136 out of 180 countries. Low public trust in the banking sector and seasonal currency shortages result in most cash being held outside of banks. To remedy this, the Central Bank of Liberia (CBL) in 2021 initiated a plan to print and circulate additional currency. The new printing and minting will provide 48 billion Liberian dollars through 2024. The CBL and commercial banks have also successfully pushed the adoption of mobile money, which Liberians access through their mobile phones to make everyday purchases and pay bills. However, the government has yet to activate the “national switch,” meaning banking instruments like ATMs and mobile money accounts remain unintegrated and are not interoperable.

The government-backed Business Climate Working Group (BCWG) works with public and private sector stakeholders to explore how to create a friendlier business environment.  International donors also work with the government to improve the investment climate, which ranks toward the global bottom by most global measures. Despite these numerous challenges, Liberia is rich in natural resources. It has large expanses of potentially productive agricultural land and abundant rainfall to sustain agribusinesses. Its rich mineral resources offer significant potential to investors in extractive industries. Several large international concessionaires have invested successfully in agriculture and mining, though negotiating these agreements with the government often proves to be a lengthy and byzantine struggle. The fishing industry, long dormant compared to pre-war levels, is making improvements that should make it more attractive for investment.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 136 of 180 
Global Innovation Index 2020 N/A 
U.S. FDI in Liberia ($M USD, historical stock positions) 2019 -$94 million 
World Bank GNI per capita 2020 $570 

1. Openness To, and Restrictions Upon, Foreign Investment

The Government of Liberia describes the country as “open for business” and supports programs and initiatives to foster commerce, including an ad hoc Business Climate Working Group (BCWG)  to improve the investment climate. During Liberia’s National Judicial Conference  in June 2021, President George Weah  called on the Judiciary to partner with agencies on reforms to improve the investment climate. The BCWG, chaired by the Minister of Finance and Development Planning, collaborates with the Ministry of Commerce and Industry , Liberia Business Registry (LBR) , National Investment Commission (NIC) , and Liberia Revenue Authority (LRA) . The National Investment Commission (NIC) is Liberia’s investment promotion agency. It develops investment strategies, policies, and programs to attract foreign investment and negotiates investment contracts and concessions. The NIC oversees the implementation of Liberia’s 2010 Investment Act and chairs an ad hoc Inter-Ministerial Concession Committee (IMCC). In 2021, the NIC became a member of the World Association of Investment Promotion Agencies (WAIPA)  See link ( ). It also participates in the African Investment Promotion Agencies (IPAs)  Forum.

In practice, however, the government does much to discourage investors and investment. Some business leaders report it is difficult even to meet with government representatives to discuss new investment or policies damaging to the business climate. A weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption inhibit foreign direct investment. Investors are often treated as opportunities for graft, and government decisions affecting the business sector are driven more by political cronyism than investment climate considerations. Many businesses find it easy to operate illegally if the right political interests are being paid, whereas those that try to follow the rules receive little if any assistance from government agencies. The Investment Act restricts market access for foreign investors, including U.S. investors, in certain economic sectors or industries. See “Limits on Foreign Control and Right to Foreign Ownership and Establishment” below for more detail.

Foreign and domestic private entities may own and establish business enterprises in many sectors. The Liberian constitution restricts land ownership to citizens, but non-Liberians may hold long-term leases to land. Examples are rubber, oil palm, and logging concessions that cover a quarter of Liberia’s total land mass. See Real Property, below, for further details.

The National Investment Commission is the oversight agency to screen and monitor investments. The Investment Act and Revenue Code mandate that only Liberian citizens may operate businesses in the following sectors and industries, but it is not clear to what degree this mandate is enforced:

  1. Supply of sand
  2. Block making
  3. Peddling
  4. Travel agencies
  5. Retail sale of rice and cement
  6. Ice making and sale of ice
  7. Tire repair shops
  8. Auto repair shops with an investment of less than USD 550,000
  9. Shoe repair shops
  10. Retail sale of timber and planks
  11. Operation of gas stations
  12. Video clubs
  13. Operation of taxis
  14. Importation or sale of second-hand or used clothing
  15. Distribution in Liberia of locally manufactured products
  16. Importation and sale of used cars (except authorized dealerships, which may deal in certified used vehicles of their make)

The Investment Act also sets minimum capital investment thresholds for foreign investors in other business activities, industries, and enterprises. (See Section 16 of the Act: .) For enterprises owned exclusively by non-Liberians, the Act requires at least USD 500,000 in investment capital. For foreign investors partnering with Liberians, the Act requires at least USD 300,000 in total capital investment and at least 25 percent aggregate Liberian ownership.

All businesses must register with the  Liberia Business Registry (LBR)  to conduct business or provide services in Liberia.

Investment contracts, such as concessions, are reviewed by the Inter-Ministerial Concessions Committee (IMCC). Concessions are ratified by the national legislature and approved by the president. Businesses register with the Liberia Revenue Authority (LRA) for taxes and the National Social Security and Welfare Corporation (NASSCORP) for social security.

It is possible for foreign companies to obtain investment incentives through the National Investment Commission. In 2021, two companies, Mano Manufacturing Company and Jetty Rubber LLC, received long-term investment incentives, according to NIC’s 2021 Annual Report. Foreign companies must use local counsel when establishing a subsidiary. If the subsidiary will engage in manufacturing and international trade, it must obtain a trade license from the LBR. For more information about investment laws, bilateral investment treaties, and other treaties with investment provisions, see: .

Liberia is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and a party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

The government neither promotes nor incentivizes outward investment but it does not restrict Liberian citizens from investing abroad.

4. Industrial Policies

The government provides tax deductions for equipment, machinery, cost of buildings and fixtures used in manufacturing. It also provides exemptions on import duties and goods and services taxes as investment incentives for the following sectors:

  • Tourism
  • Manufacturing
  • Energy
  • Hospitals and Medical
  • Housing
  • Transportation
  • Information Technology
  • Banking
  • Agriculture and Agro-processing (fisheries, poultry, aquaculture, food processing)

Investments in economically deprived regions qualify for additional incentives of up to 12.5 percent. Additional investment incentives are available if an investment creates more than 100 direct jobs, or if an investment uses at least 60 percent local materials to manufacture finished products.

The government does not issue guarantees or jointly finance foreign direct investment projects.

In 2019, the government established a Special Economic Zone (SEZ) Steering Committee, “to create, drive, guide, enhance, coordinate, and manage single, multiple and mixed-use (SEZs) in Liberia.” The government identified the port city of Buchanan in Grand Bassa County for the first special economic zone, now known as the Buchanan Special Economic Zone. In 2021, the African Development Bank (AfDB)  announced it would fund a Special Agro-Industrial Processing Zone (SAPZ) Project in the Buchanan Special Economic Zone.

Liberia has no performance or data localization requirements.

5. Protection of Property Rights

Liberian law protects property rights and interests, but with weak enforcement mechanisms. “Long term” mortgages or construction loans of up to 10 years are only available through the  Liberia Bank for Development and Investment.   Only Liberians may own land, with the limited exception provided in Article 22(c) of the Constitution that non-citizen missionary, educational, and other benevolent institutions shall have the right to own property, if that property is used for the purposes for which acquired. Property no longer so used reverts to the Government of Liberia.

Other foreigners and non-resident investors may acquire land on leases, which ordinarily run for 25 to 50 years.  Liberian law provides for no official waiver mechanisms for limitations on foreign land ownership.

The Liberia Land Authority (LLA) , a one-stop-shop for all land-related matters, is working with international partners, including USAID, to implement strategic and targeted programs aimed at resolving critical land issues. Although the LLA encourages property owners to identify and register land titles, it does not have systemic enforcement programs.  The LLA estimates that less than 25 percent of the country’s total land is formally registered. Conflicting land ownership records are common. Investors sometimes experience costly and complex land dispute issues, even after concluding agreements with the government.

The Land Rights Act, enacted in 2018, was designed to resolve historical land disputes that have caused conflict and communal strife in the past. The Act defines four categories of land ownership as follows:

Public land, which is owned, but currently not used by the government

Government land, which is used by government agencies (for office buildings or other purposes)

Customary land, on which the livelihoods of most rural communities depend

Private land owned by private citizens.

Public awareness of the Land Rights Act is growing, but still limited.

See Limits on Foreign Control and Right to Private Ownership and Establishment, above, for further information, including implementation of the Land Rights Act. See, also:     .

Foreign companies seeking to lease land may lease privately or publicly held land. Frequently, foreign companies seeking to acquire land leases do so through direct negotiations with landlords or owners.

Liberia has a weak legal structure and regulatory environment for enforcement of Intellectual Property Rights (IPR). The Liberia Intellectual Property Act covers domain names, traditional knowledge, transfer of technology, patents, and copyrights.  The Liberia Intellectual Property Office (LIPO)  operates as a semi-autonomous agency under the oversight of the Ministry of Commerce and Industry. LIPO, however, lacks the technical and financial capacity to address infringements of intellectual property rights.

The Copyright Society of Liberia (COSOL)  collaborates with the MOCI and LIPO to develop legal and international frameworks to guide the collection and distribution of royalties. In February 2021, LIPO and COSOL rolled out nationwide public awareness and inspection campaigns to remove pirated copyright materials from the Liberian market. In October 2021, during a meeting of the World Intellectual Property Organization (WIPO), the government recommitted to global efforts to protect and promote intellectual property rights.

There is no system to track and report on seizures of counterfeit goods. The government rarely prosecutes intellectual property violations. Many Liberians are unfamiliar with intellectual property rights, and intellectual property infringement is common, including unauthorized duplication of movies, music, and books. Counterfeit drugs, apparel, cosmetics, mobile phones, computer software, and hardware are sold openly.

Liberia is not listed in USTR’s Special 301 Report or the Notorious Markets List.

For additional information about national laws and local IPR points of contact, see WIPO’s country profiles at  .  

6. Financial Sector

The government welcomes foreign investment, but Liberia’s capital market is highly underdeveloped. Private investors have limited credit and investment options. The country does not have a domestic stock market and does not have an effective system to encourage portfolio investments. In 2019, Liberia committed to non-discriminatory foreign exchange auctions consistent with its obligations under IMF Article VIII  , and the country does not restrict international payments and transfers. Commercial credit is allocated on market terms, and foreign investors can get credit on the local market. Many foreign investors prefer to obtain credit from foreign banks.

The country’s financial sector regulatory authority is the Central Bank of Liberia . Foreign banks or branches can establish operations in Liberia subject to the CBL’s regulations. There are 10 commercial banks. Most are foreign-owned with branch outlets in the country. Non-bank financial institutions also provide diverse financial services. These include a development finance company, a deposit-taking microfinance institution, numerous non-deposit-taking microfinance institutions, rural community finance institutions, money remittance entities, foreign exchange bureaus, credit unions, and village savings and loans associations. However, chronic liquidity shortages, especially of Liberian dollars in recent years, have undermined confidence in banks. The CBL’s 2021 third-quarter report described the banking industry as “relatively stable” based on indicators such as total assets, deposits, loans, and total capital. As of November 2021, the capital adequacy ratio of 27.47 was well above the 10% regulatory minimum, and the liquidity ratio was 44.17, above the 15% regulatory minimum. Although the banking sector is sufficiently capitalized, it is not well positioned to withstand shocks. The sector’s primary weaknesses include a high number of non-performing loans (21% in November 2021), low profitability due to high operating expenses, periodic cash shortages for depositors, low public confidence, and inadequate policing and prosecution of money laundering and other financial crimes. There are no restrictions on a foreigner’s ability to establish a bank account.

The Government of Liberia does not maintain a Sovereign Wealth Fund (SWF) or similar entity.

7. State-Owned Enterprises

Liberia has approximately 20 state-owned enterprises (SOEs), which are governed by boards of directors and management teams overseen by government ministries. All are wholly government-owned and semi-autonomous. The president of Liberia appoints board members and directors or managers to govern and run SOEs. The Public Financial Management (PFM) Act defines the requirements for SOEs.

SOEs employ more than 10,000 people in sea and airport services, electricity supply, oil and gas, water and sewage, agriculture, forestry, maritime, petroleum importation and storage, and information and communication technology services. Not all SOEs are profitable, and some citizens and advocacy groups have called for SOEs to be dissolved or privatized. Liberia does not have a clearly defined corporate code for SOEs. Reportedly, high-level officials, including some who sit on SOE boards, influence government-owned enterprises to conduct business in ways not consistent with standard corporate governance. Not all SOEs pay taxes, or do so transparently, and SOE revenue is not always transparently reported or adequately reflected in national budgets.

In 2016 Liberia’s Ministry of Education initiated a school privatization program that, as of the 2021-22 school year, had privatized 525 schools. Operation of the schools was outsourced to domestic and foreign for-profit and nonprofit education providers and NGOs. There have been numerous calls from political leaders and government officials to privatize government-owned enterprises, including the Liberia Electricity Corporation, the Liberia Water & Sewer Corporation, and Liberia Petroleum Refining Company, but the government does not have an official privatization program.


Executive Summary

Malawi’s economy was significantly impacted by the COVID-19 pandemic. Gross domestic product growth slowed to 0.9 percent in 2020, but rebounded slightly in 2021, expanding by 2.2 percent. The government forecasts this trend will continue and forecasts growth of 4.5 percent by 2023. Macroeconomic and fiscal challenges remain, however. The government’s heavy debt burden and persistent fiscal deficits are likely to restrain economic expansion that outpaces population growth. Inflation was 9 percent in 2021, driven largely by currency devaluation and price increases for imported goods, primarily fuel, fertilizers, and food. The economy is heavily dependent on agriculture and is particularly vulnerable to climate related shocks.

The Government of Malawi is eager to attract foreign direct investment. Investment opportunities exist in agricultural, mining, health, transportation, information technology, and energy sectors. Transportation is a potential growth sector as the government works to improve the road network and rehabilitate railway lines connecting Malawi to Mozambique, Zambia, and Tanzania. Public-private partnership opportunities are likely to open in aviation and road networks. Corruption remains a major problem at all levels of the public and private sectors. There is a scarcity of skilled and semi-skilled labor. Political risk in Malawi is manageable and tribal, religious, regional, ethnic, or racial tensions are minimal.

The Malawi Investment and Trade Center assists investors and businesses by providing insight and local knowledge to help navigate the myriad regulations, processes, and procedures required to operate a business. Malawi’s legal system is generally unbiased but is notoriously slow. Investors have the right to establish, acquire, and dispose of interests in business enterprises. Parliament is scheduled to review existing land laws in early 2022. If passed, the reforms may negatively affect foreign ownership and investment in land-based enterprises.

Scarcity of foreign exchange (forex) remains a challenge and negatively affects investors. The government aims to maintain a three-month supply of forex, but often falls short of that goal. Forex rationing has led to several months wait for business to remit foreign investment funds. Despite the long wait times, there are currently no restrictions on remittance of foreign investment funds if the capital and loans initially came from foreign sources and were registered with the Reserve Bank of Malawi.

Malawi is a land-locked country and the road network connecting to ports in neighboring countries is limited. Investment in infrastructure overall has been limited. Formal and informal trade boundaries may restrict imports and exports, and import tariffs tend to be high. Malawi is one of the least electrified countries in the world; approximately eleven percent of the country has access to regular electricity and internet is unreliable, and expensive.

The government is committed to addressing climate change through climate smart policies and programs. The Environmental Management Act provides details on environmental requirements for investors and ministries, departments, and agencies (MDAs). Climate change issues are integrated across the public service and national development plans. However, limited resources and issues related to poverty impede the government’s ability to implement climate adaptation and resilience programs and initiatives.

Malawi’s borders are open to local and international travelers, but all travelers are required to present negative COVID-19 test results and certificate of COVID-19 vaccination.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 110 of 180
Global Innovation Index 2021 107 of 132
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 188 million
World Bank GNI per capita 2020 USD 580

1. Openness To, and Restrictions Upon, Foreign Investment

Malawi is open to foreign and domestic investment. Foreign investors may invest in most sectors of the economy and may access government investment incentives. There are no restrictions on ownership, size of investment, source of funds, investment sector, or whether the products are destined for export or for domestic markets. An investor can disinvest 100%, make international payments, and cannot be forced into local partnerships. The Malawi Stock Exchange limits an individual foreign investor to 10% of any company’s initial public offering (IPO) and limits foreign investment to 49% of total shares in the company.

The Cabinet Committee on Public Private Partnership was established in 2020 to boost private sector growth. The government utilizes the Malawi Investment and Trade Center ( MITC ), Ministry of Trade and Industry, Malawi Revenue Authority, Reserve Bank of Malawi, and the Public Private Partnership Commission to interface with foreign investors. The Malawi Confederation of Chambers of Commerce and Industry ( MCCCI ) represents all sectors of the economy and has successfully lobbied the government on various private sector issues in the past. The Malawi Investment Forum serves as a platform for marketing the country, fostering partnerships, and bringing in foreign direct investment.

The government does not impose restrictions on the ownership or location of investments. Foreign investment is permitted in all sectors of the economy except those that are deemed to pose a danger to health, the environment, or national security. There are no restrictions on funding sources, destinations, or final product. All companies are required to have at least two Malawian residents as directors, and there are limitations on foreign ownership of land. The 2022 session of Parliament is expected to review the current Land Act of 2016. The act states that neither Malawians nor foreigners can acquire freehold land. Foreigners can secure lease-hold land for up to 50 years and may renew the leasehold in most instances. Foreigners can only secure private land when no Malawian citizen has made an equal offer for the same land. The 2022 land act reform is expected to place additional restrictions on ownership and land acquisition by foreigners.

Malawian nationals receive preferential treatment during the privatization of government assets; this can include discounted share prices and subsidized credit. The 2017 amendment to the Public Procurement and Disposal of Assets (PPDA) Act calls for “the prioritization of all bids submitted to give 60% preference to indigenous black Malawians.” In 2020, the government drafted Indigenous Black Malawian (IBM) Preference regulations. These were approved by Parliament but failed to be gazetted due to pressure from non-indigenous populations. There is a high likelihood that the regulations will be gazetted in 2022. The Micro Small and Medium Enterprises (MSMEs) Participation Order restricts government ministries, departments, and agencies (MDAs) to allocate procurements below certain thresholds to MSMEs ( PPDA Legal Instruments ).

Prior to establishing or conducting business in Malawi, all foreign investors are required to obtain an investment certificate from MITC . As part of the certification process, investors must register with the Registrar General’s office  and RBM  and have a minimum of $50,000 to invest ( MITC Investment Procedures ). MITC announced plans to revise the threshold for capital requirements in 2019 but provided no concrete timeline for completion. The proposed thresholds will differ by sectors and may go as high as $500,000, if implemented. Registration of borrowed invested funds allows investors to externalize profits to pay back loans contracted abroad and repatriate funds when disinvesting. ( MITC Malawi ).

The last Trade Policy Review of Malawi was conducted by the WTO in April 2016. The full report is available at WTO TPR . The OECD and UNCTAD have not conducted investment policy reviews for Malawi.

There are no recent policy recommendations by civil society organizations based on reviews of investment policy related concerns.

The MITC offers business facilitation services to any foreign or domestic investor through their One Stop Center. The center houses representatives from Registrar General , Malawi Revenue Authority , Department of Immigration , and Ministry of Lands, Housing and Urban Development.   Information can also be found on MITC’s main website, the iGuides , and its online trade portal ; and .

To operate in Malawi, a business must register with the Registrar General, the Malawi Revenue Authority and the Ministry or regulatory body overseeing their particular sector. Businesses can register online through the Registrar General; however, the online process can be cumbersome and inefficient due to technical constraints. Registering in person is preferred and generally less time consuming. Businesses must also obtain business licenses from the city assembly, register the worksite with the Ministry of Labor, and allow health officials to carry out periodic inspections of the company premises (  ).

Malawi does not incentivize or promote outward investment. The Pension Act of 2010 and accompanying regulations prohibit domestic investors from investing pension funds or umbrella funds in foreign schemes. There are no other prohibitions on domestic investors investing abroad.

MITC is responsible for the promotion and facilitation of trade and investment. MITC offers services to both local and foreign investors, for both inward and outward facing investments. In practice, most MITC services are for domestic investing and business development.

4. Industrial Policies

The government offers tax and non-tax incentives in various sectors. Incentives vary by year and are available to both domestic and foreign investors. In recent years, the government has offered incentives in manufacturing, agriculture, and mining. The current list of investment incentives can be found on the MITC and Malawi Revenue Authority websites. Firms must negotiate to establish their eligibility with the relevant government entity. Long delays in accessing incentives and accrued benefits are not uncommon. The government occasionally issues guarantees and joint financing on foreign direct investment projects of national importance. To support clean energy investment, government recently removed import duty, import excise and value added tax (VAT) on most imported renewable energy products.

Regulations to enable export processing zones (EPZs) were established in 1995. The original program was limited to companies strictly engaged in manufacturing for export. In 2020, the EPZ program was amended to allow export processing firms to sell up to 20 percent of their product on the local market. As of 2022, there are 13 companies operating under the auspices of the EPZ, 11 of the companies in the program are foreign owned, though the law does not discriminate on ownership. The government began the process to establish Special Economic Zones (SEZ), in 2021. The SEZs will have broader coverage than EPZs and include a mix of commercial activities and services.

Malawi does not follow “forced localization” or use geographic requirements for goods or financing, nor set performance requirements for establishing, maintaining, or expanding an investment. There is an ongoing local campaign to “Buy Malawi” to encourage the purchase of locally produced goods. Legal restrictions on foreign investment are based on environmental, health, biosafety, and national security concerns. The primary sectors subject to restrictions are firearms and ammunition, chemical and biological weapons, explosives, and manufacturing involving hazardous waste treatment/disposal or radioactive material. All business ventures in Malawi must navigate complex and often confusing bureaucratic processes. Minimum requirements include, business license, tax registration number, temporary employment permit, business residency permits, and land use permits. Depending on the sector additional licensing or permits may also be required. These procedures are time consuming and may constitute an impediment to investment.

Currently there are no requirements for foreign IT providers to turn over source code or provide access to encryption to prevent free transmission of customer or other business-related data outside the country’s territory, or a mandate for local data storage within the country. The Malawi Communications Regulatory Authority ( MACRA ) and the Ministry of Information and Digitization are responsible for IT issues. The Ministry of Information and Digitization is drafting a data protection bill, it is expected to be tabled in parliament sometime in 2022.

5. Protection of Property Rights

The government utilizes various laws and regulations to govern the acquisition, disposition, recording, and protection of all physical property rights. The land ownership registry is centralized, and record keeping is inefficient and often inaccurate. Efforts are underway to computerize and decentralize recordkeeping. Financing options in the housing sector are extremely limited. Most households finance their homes through savings or non-mortgage credit. Mortgage availability is inefficient to meet demand and interest rates generally start at 18 percent and go up.

The Land Act of 2016 converted customary land tenure to leasehold title to enable those currently using that land to have legal rights to it. The 2016 law prohibits freehold title; renewable lease terms for Malawians is up to 99 years and up to 50 years for foreigners. The Act prohibits the issuance of new freehold titles but grandfathered in existing land titles. The Office of Commissioner of Lands administers and manages land issues, grants, leases, and other dispositions. There is no reliable data on the proportion of land without clear titles, but it is likely much higher than 10%. Under the 2016 Act, land may be repossessed by the government if it lays idle for more than two years after it is registered to an individual or entity. No land has been repossessed from a developer the recent past. The 2022 session of Parliament is expected to review proposed changes to the 2016 Act. If passed, the reforms may negatively affect foreign ownership of land and investments in land-based enterprises while increasing ministerial powers to determine land uses.

Malawi recognizes the importance of intellectual property protection but lacks enforcement capacity. The Registrar General administers the Patent and Trademarks Act, which protects industrial intellectual property rights (IPR) in Malawi. The Registrar General maintains a public registry of patents and patent licenses. Patents must be registered. Trademarks are registered publicly following advertisement and a period of no objection. Enforcement of IPR is inadequate. General awareness of importance of protecting intellectual property in all forms has improved. The Copyright Society of Malawi (COSOMA) administers the Copyright Act of 2016, which protects copyrights and “neighboring” rights in Malawi.

The government approved copyright regulations and levies on storage devices in 2018. COSOMA and the Malawi Revenue Authority introduced a five percent levy on all media storage devices to be used to compensate rights holders. The Trademarks Act of 2018 and National Intellectual Property Policy of 2019 acknowledge the challenges to intellectual property rights in Malawi and provide a framework to foster the generation and protection of intellectual property rights. Enforcement officials routinely seize counterfeit goods, but there is no systematic approach to track and report on seizures, so statistics are not available. Malawi is not listed on USTR’s Special 301 Report or Notorious Markets List. For additional information about national laws and points of contact for local IP offices, please see WIPO’s country profiles at 

6. Financial Sector

The Malawi Stock Exchange ( MSE ) is open to foreign portfolio investment. As of February 2022, the MSE hosts 16 listed companies with a total market capitalization of $3.01 million. The demand and supply of shares for listed companies is limited. The stock exchange is licensed under the Financial Services Act 2010 and operates under the Securities Act 2010 and the Companies Act 2013. Other governing regulations are the Capital Market Development Act 1990, and Capital Market Development Regulations 1992 as amended in 2013.

There are no restrictions on foreign investors buying or selling shares listed on the MSE. Trading can be done by the stockholder or through one of four registered brokers. A secondary market offers government securities and is also open to local and foreign investors. Malawi respects the obligations under IMF article VIII. There are no restrictions on making payments or transfers for international transactions and no discriminatory currency arrangements or multiple currency practices undertaken without IMF approval. Credit is generally allocated on market terms though the cost of credit is generally high. Foreign investors may utilize domestic credit, but any proceeds from investments made using local resources are not remittable.

According to a World Bank Report , only 40 percent of the adult population in Malawi use financial services. Access to and the cost of credit remains one of the biggest challenges for businesses and particularly SMEs. The minimum lending rate in February 2022 was 12 percent with a maximum rate of 24 percent. Mobile banking technology has the potential to increase access to local banking but is very nascent and its implementation is limited by access to reliable electricity and IT infrastructure. Official central bank reports  do indicate an increase in electronic transactions over the last 24 months, but mobile banking is still not widely used.

The banking sector is generally sound. The sector is overseen and regulated by the Reserve Bank of Malawi (RBM). As of February 2022, there are eight full-service commercial banks with 106 branches across the country. The banking sector remained profitable and stable with adequate liquidity and capital positions throughout 2021. Prudential regulations have limited net forex exposure and non-performing loan rates hovers around 6-7 percent and spreads remain high. The sector is highly concentrated and heavily invested in domestic government debt, which is a systemic risk. Total assets as of December 2021 were $3.5 billion. The National Bank of Malawi and Standard Bank Malawi account for 46 percent of total assets. Equity capital of the two banks is approximately 61 percent and total loans 53 percent of total banking sector.

The Banking Act provides a supervisory mandate to the RBM. The RBM has supervisory authority over all financial institutions and is responsible for ensuring the efficiency, reliability, and integrity of the financial system. There are no additional restrictions placed on foreign banks in Malawi. As of February 2022, four of the eight banks are foreign owned. The RBM and the major commercial banks maintain correspondent banking relationships with other central banks and major banks in foreign countries. To open a bank account locally, a foreigner must first present a temporary employment permit or business residency permit.

Malawi does not have a Sovereign Wealth Fund or similar entity.

7. State-Owned Enterprises

Malawi has 71 public enterprises, 20 of which are SOEs. A full list of the SOEs is available by request from the Office of the President and Cabinet (OPC), but the government does not publish the list in the media or online except in conjunction with the announcement of board members of public enterprises. The government has bailed out several SOEs when they incurred heavy losses. SOE finance and operations data is opaque and not available to the public. Malawi’s SOEs are not required to adhere to the OECD Guidelines on Corporate Governance of SOEs. Corporate governance for the various SOEs is mandated by the law that established the entity. All public enterprises report to their sector-related line ministry, to the Department of Statutory Corporations in the OPC, and have a Chairperson and Board of Directors. The President appoints the board of directors, usually politicians, religious & traditional leaders, and professionals. Boards also include senior government officials as ex-officio/non-voting members. The participation of members as ex-officio/non-voting members, and of politicians as directors, creates a perceived and/or real conflict of interest.

Public and private enterprises are subject to the same terms and conditions, and must compete for access to markets, credit, and business opportunities. Public enterprises are given special preference by the government in the case of public projects. Personal relationships play a significant role in influencing business decision-making. Public enterprises in agriculture, education, and health sectors spend more on research and development than the private sector. Local firms tend to be capital-constrained and highly skilled labor is scarce. There is not a strong tradition of private sector-led research and development in Malawi.

There are no immediate plans for privatization of government resources or services. It is unclear how impacts from the proposed Lands Amendment will impact the ability of foreign investors to participate in the privatization sales. Under the current Land Law, if privatization were to take place, any foreign or domestic investor would be allowed to participate, and the government is permitted to offer domestic investors a discount on shares. Business and investment efforts are focused on public-private partnerships and attracting strategic investors rather than outright privatization. These are handled by the Public Private Partnership Commission .


Executive Summary

Mozambique’s lengthy coastline, deep-water ports, favorable climate, rich soil, and vast natural resources give the country significant potential, but investors face challenges related to the business environment. The Government of the Republic of Mozambique (GRM) made progress on public financial management reforms and publishing budget and debt figures, took steps to reform State-Owned Enterprises (SOEs), and arrested or prosecuted high-level officials on corruption-related charges. It reached an agreement with the IMF and promoted dialogue with the private sector and donor community on economic reforms. Challenges include Mozambique’s opaque and complicated taxation policies, barriers to private land ownership, corruption, an underdeveloped financial system, high interest rates, poor infrastructure, and difficulties obtaining visas. Infrastructure outside of Maputo is often poor, while bureaucracy and corruption slow trade at many points of entry. Mozambican labor law makes it difficult to hire and fire workers, and court systems are bogged down in labor disputes. The domestic workforce also lacks many advanced skills needed by industry, and the visa regime makes bringing in foreign workers difficult.

Insecurity related to a terrorist insurgency in northern Mozambique has resulted in multi-billion-dollar onshore LNG projects being delayed, although a smaller offshore floating LNG platform remains on track to begin production by October 2022.

The COVID-19 pandemic negatively impacted the extractive industry and tourism sector, and pandemic-related restrictions affected many other economic sectors. Following a recession in 2020, the economy returned to 2.5 percent economic growth in 2021. In 2022, the GRM began to ease some restrictions, although COVID-19 measures have continued to limit the hours restaurants and other businesses can operate and impose testing requirements on travelers.

Mozambique is eager to partner with the United States on climate issues, although it lacks resources. It joined the Agricultural Innovation Mission for Climate (AIM4C) and is considering joining the Global Methane Pledge. As the GRM made progress on rural electrification, it incorporated solar energy and solicited investment for hydropower projects. U.S. development agencies and international financial institutions contributed to energy projects in solar and natural gas. The U.S. Department of Energy helped identify areas where small renewable solar and wind projects could be built alongside agricultural activities. These areas may provide opportunities for sustainable foreign direct investment in the renewable energy market. Mozambique is a growing producer of critical minerals, including graphite, lithium, and titanium. In 2021, Mozambique joined the Kimberley Process Certification Scheme, enabling Mozambique to legally export diamonds.

The GRM worked constructively with the United States and other members of the donor community. In March 2022, it reached an agreement with the IMF for a three-year, $470 million program that aims to reinforce economic recovery while addressing challenges related to debt and financing and encouraging good governance and improved management of public resources. The GRM is working with the U.S. Millennium Challenge Corporation (MCC) towards signing a second MCC compact (Compact II) in 2023. Compact II will entail business-enabling reforms and will undertake investments in Zambézia Province that focus on transportation infrastructure, commercial agriculture, and climate change mitigation. While Compact II is still under development, it has potential to contribute to key sectors and help create an enabling environment for additional investments.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 147 of 180 
Global Innovation Index 2021 122 of 132 
U.S. FDI in partner country ($M USD, historical stock positions) 2018 $491  
World Bank GNI per capita (USD) 2020 $460   

1. Openness To, and Restrictions Upon, Foreign Investment

The GRM welcomes foreign investment and sees it as a critical driver of economic growth and job creation. Except for a few sectors related to national security, all business sectors are open to foreign investment. Mozambique’s 1993 Investment Law (no. 3/93) and a 2009 decree (no. 43/2009) govern foreign investments. Many observers perceive the Investment Law as obsolete, although the GRM has not yet taken steps to revise it.

In general, large investors receive more support from the GRM than small and medium-sized investors.  GRM authorities must approve all foreign and domestic investment, including guarantees and incentives.  Regulations for the 2009 Code of Fiscal Benefits law (no. 4/2009), were established under a 2009 Decree (no. 56/2009).

The Agency for Promotion of Investments and Exports (APIEX, Agencia para a Promocao de Investimentos e Exportacoes) is the primary investor contact within the GRM, operating under the Ministry of Industry and Commerce (MIC), with the objective of promoting and facilitating private and public investment.  APIEX also oversees the promotion of national exports and assists investors with administrative, financial, and property issues.  Through APIEX, investors can receive exemptions from some customs and value-added tax (VAT) duties when importing “Class K” equipment, which includes capital investments.

Contact information for APIEX is:

Agency for Promotion of Investments and Exports
Rua da Imprensa, 332 (ground floor)
Tel: (+258) 21313310

Ahmed Sekou Touré Ave., 2539 Maputo
Telephone: (+258) 21 321291
Mobile: (+258) 823056432

GRM dialogue with the private sector is primarily coordinated by Mozambique’s Ministry of Industry and Commerce (MIC). Most businesses in Mozambique interact with the GRM via the country’s largest business association, the Confederation of Economic Associations (CTA, Confederação das Associações Económicas de Moçambique). CTA was formed in 1996 and continues to be the most influential business association in Mozambique. CTA hosts an annual conference for private sector dialogue with the GRM (Conferencia Annual do Sector Privado; CASP), which is usually attended by the President of Mozambique and senior cabinet officials.

With some exceptions, Mozambique’s Investment Law and its regulations generally do not distinguish between investor origin or limit foreign ownership or control of companies.  The 2011 “Mega-Projects Law” (no. 15/2011) stipulates that 5 – 20 percent of the equity capital of public-private partnerships, large-scale ventures, and major business concessions be owned by Mozambicans.

The Petroleum Law (no. 14/2014) states that the GRM regulates the exploration, research, production, transportation, trade, refinery, and transformation of liquid hydrocarbons and their by-products, including petrochemical activities.  Article 4.6 of this law establishes the state-owned oil company, the National Hydrocarbon Company (Empresa National das Hidrocarbonetos; ENH) as the GRM’s exclusive representative for investment and participation in oil and gas projects.  ENH typically owns up to 15 percent of shares in oil and gas projects in the country.

Depending on the size of the investment, the GRM approves both domestic and foreign investments at the provincial or national level, but there is no other formal investment screening process.

In March 2022, CTA published a report entitled “ Accelerating actions for economic recovery in Mozambique’s Private Sector.” The report lists seven key recommendations announced at the March 30-31 CASP conference: 1) Reduce the number of days required to obtain a business license; 2) reduce the cost of finance; 3) apply incentives to increase industrialization; 4) increase the number of products certified at international standards; 5) strengthen small and medium enterprises through legal reforms and payment of all government debts to companies; 6) increase agricultural productivity through fiscal reform; and 7) increase influx of international tourists to Mozambique by facilitating visas and lowering value added taxes paid by tourists.

Starting a business in Mozambique is a lengthy, bureaucratic, and complex process that has contributed to Mozambique’s relatively low score on the World Bank’s Doing Business Report. In the 2020 report (the most recent available), Mozambique ranked 176 out of 190 economies worldwide for ease of starting a new business, scoring well below the regional average for sub-Saharan Africa. Its low rank is due in part to the relatively high cost of registering a business and number of procedures required to complete the process.

Registering a business typically involves many steps including reserving a name, signing an incorporation contract, paying registration fees, publishing the company’s name and statutes in the national gazette, registering with the tax authority, and notifying relevant agencies of the start of activity. According to the World Bank, this process takes approximately seventeen days. There is not a business registration website; however, APIEX maintains a guide  to starting a business with some resources. In 2020, the City of Maputo consolidated some of the steps by establishing a “one stop shop” (balcão de atendimento unico; BAU), reducing the number of days required to register a new company to eleven.

The GRM has initiated several projects to promote competitiveness within the private sector. The MIC collaborated with CTA to create an action plan for improving the business environment (Plano de Acção para Melhorar a Ambiente de Negocios; PAMAN) in the 2019-2021 period, although the GRM achieved only 38.6 percent of the proposed reforms. In 2020, the GRM partnered with CTA to launch the Programa Nacional de Certificação Empresarial (PRONACER) to support small and medium enterprises.

The GRM does not promote or incentivize outward investment.  It also does not restrict domestic investors from investing abroad.  However, Mozambique does require domestic investors to remit investment income from overseas, except for amounts required to pay debts, taxes, or other expenses abroad.

4. Industrial Policies

The GRM reformulated its Code of Fiscal Benefits in 2009 (Law no. 4/2009 and Decree no. 56/2009). These benefits aim to encourage development in Mozambique by reducing the amount of tax to be paid by certain companies or entities in the public interest. The law contains specific incentives for entities that intend to invest in certain geographical areas within Mozambique that have natural resource potential but lack infrastructure and have low levels of economic activity.  Additional modest incentives are available for professional training and the construction and rehabilitation of public infrastructure, including but not limited to roads, railways, water supply, schools, and hospitals.

Mozambique has six Special Economic Zones (SEZs) including one specific SEZ for Agriculture, and five Industrial Free Zones (IFZs). Created in 2007, Mozambique’s SEZs are zones of general economic activity, geographically delimited and governed by a special customs regime in which goods entering, circulating, transforming, and leaving Mozambican territory are exempt from tax, customs and foreign exchange obligations. Goods produced in SEZs can be sold domestically or abroad, although goods sold domestically are treated by Mozambican authorities as an export to the domestic market and are therefore subject to the applicable customs duties. Mozambique’s six SEZs are distributed in Nampula, Sofala, Zambézia, Niassa and Gaza provinces.

Mozambique’s IFZs are similar to SEZs, except that they are designed specifically for industry, and firms operating in IFZs must export at least 70% of their total production. Investments in IFZs are eligible for specific tax incentives. Mozambique’s five IFZs are located in the provinces of Maputo, Nampula, and Tete.

Investors should pay close attention to documents and procedures requested to establish a business locally or request fiscal and customs incentives if investing in an SEZ or IFZ. Investors have complained that some GRM officials may not be aware of the benefits conferred by tax-free status, particularly related to customs and duty-free imports.

The GRM established the Limpopo Valley Agribusiness SEZ (ZEEA-L) in January 2021, with the objective of exploring and developing the agricultural potential of the Limpopo Valley. The zone falls under the 2009 Code of Fiscal Benefits. ZEEA-L is part of the GRM’s World Bank funded 2020-2024 SUSTENTA Program, which aims to stimulate investment in agriculture by integrating family farming into productive value chains.

Although the concept of local content in terms of employment and procurement by international firms has featured prominently in Mozambican public discourse, the GRM does not require investors to purchase from local sources, nor does it require technology or proprietary business information to be transferred to a local company.  However, within certain sectors, the GRM has implemented specific local content requirements. In the oil and gas sector, the Petroleum Law (no. 21/2014) requires oil and gas companies to give preference to Mozambican individuals and companies if the goods or services are of an internationally comparable quality and competitively priced. The exact local content requirements for each project operating under this law are negotiated within the “Local Content Working Group,” an inter-ministerial body responsible for implementing the GRM’s local content strategy. In March 2022, President Nyusi declared that Mozambique would not adopt a local content law, which he said would make Mozambique uncompetitive.

Companies may hire foreign workers only when there are not sufficient Mozambican workers available to meet specific job qualifications.  The Ministry of Labor enforces maximum quotas on foreign workers as a percentage of the workforce within companies, which varies based on the size of the company.  The 2007 Labor Law (no. 23/2007) sets minimum quotas for the percentage of Mozambicans a company operating in Mozambique must employ.  Many companies have found a work-around by hiring foreigners as outside consultants. Work permits for foreigners cost approximately $370 and take at least one month to be issued.  All investments must specify the number and category of Mozambican and foreign workers.

The GRM currently has no data localization policies in effect.  Several international companies offer cloud services to Mozambique; however, none operate in-country data centers. In addition to the GRM-operated Maluana Park and Teledata centers, Mozambique hosts three private data centers: SEACOM, Webmasters, and Eduardo Mondlane University. None of Mozambique’s facilities are carrier-neutral and they do not host individual servers. In February 2022, Mozambique became the first African country to grant a license to SpaceX’s satellite-based internet service provider Starlink.

The government agency responsible for enforcing IT policies and rules is:

UTICT – Unidade Tecnica de Implementacao da Politica de Informatica
Technical Implementation Unit for IT Policy
Tel: (258) 21 309 398; 21 302 241
Mobile (258) 305 3450

5. Protection of Property Rights

The legal system recognizes and protects property rights to buildings and movable property, although private land ownership is not permitted, as all land is owned by the State. The GRM grants land-use concessions called Direitos de Uso e Aproveitamento de Terra (DUAT) for periods of up to 50 years with options to renew for additional periods. In practice, DUATs serve as proxies for land titles, although there is no robust market for DUATs as they are not easily transferable.  The process to award DUATs is not transparent and the GRM at times has granted overlapping DUATs that require lengthy negotiations to resolve.  It takes an average of 90 days to issue a DUAT. Banks in Mozambique tend to rely on property other than land – cars, private houses, and infrastructure – as collateral. While CTA and other entities have made efforts to make DUATs “bankable,” it is not currently possible to securitize DUATs for lending purposes.

In urban areas, the DUAT of a plot passes automatically to the purchaser following the sale of a house or building.  In rural areas, the purchaser of physical infrastructure or improvements and crops must request authorization from the GRM for the DUAT to be transferred.  This requirement is often cited as a barrier to obtaining loans in the agricultural sector and is seen as a potential barrier to investment and the transition to more intensive commercial forms of agriculture.

Investors should be aware of the requirement to obtain endorsement of their projects in terms of land use and allocation at a local level from affected communities.  APIEX assists investors in finding land for development and obtaining appropriate documentation, including agricultural land.  The GRM advises companies on relocating individuals currently occupying land designated for development; however, companies are ultimately responsible for planning and executing resettlement programs.

Despite enforceable laws and regulations protecting intellectual property rights (IPR) and a relatively simple registration process, it remains difficult for investors to protect their IPR in Mozambique. Private sector organizations work with various GRM entities on an IPR taskforce to combat IPR infringement and related public safety issues stemming from the use of counterfeit products, but enforcement in Mozambique remains sporadic and inconsistent. Mozambique’s National Inspectorate of Economic Activities (INAE) has conducted seizures, confiscating fake Hewlett-Packard (HP) toner cartridges and falsely branded Nike, Adidas, Ralph Lauren, and other merchandise in several raids in 2019. However, in general, enforcement and prosecutions are limited.  Pirated DVDs and other counterfeit goods are commonly sold in Mozambique.

The Parliament passed a copyright and related rights bill in 2000 (no. 4/2001), which, when combined with the 1999 Industrial Property Act, brought Mozambique into compliance with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).  The law provides for the security and legal protection of industrial property rights, copyrights, and other related rights.  In addition, Mozambique is a signatory to the Bern Convention, as well as the New York and Paris Conventions.

Mozambique joined the African Regional Intellectual Property Organization (ARIPO) in February 2020. Joining ARIPO paved the way for Mozambique to implement the Banjul Protocol and the GRM deposited its instrument of accession to the protocol at ARIPO in May 2020. Mozambique’s adhesion to ARIPO should facilitate filing trademarks, as ARIPO processes are standardized across all member states and valid across all jurisdictions.

Mozambique is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at  .

6. Financial Sector

The Mozambique Stock Exchange (Bolsa de Valores de Mocambique, BVM) is a public institution under the guardianship of the MEF and the supervision of the Central Bank of Mozambique.  In general, the BVM is underutilized as a means of financing and investment.  However, the GRM has expressed interest in reforming market rules to increase capitalization and potentially prepare to require foreign companies active in Mozambique to be listed on the local stock exchange. Corporate and GRM bonds are traded on the BVM, but there is only one dealer that operates in the country, with all other brokers incorporated into commercial banks, which act as primary dealers for treasury bills.  The secondary market in Mozambique remains underdeveloped.  Available credit instruments include medium- and short-term loans, syndicated loans, foreign exchange derivatives, and trade finance instruments, such as letters of credit and credit guarantees.  The BVM remains illiquid, in the sense that very limited activity occurs outside the issuing time.  Investors tend to hold their instruments until maturity.  The market also lacks a bond yield curve as GRM issuances use a floating price regime for the coupons with no price discovery for tenures above 12 months.  In 2022 the Central Bank accepted technical assistance manuals from the U.S. Securities and Exchange Commission related to regulation of the BVM.

The GRM notified the IMF that it has accepted the obligations of Article VIII sections 2, 3, and 4 of the IMF Articles of Agreement, effective May 20, 2011.

According to a December 2021 Mozambican Bank Association (MBA) survey, there are 20 commercial banks operating in Mozambique. The top three banks – Banco Comercial e de Investimentos (BCI), Banco Internacional de Moçambique SA (BIM), and Standard Bank – account for 68 percent of total banking assets. However, Mozambique’s other banks have been gaining market share. MyBucks Banking Corporation SA, Societe Generale Mocambique SA and Banco Nacional de Investimento SA have recorded impressive asset growth rates of 78 percent, 64 percent, and 51 percent respectively in recent years.

The non-performing loan ratio for the sector improved from 11.3 percent in December 2019 to 10.2 percent in December 2020, the most recent years for which such figures are available. It was possible to see an increase in the expected credit losses going into the income statement for the year 2020 when compared to the year 2019. The total level of impairment going into the income statement increased from 4.8 billion meticais to 6.3 billion meticais for the period 2019 to 2020.

Despite recent challenges including the COVID-19 pandemic, damaging cyclones, and terrorist activity in Cabo Delgado province, Mozambique’s economy has been recovering following a recession in 2020. According to the 2021 MBA survey, Mozambique’s banking system has continued to grow at around 17 percent annually, with an annual increase in the volume of deposits of 22 percent, an increase in financing by 10 percent, and an expansion in the number of bank branches nationwide by 2 percent over the previous year.

According to 2019 FinScope data, only 21 percent of the population had access to a bank account, which is well below the country’s target of 60 percent. As of March 2021, Mozambique had 719 bank agencies, 1,742 ATMs, and 36,839 point of sale devices. Most banking locations are concentrated in provincial capitals, and rural districts often have no banks at all.  Thanks to the partnership between mobile communications companies and banks for electronic or mobile-money transactions, access to financial services is improving, with many Mozambicans using the mobile money service M-PESA. The number of services available from ATMs is also increasing. There are 1,697 banking agents in the country that provide basic banking services to customers without access to a bank branch.

With financing already prohibitively expensive for most Mozambicans, the Central Bank increased interest rates by 200 basis points to 15.25 percent in March 2022, following commodity price rises associated with the Russian invasion of Ukraine. Credit is allocated on market terms, but eligibility requirements exclude much of the population from obtaining credit. Banks request collateral, but since DUATs generally cannot be used as collateral, the majority of Mozambican applicants do not qualify for loans. Foreign investors’ export activities in food, fuel, and health markets have access to credit in foreign currency.  All other sectors have access to credit only in the local currency.

In October 2020, Mozambique’s Central Bank published an initial proposal for a Sovereign Wealth Fund (SWF) to manage the expected increase in GRM revenues from natural gas projects in northern Mozambique. The GRM is still studying the proposal, although the March 2022 IMF program includes adoption of a SWF law as one of its proposed reforms, and President Nyusi has recently signaled that implementing the SWF remains a GRM priority.

The initial SWF draft from the Central Bank calls for 50 percent of GRM revenue from extractive industries to be used to fund the SWF for a period of 20 years, and sets up strict payout criteria for any withdrawals from the SWF before it reaches maturity. In general, the GRM’s proposal follows the Santiago Principles, and the Central Bank consulted with the International Forum of Sovereign Wealth Funds to refine its proposal.

The GRM’s National Petroleum Institute (INP) estimates total government revenues from LNG projects in the Rovuma Basin would amount to $49.4 billion over the lifetime of the projects through 2048. A Central Bank proposed model published in 2020 had estimated total revenues could amount to as much as $96 billion. However, delay of both the Area 1 and Area 4 onshore projects and fluctuating international energy prices could impact Mozambique’s real returns from this sector. In March 2021, TotalEnergies declared force majeure and halted work on its Area 1 project, citing concerns over insecurity around the project site in Cabo Delgado province. The Exxon-Mobil-led Area 4 onshore project has yet to see a Final Investment Decision (FID). The Eni-led Floating LNG platform, also part of Area 4, is set to begin LNG production in 2022, with projected production of 3.4 million tons per annum.

7. State-Owned Enterprises

According the State Holdings Management Institute (IGPE), Mozambique has twelve SOEs , 18 companies  that are majority state-owned, and 23 companies  with minority state ownership, which IGPE does not consider to be SOEs.

Some of the largest SOEs, such as Airports of Mozambique (Aeroportos de Moçambique) and Electricity of Mozambique (Electricidade de Moçambique), have monopolies in their respective industries.  In some cases, SOEs enter into joint ventures with private firms to deliver certain services.  For example, Ports and Railways of Mozambique (CFM, Portos e Caminhos de Ferro de Moçambique) offers some concessions. Many SOEs benefit from state subsidies.  In some instances, SOEs have benefited from non-compete contracts that should have been competitively tendered.  SOE accounts are generally not transparent and not thoroughly audited by the Supreme Audit Institution.  Unsustainable SOE debt represents a liability for the GRM, and SOEs were at the heart of the hidden debt scandal revealed in 2016.

In 2018, the Parliament passed Law no. 3/2018, which broadens the definition of SOEs to include all public enterprises and shareholding companies.  The law seeks to unify SOE oversight and harmonize the corporate governance structure, instituting additional financial controls, borrowing limits, and financial analysis and evaluation requirements for SOEs.  The law requires the oversight authority to publish a consolidated annual report on SOEs, with additional reporting requirements for individual SOEs.  The Council of Ministers approved regulations for the SOE law in early 2019, and in 2020 the MEF published limited information on SOE debt.

The GRM is working with the IMF and the international donor community in an effort to reform its SOEs. In March 2021, the GRM hired a consulting company to study models for restructuring SOEs and selected four SOEs to be restructured: Mozambican Insurance Company (EMOSE), the Correios de Moçambique (Post Office), the Sociedade de Gestão Imobiliária (DOMUS) and the Matola Silos and Grain Terminal (STEMA).

Mozambique’s privatization program has been relatively transparent, with tendering procedures that are generally open and competitive.  Most remaining parastatals operate as state-owned public utilities with GRM oversight and control, making their privatization more politically sensitive.  While the GRM has indicated an intention to include private partners in most of these utility industries, progress has been slow.

Sierra Leone

Executive Summary

Sierra Leone, with an estimated population of 8.2 million people (2022 World Population Review), is located on the coast of West Africa between the Republic of Guinea in the north and northeast, the Republic of Liberia in the south and southeast, and the Atlantic Ocean on the west, with a land area of 71,740 square kilometers and a humid tropical climate.

Sierra Leone emerged from a decade-long civil war in 2002 and has been politically stable with remarkable religious tolerance among its people. Since 2002, the country economically outperformed other west African countries before it was struck by an outbreak of the Ebola epidemic in 2014. When the country emerged out of the Ebola scourge in 2015, the government turned to foreign direct investment (FDIs) to return the economy to the pre-Ebola growth trajectory.

Sierra Leone was recovering from the ravages of the Ebola epidemic of 2014-15 when the COVID-19 pandemic struck in March 2020 and took a heavy toll on the economy. The government’s quick and decisive response, which comprised the COVID-19 Health Preparedness and Response Plan and the Quick Action Economic Response Program (QAERP), focused on saving lives and livelihoods to prevent a more significant outbreak. The containment measures addressed broader economic and social concerns combined with strained debt. The government’s 2021 budget prioritized COVID-19 and was augmented by concessional support, primarily in the form of grants from development partners. According to the International Monetary Fund (IMF), in August 2021, Sierra Leone grappled with severe and persistent effects of the COVID-19 pandemic amidst signs of early economic recovery.

Economic activity dipped sharply in 2020 with elevated inflation and limited fiscal space.

Sierra Leone offers significant investment potential across numerous sectors. The country is rich in mineral reserves and natural resources with a favorable tropical climate, fertile soil advantageous for agriculture, extensive continental shelf with multiple varieties of fishery resources, a natural environment offering touristic prospects, and vast mineral resources, especially iron ore, diamonds, gold, rutile, ilmenite, and bauxite. Possibilities also exist in energy, water, telecommunications, and other infrastructure. FDIs are crucial to the country’s economic recovery. Therefore, there has been a continuous drive and policy focus on encouraging FDIs into the country.

There are, however, legislative, institutional, and regulatory challenges to investment, including governance, the rule of law, business and human rights, dispute resolution, finance, and banking. Poor quality and limited infrastructure also pose significant investment challenges as the country lacks the capacity necessary to support practical commercial activities. Challenges similarly persist in corruption, skilled labor, accessing land, high-interest rates, and contract enforcement. The government’s policy focus has been to address all these impediments and shape the economic fundamentals for investment to flourish.

Sierra Leone has potential in six primary areas: agriculture, fisheries, mining, tourism, energy, and construction. The country is endowed with a favorable tropical climate with a wide-ranging fertile soil advantageous for agriculture. It also provides an extensive continental shelf with numerous fishery resources, a natural environment offering touristic prospects, and vast mineral resources, especially iron ore, diamonds, gold, rutile, ilmenite, and bauxite. There are also opportunities for public-private partnership projects in energy, water, telecommunications, and other infrastructure. Opportunities further exist for investors to benefit from several preferential trade agreements. These include duty-free access to the Mano River Union market of more than 50 million, ECOWAS market of over 420 million, and the African Continental Free Trade Agreement of about fifty-four African countries with a combined population of more than one billion. The country also benefits from the European Union’s Everything but Arms initiative and the United States African Growth and Opportunity Act (AGOA).

President Julius Maada Bio of the Sierra Leone Peoples Party (SLPP), who ruled briefly as head of a military regime in 1996, replaced President Ernest Bai Koroma in April 2018.  His administration took over a poverty-stricken and debt-burdened country with an elevated level of corruption and fiscal indiscipline. His development aspirations are outlined in the comprehensive medium-term National Development Plan (MTNDP) launched in 2019 to span through 2023. The plan is built on human capital development and economic diversification in agriculture, fisheries, and tourism to facilitate the country’s transformation from a fragile state to a stable and prosperous democracy that would achieve middle-income status by 2035. His foreign policy agenda prioritized economic diplomacy and he has traveled to many countries seeking and marketing Sierra Leone as an investor-friendly country. The government is calling on investors in all sectors of the economy as it looks for private sector-led economic growth and development.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 115 of 180
Global Innovation Index 2021 N/A
U.S. FDI in partner country (stock positions) 2021 N/A
World Bank GNI per capita 2020 $510 USD

1. Openness To, and Restrictions Upon, Foreign Investment

The Government of Sierra Leone (GoSL) has a strong and positive attitude towards foreign direct investment (FDI) required to invigorate the country’s economic growth and development. The GoSL’s Medium-Term National Development Plan (2019-2023) sets a growth agenda to support economic diversification and competitiveness towards promoting and developing a viable private sector to increase participation in global trade.

The Sierra Leone Investment and Export Promotion Agency (SLIEPA) is the government’s lead agency established to oversee trade policy, improve the investment climate, and provide information on business registration, applicable incentives, and licenses. The Corporate Affairs Commission (CAC) supervises the registration of limited liability companies. Simultaneously, the Public-Private Partnership Unit, established in the Office of the President, facilitates, and streamlines all public-private partnership agreements.

A bill to establish a National Investment Board (NIB) awaits Parliamentary ratification. When established, the NIB will regularize the activities previously marred by bureaucracy and fraud. The NIB will create an Investment and Export Promotion Unit to replace SLIEPA, the Corporate Affairs Unit will take over the management of the Public Private Partnership Unit (PPPU) from the Office of the President, and establish a Business Facilitation Unit. The Investment and Export Promotion Unit will oversee trade policy and improve the investment climate, while the Corporate Affairs Unit will supervise and regulate company incorporation. The PPPU will promote, facilitate, and streamline all public-private agreements, whereas the Business Facilitation Unit will serve as a one-stop shop to facilitate the setting up of businesses and provide support and information to start and operate a business. The aim is to create a conducive and safer investment environment to end the corrupt ways investment has been handled in the past.

Sierra Leone allows foreign investors to compete on the same terms as domestic firms. The Investment Promotion Act of 2004 protects foreign entities from discriminatory treatment. The Act creates incentives and customs exemptions, provides for investors to freely repatriate proceeds and remittances, and protects against expropriation without adequate compensation. The Act further provides for arbitration under the UNCITRAL rules in the event of a commercial dispute. However, a draft arbitration bill, which incorporates the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), presently awaits Parliamentary domestication.

The diversification initiative of the GoSL is largely directed towards agriculture, fisheries, tourism, and infrastructure. The government is promoting sustainable investment in mechanized commercial agriculture, value addition, and agricultural research. The fishery sector is pushing for investment in lawful cultivation, commercial farming, and preservation of fish products. In the tourism sector, priority areas are investment in the hospitality industry, rehabilitation of historical and cultural sites, and promotion of tourism-based activities that link with the rural economy. The government focuses on public-private partnerships for major infrastructural projects in energy, water, roads, ports, and telecommunications, and encourages investments in local industries like agro-processing, other value addition industries, and small enterprise development.

Conversely, poor quality and limited infrastructure pose significant challenges to investment and practical commercial activity. The shortage of skilled labor, the slow legal system, the high level of corruption, and political violence are significant obstacles to FDI. However, Sierra Leone made significant reforms in simplifying the process of setting up a business, and the World Bank ranked the country 58 out of 190 countries in 2020. The country also migrated to the UNCTAD ASYCUDA World System to further enhance trading across borders. In addressing corrupt practices, the country progressed 14 places up in the Transparency International Corruption ranking from 129/180 in 2018 to 115/180 in 2021. Similarly, the government passed the Millennium Challenge Corporation’s indicator on the control of corruption four times in a row, from 71 percent in FY19 to 83 percent in FY22.

The disruption of COVID-19 has been widespread and has severely impacted the economy. To mitigate the shock and accelerate economic recovery, the government initiated the Quick Action Economic Response Plan (QAERP), which aimed at saving lives and sustaining livelihoods. QAERP maintained adequate stock of essential commodities, supported hardest-hit businesses and labor-based public works, and assisted local production and processing of food items. After the July 2021 review of Sierra Leone’s Extended Credit Facility, the International Monetary Fund underscored the government’s strong economic and health responses to mitigate the immediate impact of the crisis and safeguard macroeconomic stability.

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activities. Foreigners are free to establish, acquire, and dispose of interests in business enterprises. However, foreign investors cannot invest in arms and ammunition, cement block manufacturing, granite and sandstone excavation, manufacturing of certain consumer durable goods, and military, police, and correctional officers’ apparel and accouterments. Furthermore, there are limits to land ownership by foreign entities and individuals; the limitations vary depending on the location of the land being used and are discussed below in the “Real Property” section.

Sierra Leone has few specific restrictions, controls, fees, or taxes on foreign ownership of companies that can outrightly own Sierra Leonean companies subject to certain registration formalities. However, investment in mining of less than $500,000 is an exception as this requires a 25 percent Sierra Leonean holding.  Foreign technical and unskilled labor can be used but must seek approval from the Corporate Affairs Commission to transfer shares.

Export licenses are required only for certain goods and materials. In comparison, the export of gold and diamonds must comply with internationally accepted standards such as Kimberley Process certification. The permits required to export goods such as cocoa and coffee are issued automatically and at no cost.

Small mining investments require a minority partnership with a Sierra Leonean company. The Sierra Leone National Carrier Ratification Agreement Act of 2012 mandates the use of the Sierra Leone National Shipping Company for 40 percent of all goods imported or exported from Sierra Leone. The Petroleum Act 2001 restricts petroleum exploration and production licenses to companies registered or incorporated in Sierra Leone.

Sierra Leone has also identified certain restrictions on foreign investment in its Schedule of Specific Commitments to the General Agreement on Trade in Services, from August 1995, which established limited restrictions on the business services, financial services, and maritime and airport sectors.

The Local Content Policy, adopted in 2012, promotes the utilization of locally produced goods and locally provided services and the employment of Sierra Leonean nationals. While failure to follow the policy previously resulted only in denying investment incentives, the Sierra Leone Local Content Agency Act 2016 requires compliance. More information is available below in the “Performance Requirements” section.

The 2016 local content policy requires investors to utilize local goods in place of imported goods, promote the employment of citizens, and develop the human capacity of these citizens through training.

The legal system generally treats foreign investors in a non-discriminatory fashion, though investors comment that judicial application of the laws is often subject to financial and political influence.

The World Trade Organization (WTO) conducted a trade policy review for Sierra Leone in 2017. The UN Conference on Trade and Development (UNCTAD) last conducted an investment policy review for Sierra Leone in 2010.

Sierra Leone has progressed in simplifying its business registration process in recent years. The Corporate Affairs Commission manages the registration of limited liability companies and provides a “one-stop-shop,” including an online business registration system. The entire process involves five steps and takes, on average, ten days. Additional information is available from the CAC’s website: . The Sierra Leone Investment and Export Promotion Agency also provides helpful guidance on starting a business, sector-specific business licenses, mining licensing, and certification fees, and marine resources and fisheries.

Sierra Leone has no program to promote or incentivize outward investment and places no restrictions on such activity.

2. Bilateral Investment Agreements and Taxation Treaties

Sierra Leone has bilateral investment treaties with Germany, in force since 1966, the United Kingdom in 1981 and revised in 2001, China signed in 2001 but not yet entered into force, and United Arab Emirates, signed in 2019 but not yet in force. These treaties protect investors with fair and equitable treatment and defense against unlawful expropriation. Though not yet in force since signing in 2001, China and Sierra Leone reaffirmed their commitment to deepening the relationship by a memorandum of understanding signed when President Bio visited China in 2018.

Sierra Leone also benefits from its membership of the Economic Community of West African States (ECOWAS) and the Trade and Investment Framework Agreement with the United States, signed in 2014 with no bilateral taxation treaty. Double bilateral taxation treaties exist with Norway, South Africa, and the UK, extended to Canada, Denmark, Ghana, New Zealand, Nigeria, and The Gambia. However, the Ministry of Finance plans to review all existing treaties and work on the requested treaties from Kenya and Qatar.

4. Industrial Policies

The Investment Promotion Act 2004 creates various incentives for foreign and domestic investors. SLIEPA compiles information about the benefits and incentives available in various sectors. In particular, these are investment and employment, research and development, value-added manufacturing and training expenses incentives; incentives provided for businesses engaged in agriculture, airlines, fish farming, infrastructure, liquefied petroleum gas and cookers, mineral and petroleum, petroleum refinery, pharmaceuticals, photovoltaic systems, poultry, tourism; and income tax deductions for disabled persons, women and youth employment and skills development, and social services like schools and hospitals, etc. SLIEPA provides details of these investment incentives on its website at: , and the Ministry of Finance provides a handbook on tax incentives for investment at .

The Public-Private Partnership (PPP) Act of 2014 established the PPP Unit in the Office of the President to promote and increase private sector involvement in the development plan of the country, especially in public utility services and will ensure that PPP arrangements follow the Act. Since its establishment, the PPP Unit has engaged the private sectors to secure projects in energy, fisheries, health, housing, etc.

In conjunction with First Step, a subsidiary of U.S.-based development organization World Hope International, the government established a Special Economic Zone (SEZ) in 2011 on 54 acres outside of the capital, Freetown. The SEZ policy accords businesses operating in the zone with a three-year tax holiday, duty and tax exemptions on imported goods, expedited government services including customs, immigration, registration, and guaranteed electricity and water supplies.

The Sierra Leone Local Content Agency Act 2016 promotes foreign investors’ utilization of the domestic private sector. The Act applies in the mining, industrial, petroleum, manufacturing, agriculture, transportation, maritime, aviation, tourism, public works, fisheries, health, energy sectors, etc.

The local content policy is meant to boost the economy by leveraging the power of local industries and citizens through their participation in the economy. It targets several issues, including:

Employment of nationals: All foreign businesses must employ Sierra Leoneans, at least 20 percent of the managerial and 50 percent of intermediate positions. After five years, this ratio must increase to 60 percent for managerial and 80 percent for intermediate positions.

Preferential Treatment: Preference will be granted to a foreign business that partners with Sierra Leonean businesses over foreign companies with no equity share owned by Sierra Leonean entities.

First Consideration: Foreign businesses must give Sierra Leoneans first consideration for employment and training.

Use of local goods and services: Firms should give preference to Sierra Leonean goods when they are of equal or comparable value. Companies must use specific amounts of local materials in critical sectors, but if there is inadequate local capacity to meet the law’s target, the Ministry of Trade and Industry may issue a waiver.

National preferences in contracts: The policy gives first consideration to Sierra Leonean companies for mining and petroleum awards and licenses and public works contracts. The policy also offers domestic firms a preferential margin in government and private procurements.

The Local Content Agency enforces the local content policy. Companies must submit local content plans to demonstrate compliance, and violations are subject to fines, the loss of investment incentives, and civil forfeiture.

5. Protection of Property Rights

There are two systems of land tenure in Sierra Leone. The Western Area, the former British colony of Sierra Leone, which includes Freetown, operates under a freehold system. In the provincial areas outside the Western Area, the land is governed under a leasehold system where local communities retain ultimate control. Foreigners cannot own land under either system but can lease land for terms of up to 99 years. In leasehold areas, local Paramount Chiefs control the land and may enter joint ventures with investors to develop or use the land in ways that serve the interests of the local communities.

The Constitution protects property rights, but the rule of law is fragile and uneven across the country. In the absence of an effectively functioning legal framework, property rights and contracts are not adequately secure. Mortgages and liens are possible but rare and generally involve high-interest rates and short loan periods. There is no land titling system, and traditional tribal justice systems still supplement the national government’s judiciary, especially in rural areas. In 2020, the World Bank Doing Business Report ranked Sierra Leone 169 in the World Bank ease of registering property. The process takes approximately 56 days with seven procedures and costs about 11 percent of the property’s value.

The Land Administration system currently inhibits successful problem resolution. The survey system is manual, and land survey technologies are outdated and inaccurate. Property management procedures are lengthy, unreliable, expensive, and do not guarantee the protection of the property user and or owner’s rights. In 2017, the cabinet approved a comprehensive national land policy to improve and strengthen land laws and administration within the land tenure systems in the Western Area and the provinces. The policy, which awaits parliamentary action, is intended to enhance the abilities of institutions to acquire land for responsible investment and promote sustainable socio-economic development. While the new policy seeks to gradually formalize land transactions while respecting the customary systems, the 2019–23 Medium-term National Development Plan recognizes that land ownership rights and obligations are necessary to attract foreign investment.

Sierra Leone has been a member of the World Intellectual Property Organization (WIPO) since 1986 and a member of the African Regional Intellectual Property Organization (ARIPO), the common intellectual property body for English-speaking African countries, since 1980. As a member of the WTO, Sierra Leone is bound by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Sierra Leone has not ratified the WIPO Copyright Treaty or the Berne Convention to protect Literary and Artistic Rights.

Despite its recognition of international standards, Sierra Leone’s intellectual property protection is limited. Laws pre-dating the colonial era allowed patents and trademarks registered in the United Kingdom to be extended to Sierra Leone. Efforts to update the country’s legal framework have thus far included the Copyright Act 2011, the Patents and Industrial Design Act 2012, and the Trademark Act 2014. Nonetheless, legal protections remain outdated and incomplete, and government enforcement is minimal due to resource and capacity limitations.

For companies who may wish to seek advice from local attorneys who are experts in Sierra Leonean law, go to  for a list of local lawyers.

Sierra Leone has not been listed in the U.S. Trade Representative (USTR) Special 301 Report or the Notorious Markets List. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at .

6. Financial Sector

Limited capital market and portfolio investment opportunities exist in Sierra Leone. The country established a Stock Exchange in 2009 to provide a place for enterprise formation and a market for trading stocks and bonds. The exchange initially listed only one stock, a state-controlled bank, but in early 2017, it had three listings that expressed willingness to trade their shares at the exchange.

Sierra Leone acceded to the IMF Article VIII in January 1996, which removed all restrictions on payments and transfers for current international transactions. The regulatory system does not interfere with the free flow of financial resources. Nonetheless, foreign and domestic businesses alike have difficulty obtaining commercial credit. Foreign interests may access credit under the same market conditions as Sierra Leoneans, but banks loan small amounts at high-interest rates. Foreign investors typically bring capital in from outside the country.

Sierra Leone’s banking sector, supervised by the central bank of Sierra Leone, consists of 14 commercial banks, 66 foreign exchange bureaus, 18 community banks including Apex Bank, 39 credit-only microfinance, five deposit-taking microfinance, two discount houses, a home mortgage finance company, a leasing company, two mobile financial services providers, and a stock exchange. Bank branches exist throughout the country, with activity concentrated in Freetown. The banking system currently has seven correspondent banks. While the commercial banking sector is characterized by poor performance with significant financial vulnerability, the central bank of Sierra Leone in 2018 approved the takeover of a commercial bank acquired in 2016 by a foreign investor.

Foreign individuals and companies are permitted to establish bank accounts. The use of mobile money is becoming more popular. Other electronic payments and ATM usage are available in urban areas but limited in rural settings, while the Bank of Sierra Leone is set to roll out a “national payment switch” to facilitate connectivity among different banks’ electronic systems. Telecommunications companies are upgrading to enhance mobile money services and e-commerce specifically.

In December 2021, the Parliament, upon the request of the Bank of Sierra Leone, passed into law the redenomination of the Leone bill. The bill authorizes the elimination of three zeros from the currency- Le 1,000 will now be Le1, and so on. The redenomination is planned to take place in 2022. According to the governor of the central bank, the move is to reduce transaction costs, standardize the Leones bill and save the cost of currency printing. The bank is now embarking on a sensitization campaign.

Sierra Leone suffers from a high inflation rate and deteriorating currency exchange rate. In December 2021, the annual national consumer price or inflation rate was 17.94 percent.

As part of structural reforms in the banking sector under the Extended Credit Facility of the International Monetary Fund, the Bank of Sierra Leone pledged to establish a particular resolution framework for troubled financial institutions, establish a deposit insurance system, strengthen its capacity to supervise and oversee the non-bank financial institution sector, and facilitate the adoption of International Financial Reporting Standards (IFRS) both internally and across the financial industry.

Inadequate supervisory oversight of financial institutions, weak regulations, and corruption have made Sierra Leone vulnerable to money laundering. While the country’s anti-money laundering (AML) controls remain underdeveloped and underfunded, the Financial Intelligence Unit (FIU) completed a national risk assessment in 2017. The FIU is currently working with the Economic Crime Team of the Office of Technical Assistance, U.S. Department of the Treasury, to enhance its capacity with technical visits to the FIU. The GIABA (a French acronym for Groupe Intergouvernemental d’Action Contre la Blanchiment d’Argent en Afrique de l’Ouest, which in English is, ‘The Inter-Government Action against Money Laundering in West Africa’) and the EU also funded a workshop on designated non-financial business and professions on Anti-Money Laundering and Combating Financing Terrorism (AML/CFT) preventive measures.

Sierra Leone has a floating exchange rate regime. The Leone, has depreciated slowly over the years mainly due to the increasing demand to finance current consumption and a decreasing inflow of foreign currency resulting from decreased exports and remittances.

Sierra Leone has not established a sovereign wealth fund which was legislated under the 2018 Extractive Industries Revenue Act and the 2016 Public Financial Management Act. The implementation was delayed because of the collapse of the international iron ore prices in 2014-16, which coincided with the Ebola outbreak, both of which deteriorated the economy’s fundamentals.

7. State-Owned Enterprises

Sierra Leone has more than 20 state-owned enterprises (SOEs) mainly active in the utilities, transport, and financial sectors. There is no official or comprehensive government-maintained list of SOEs. There is no official or comprehensive government-maintained list of SOEs. However, notable examples include the Guma Valley Water Company, the Sierra Leone Telecommunication Company, the Electricity Distribution, and Supply Authority, the Electricity Generation and Transmission Company, the Sierra Leone Broadcasting Corporation, the Rokel Commercial Bank, the Sierra Leone Commercial Bank, the Sierra Leone Produce Marketing Company, to name but a few. Some of these SOEs are governed by an independent board of directors, while the relevant government ministries supervise others.

Sierra Leone is not a party to the Government Procurement Agreement within the WTO Framework. SOEs may engage in commerce with the private sector, but they do not compete on the same terms as private enterprises, and they often have access to government subsidies and other benefits. SOEs in Sierra Leone do not play a significant role in funding or sponsoring research and development.

The National Commission for Privatization was established in 2002 to facilitate the privatization of various SOEs. With support from the World Bank, the commission has focused on privatizing the country’s port operations and other unsuccessful public enterprises. It continues to seek investments in public-private partnerships for SOEs with significant infrastructure, including telecommunications, energy, housing, etc. Privatization processes are open to foreign investors and could be integrated into plans for better capitalizing the stock exchange in Freetown via new equity listings.

South Africa

Executive Summary

South Africa boasts the most advanced, broad-based economy in sub-Saharan Africa. The investment climate is fortified by stable institutions; an independent judiciary and robust legal sector that respects the rule of law; a free press and investigative reporting; a mature financial and services sector; and experienced local partners.

In dealing with the legacy of apartheid, South African laws, policies, and reforms seek economic transformation to accelerate the participation of and opportunities for historically disadvantaged South Africans. The Government of South Africa (GoSA) views its role as the primary driver of development and aims to promote greater industrialization, often employing tariffs and other trade measures that support domestic industry while negatively affecting foreign trade partners. President Ramaphosa’s October 2020 Economic Reconstruction and Recovery Plan unveiled the latest domestic support target: the substitution of 20 percent of imported goods in 42 categories with domestic production within five years. Other GoSA initiatives to accelerate transformation include labor laws to achieve proportional racial, gender, and disability representation in workplaces and prescriptive government procurement requirements such as equity stakes and employment thresholds for historically disadvantaged South Africans. In January 2022, the World Bank approved South Africa’s request for a USD 750 million development policy loan to accelerate the country’s COVID-19 response. South Africa previously received USD 4.3 billion from the International Monetary Fund in July 2020 for COVID-19 response. This is the first time that the institutions have supported South Africa’s public finances/fiscus since the country’s democratic transition.

In November 2021 at COP 26 the GoSA, the United States, the UK, France, Germany, and the European Union (EU) announced the Just Energy Transition Partnership (JETP). The partnership aims to accelerate the decarbonization of South Africa’s economy, with a focus on the electricity system, to help achieve the ambitious emissions reduction goals laid out in South Africa’s Nationally Determined Contribution (NDC) in an inclusive, equitable transition. The partnership will mobilize an initial commitment of USD 8.5 billion over three-to-five years using a variety of financial instruments.

South Africa continues to suffer the effects from a “lost decade” in which economic growth stagnated, hovering at zero percent pre-COVID-19, largely due to corruption and economic mismanagement. During the pandemic the country implemented one of the strictest economic and social lockdown regimes in the world at a significant cost to its economy. South Africa suffered a four-quarter technical recession in 2019 and 2020 with economic growth registering only 0.2 percent growth for the entire year of 2019 and contracting -6.4 percent in 2020. In a 2020 survey of over 2,000 South African businesses conducted by Statistics South Africa (StatsSA), over eight percent of respondents permanently ceased trading, while over 36 percent indicated short-term layoffs. Although the economy grew by 4.9 percent in 2021 due to higher economic activity in the financial sector, the official unemployment rate in the fourth quarter of 2021 was 34.9 percent. Other challenges include policy certainty, lack of regulatory oversight, state-owned enterprise (SOE) drain on the fiscus, widespread corruption, violent crime, labor unrest, lack of basic infrastructure and government service delivery and lack of skilled labor.

Due to growth in 2021, Moody’s moved South Africa’s overall investment outlook to stable; however, it kept South Africa’s sovereign debt at sub-investment grade. S&P and Fitch ratings agencies also maintain assessments that South Africa’s sovereign debt is sub-investment grade at this time.

Despite structural challenges, South Africa remains a destination conducive to U.S. investment as a comparatively low-risk location in Africa, the fastest growing consumer market in the world. Google (US) invested approximately USD 140 million, and PepsiCo invested approximately USD 1.5 billion in 2020. Ford announced a USD 1.6 billion investment, including the expansion of its Gauteng province manufacturing plant in January 2021.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 70 of 175
Global Innovation Index 2021 61 of 132
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $3.5 billion
World Bank GNI per capita 2020 $6,010

1. Openness To, and Restrictions Upon, Foreign Investment

The GoSA is generally open to foreign investment to drive economic growth, improve international competitiveness, and access foreign markets. The Department of Trade and Industry and Competition’s (DTIC) Trade and Investment South Africa (TISA) division assists foreign investors. It actively courts manufacturing in sectors where it believes South Africa has a competitive advantage. It favors sectors that are labor intensive and with the potential for local supply chain development. DTIC publishes the “Investor’s Handbook” on its website: HYPERLINKError! Hyperlink reference not valid. and TISA provides investment support through One Stop Shops in Pretoria, Johannesburg, Cape Town, Durban, and online at  (see Business Facilitation). The 2018 Competition Amendment Bill introduced a government review mechanism for FDI in certain sectors on national security grounds, including energy, mining, banking, insurance, and defense (see section on Laws and Regulations on Foreign Direct Investment). The private sector has expressed concern about the politicization of mergers and acquisitions.

Currently, there are few limitations on foreign private ownership and South Africa has established several incentive programs to attract foreign investment. Under the Companies Act, which governs the registration and operation of companies in South Africa, foreign investors may establish domestic entities as well as register foreign-owned entities. However, the Act requires that external companies submit their annual returns to the Companies and Intellectual Property Commission Office (CIPC) for review. Although generally there are no rules that would prohibit foreign companies from purchasing South African assets or engaging in takeovers, the Act does contain national security interest criteria for certain industries, including energy, mining, banking, insurance, and defense (see section on Laws and Regulations on Foreign Direct Investment), that could potentially subject transactions covered to additional scrutiny. Reviews will be conducted by a committee comprised of 28 ministers and officials chosen by President Ramaphosa. The law also states that the president must identify and publish in the Gazette, the South African equivalent of the U.S. Federal Register, a list of national security interests including the markets, industries, goods or services, sectors or regions for mergers involving a foreign acquiring firm.

In addition to the Companies Act national security review provisions, there are a small number of industries that are subject to additional requirements through separate acts. On September 28, 2021, President Ramaphosa signed the Private Security Industry Regulation Amendment Act, which limits foreign ownership of private security companies to 49 percent based on national security concerns. The Banks Act of 1990 permits a foreign bank to apply to the Prudential Authority (operating within the administration of the South African Reserve Bank) to establish a representative office or a local branch in South Africa.  The Insurance Act of 2017 prohibits persons from conducting insurance business in South Africa without being appropriately licensed by the Prudential Authority.  The Insurance Act permits a foreign reinsurer to conduct insurance business in South Africa, subject to that foreign reinsurer being granted a license and establishing both a trust (for the purposes of holding the prescribed security) and a representative office in South Africa.  The Electronic Communications Act of 2005 imposes limitations on foreign control of commercial broadcasting services.  The Act Provides that a foreign investor may not, directly or indirectly, (1) exercise control over a commercial broadcasting licensee; or (2) have a financial interest or an interest in voting shares or paid-up capital in a commercial broadcasting licensee exceeding 20 percent. The Act caps the percentage of foreigners serving as directors of a commercial broadcasting licensee at 20 per cent. Lastly, foreign purchasers of South African securities are obliged to notify an authorized dealer (generally commercial banks) of the purchase and have the securities endorsed “non-resident.”

DTIC’s TISA division assists foreign investors, actively courting manufacturers in sectors where it believes South Africa has a competitive advantage. DTIC publishes the “Investor’s Handbook” on its website: www.the and TISA provides investment support through One Stop Shops in Pretoria, Johannesburg, Cape Town, Durban, and online at  (see Business Facilitation).  Foreign companies may be eligible for incentives in South Africa under several ad hoc initiatives as well as the Special Economic Zones (SEZs) Act of 2014, which promotes regional industrial development by providing incentives for foreign (and local) investors that elect to operate within the country’s SEZs. More information regarding incentive programs may be found at: http://www.thedtic.go/  and below in Incentives. The 2018 Competition Amendment Bill introduced a government review mechanism for FDI in certain sectors on national security grounds,

Although South Africa welcomes foreign investment, there are policies that potentially disadvantage foreign companies, including the Broad-Based Black Economic Empowerment Act of 2013 (B-BBEE). B-BBEE represents one avenue that South Africa has taken to re-integrate historically disadvantaged individuals (HDIs) into the economy by requiring companies meet certain thresholds of black ownership and management control to participate in government tenders and contracts. While companies support the Act’s intent, it can be difficult to meet the B-BBEE requirements, which are tallied on B-BBEE scorecards and are periodically re-defined. The higher the score on the scorecard, the greater preferential access a company must bid on government tenders and contracts.

In recognition of the challenge the scorecards place on foreign business, the Department of Trade, Industry and Competition created an alternative Equity Equivalence Investment Program (EEIP) program for multinational or foreign owned companies to allow them to show alternative paths to meeting B-BBEE ownership and management requirements under the law. Many companies still view the terms as onerous and restrictive. Multinationals, primarily in the technology sector such as Microsoft and Amazon Web Services, participate in the EE program. J.P. Morgan was the first international investment bank in South Africa to launch a DTIC-approved equity equivalent investment program in August 2021. The company will deploy R340 million (approximately USD 22 million) of financing into the South African economy and create more than 1000 permanent jobs.

The B-BBEE program has come under sharp criticism in the past several years on the grounds that the Act has not gone far enough to shift ownership and management control in the commercial space to HDIs. In response, the GoSA has increasingly taken measures to strengthen B-BBEE through more restrictive application, increasing investigations into the improper use of B-BBEE scorecards, and is considering additional legislation to support B-BBEE’s policies. For instance, the GoSA is considering a new Equity Employment Bill that will set a numerical threshold, purportedly at the discretion of each Ministry, for employment based on race, gender, and disability, over and above other B-BBEE criteria. The bill is currently with the National Council of Provinces and if it passes, it will move to President Ramaphosa for signature.

South Africa has not undergone any third-party investment policy reviews through organizations such as the Organization for Economic Co-operation and Development (OECD), World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD), or UN Working Group on Business and Human Rights.

In November 2021, civil society organizations launched a constitutional lawsuit against the GoSA, demanding that it cancel plans to build 1,500 Mega Watts (MW) of coal-fired power because this would worsen air and water pollution along with health hazards and global warming. They filed the case in the North Gauteng High Court on the grounds that the new power would pose “significant unjustifiable threats to constitutional rights” and to the climate by pushing up greenhouse gas emissions. South Africa is the 12th worst greenhouse gas (GHG) emitter in the world. The Center for Environmental Rights provided a review at: .

In November 2021, environmental activists gathered at the oil and gas giant Sasol’s annual general meeting demanding commitment to move away from fossil fuels. Activists also want Sasol and its shareholders to accelerate the country’s just transition, which commits to significantly reducing carbon dioxide emissions, and moving towards greener energy alternatives. A domestic shareholder activism organization called JustShare released a report on Sasol and climate change claiming that Sasol is not planning to decarbonize, despite climate science.

DTIC has established One Stop Shops (OSS) to simplify administrative procedures and guidelines for foreign companies wishing to invest in South Africa in Cape Town, Durban, and Johannesburg. In theory, OSS should be staffed by officials from government entities that handle regulation, permits and licensing, infrastructure, finance, and incentives, with a view to reducing lengthy bureaucratic procedures, reducing bottlenecks, and providing post-investment services. However, some users of the OSS complain that some of the inter-governmental offices are not staffed, so finding a representative for certain transactions may be difficult. The virtual OSS web site is: .

The CIPC issues business registrations and publishes a step-by-step guide for online registration at ( ), which can be done through a self-service terminal, or through a collaborating private bank. New businesses must also request through the South African Revenue Service (SARS) an income tax reference number for turnover tax (small companies), corporate tax, employer contributions for PAYE (income tax), and skills development levy (applicable to most companies). The smallest informal companies may not be required to register with CIPC but must register with the tax authorities. Companies must also register with the Department of Labour (DoL) –  – to contribute to the Unemployment Insurance Fund (UIF) and a compensation fund for occupational injuries. DoL registration may take up to 30 days but may be done concurrently with other registrations.

South Africa does not incentivize outward investments. South Africa’s stock foreign direct investments in the United States in 2019 totaled USD 4.1 billion (latest figures available), a 5.1 percent increase from 2018. The largest outward direct investment of a South African company was a gas liquefaction plant in the State of Louisiana by Johannesburg Stock Exchange (JSE) and NASDAQ dual-listed petrochemical company SASOL. There are some restrictions on outward investment, such as a R1 billion (USD 83 million) limit per year on outward flows per company. Larger investments must be approved by the South African Reserve Bank and at least 10 percent of the foreign target entities’ voting rights must be obtained through the investment. 

4. Industrial Policies

South Africa also offers various investment incentives targeted at specific sectors or types of business activities, including tax allowances to support in the automotive sector and rebates for film and television production. The GoSA favors sectors that are labor intensive and with the potential for local supply chain development More information regarding incentive programs may be found at: .

The Public Investment Corporation SOC Limited (PIC) is an asset management firm wholly owned by the GoSA and is governed by the Public Investment Corporation Act, 2004 . PIC’s clients are mostly public sector entities, including the Government Employees Pension Fund (GEPF) and UIF, among others. The PIC runs a diversified investment portfolio including listed equities, real estate, capital market, private equity, and impact investing. The PIC has been known to jointly finance foreign direct investment if the project will create social returns, primarily in the form of new employment opportunities for South Africans.

To encourage and support businesses looking to green their operations, there are incentives built in into the income tax. Section 12L of the Income Tax Act was passed in 2013 allowing for deductions for energy efficiency measures. Businesses can claim deductions of 95 cents per kilowatt hour, or kilowatt hour equivalent, of energy efficiency savings made within a year against a verified 12-month baseline. The baseline measurement and verification of savings must be done by a SANAS accredited Measurement and Verification (M&V) body. The incentive allows for tax deductions for all energy carriers, not just electricity, except for renewable energy sources which have separate provisions. An amendment in 2015 allowed businesses to claim savings from electricity co-generation, combining heat and power, if there is an energy conversion efficiency of more than 35 percent. All energy efficiency schemes that businesses want to claim the deductions against need to be registered with the South African National Energy Development Institute (SANEDI). 

Section 12B of the Income Tax Act includes a provision for a capital allowance for movable assets used in the production of renewable energy. The incentive allows for 100 percent asset accelerated depreciation in first financial year that the asset is brought online. This could equate to a 28 percent deduction on the business’ income tax. Currently, company tax in South-Africa is 28 percent (it has since been reduced to 27 percent as from April 1, the beginning of the 2022/2023 fiscal year). With this incentive, a company could deduct the value of a new solar power system as a depreciation expense decreasing the company’s income tax liability by the same value as the value of the installed solar system. The reduction can also be carried over to the next financial year as a deferred tax asset. 

Section 12N of the Income Tax Act provides for improvements to property not owned by taxpayers: if the improvements are associated with the Independent Power Producer Procurement Programme. Section 12U Income Tax Act provides for additional deduction in respect of supporting infrastructure in respect of renewable energy: such as roads and fences

South Africa designated its first Industrial Development Zone (IDZ) in 2001. IDZs offer duty-free import of production-related materials and zero VAT on materials sourced from South Africa, along with the right to sell in South Africa upon payment of normal import duties on finished goods. Expedited services and other logistical arrangements may be provided for small to medium-sized enterprises or for new foreign direct investment. Co-funding for infrastructure development is available from DTIC. There are no exemptions from other laws or regulations, such as environmental and labor laws. The Manufacturing Development Board licenses IDZ enterprises in collaboration with the SARS, which handles IDZ customs matters. IDZ operators may be public, private, or a combination of both. There are currently five IDZs in South Africa: Coega IDZ, Richards Bay IDZ, Dube Trade Port, East London IDZ, and Saldanha Bay IDZ. South Africa also has SEZs focused on industrial development. The SEZs encompass the IDZs but also provide scope for economic activity beyond export-driven industry to include innovation centers and regional development. There are six SEZs in South Africa: Atlantis SEZ, Nkomazi SEZ, Maliti-A-Phofung SEZ, Musina/Makhado SEZ, Tshwane SEZ, and O.R. Tambo SEZ. The broader SEZ incentives strategy allows for 15 percent Corporate Tax as opposed to the current 28 percent, Building Tax Allowance, Employment Tax Incentive, Customs Controlled Area (VAT exemption and duty free), and Accelerated 12i Tax Allowance. For more detailed information on SEZs, please see: 

The GoSA does not impose forced localization. However, authorities incentivize the use of local content in goods and technology. In 2021, President Ramaphosa and DTIC Minister Ebrahim Patel announced that South Africa will expand existing localization measures to reboot the economy. DTIC released a policy statement on localization in May 2021. The localization plan’s cornerstone is the implementation of a scheme to substitute 20 percent of imports, or approximately R20 billion (USD 1.3 billion) across selected categories with local goods by 2025. For instance, the industrial master plan for textiles set a goal that 60 percent of all clothing sold in South Africa will be locally manufactured by 2030. Preferential procurement is applied uniformly to both domestic and foreign investors. The GoSA’s B-BBEE requirements, however, make it difficult for foreign investors to score well on the “ownership” element of the B-BBEE scorecard due to corporate rules that can prevent the transfer of discounted equity stakes to South African subsidiaries. Although the GoSA created the EEIP for international companies that cannot meet the ownership element of B-BBEE through the direct sale of equity to local investors, some companies claim that the reporting requirements and high level of required financial contributions make the EE program unviable.

A Draft National Data and Cloud Policy, released by the GoSA in April 2021, seeks to put the GoSA at the heart of data control, ownership, and distribution in South Africa.  The draft policy proposed a series of government interventions, including the establishment of a new state-owned enterprise to manage government-owned and controlled networks. It aims to consolidate excess capacity of publicly funded data centers and deliver processing, data facilities and cloud computing capacity. The GoSA plans to develop ICT special economic zones, hubs and transformation centers. The draft policy seeks to impose data localization requirements and defines data localization as the “…requirements for the physical storage of data within a country’s national boundaries, although it is sometimes used more broadly to mean any restrictions on cross border data flows.” The draft policy provides inter alia that: data generated in South Africa shall be the property of South Africa, regardless of where the technology company is domiciled; ownership and control of personal information and data shall be in line with the Protection of Personal Information Act (POPIA); DTIC through the CIPC and the National Intellectual Property Management Office (NIPMO) shall develop a policy framework on data generated from intellectual activities including sharing and use of such data. The POPIA entered fully into force in July 2021 and regulates how personal information may be processed and under which conditions data may be transferred outside of South Africa. Currently, there is no requirement for foreign information technology providers to turn over source code or provide access to surveillance. However, compliance burdens may be significant.  The Department of Communications and Digital Technologies is responsible for developing ICT policies and legislation. The Independent Communications Authority of South Africa is the regulatory body which regulates the telecommunications sector.

5. Protection of Property Rights

The South African legal system protects and facilitates the acquisition and disposition of all property rights (e.g., land, buildings, and mortgages). Deeds must be registered at the Deeds Office. Banks usually register mortgages as security when providing finance for the purchase of property. Foreigners may purchase and own immovable property in South Africa without any restrictions since they are generally subject to the same laws as South African nationals. Foreign companies and trusts are also permitted to own property in South Africa if they are registered in South Africa as an external company. Since South Africa does not have formal land audits, the proportion of land that does not have clear title is unknown. If property legally purchased is unoccupied, property ownership does not revert back to other owners such as squatters. However, squatters are known to occupy properties illegally and may rent the properties to unsuspecting tenants when there are absentee landowners.

South Africa enforces intellectual property rights through civil and criminal procedures. It is a member of the World Intellectual Property Organization (WIPO) and in the process of acceding to the Madrid Protocol. It is also a signatory to the WTO’s Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS). Generally, South Africa is considered to have a strong domestic legal framework for protecting intellectual property (IP). Enforcement can be spotty due to lack of resources for additional law enforcement and market surveillance support. However, South African authorities work closely with rights holders and with international stakeholders to address IP violations. Bringing cases to criminal court is costly, with most of the burden placed on rights holders to develop the evidence needed for prosecutions; however, civil and criminal remedies are available. South Africa has not been named in the Special 301 or the notorious market report; however, there are yearly submissions requesting South Africa’s inclusion, primarily based on delays in burdens in patent and trademark registration, draft copyright legislation under review in Parliament described below and increasing counterfeit activity in certain business districts. South Africa does not track seizures of counterfeit goods writ-large, though CIPC and law enforcement agencies release periodic reports on significant raids and media coverage in major metro areas reports on major seizures.

Owners of patents and trademarks may license them locally, but when a patent license entails the payment of royalties to a non-resident licensor, DTIC must approve the royalty agreement. Patents are granted for twenty years, usually with no option to renew. Trademarks are valid for an initial period of ten years, renewable for additional ten-year periods. A patent or trademark holder pays an annual fee to preserve ownership rights. All agreements relating to payment for applicable rights are subject to South African Reserve Bank (SARB) approval. A royalty of up to four percent is the standard for consumer goods and up to six percent for intermediate and finished capital goods.

Literary, musical, and artistic works, as well as cinematographic films and sound recordings, are eligible for protection under the Copyright Act of 1978. New designs may be registered under the Designs Act of 1967, which grants copyrights for five years. The Counterfeit Goods Act of 1997 provides additional protection to owners of trademarks, copyrights, and certain marks under the Merchandise Marks Act of 1941. The Intellectual Property Laws Amendment Act of 1997 amended the Merchandise Marks Act of 1941, the Performers’ Protection Act of 1967, the Patents Act of 1978, the Copyright Act of 1978, the Trademarks Act of 1993, and the Designs Act of 1993 to bring South African intellectual property legislation into line with TRIPS. To modernize its intellectual property rights (IPR) regime further, DTIC introduced the Copyright Amendment Bill (CAB) and the Performers’ Protection Amendment Bill (PPAB). The bills remain under Parliamentary review after being returned by President Ramaphosa in June 2020 on constitutional grounds. Stakeholders have raised several concerns, including the CAB bill’s application of “fair use,” and clauses in both bills that allow DTIC Minister to set royalty rates for visual artistic work or equitable renumeration for direct or indirect uses of copyrighted works. Additional changes to South Africa’s IPR regime are under consideration through a draft DTIC policy document, Phase 1 of the Intellectual Property Policy of the Republic of South Africa; however, draft legislation has not yet been released.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at 

6. Financial Sector

South Africa recognizes the importance of foreign capital in financing persistent current account and budget deficits, and South Africa’s financial markets are regarded as some of the most sophisticated among emerging markets. A sound legal and regulatory framework governs financial institutions and transactions. The fully independent SARB regulates a wide range of commercial, retail and investment banking services according to international best practices, such as Basel III, and participates in international forums such as the Financial Stability Board and G-20 Finance Ministers and Central Bank Governors. The JSE serves as the front-line regulator for listed firms but is supervised by the Financial Services Board (FSB). The FSB also oversees other non-banking financial services, including other collective investment schemes, retirement funds and a diversified insurance industry. The GoSA has committed to tabling a Twin Peaks regulatory architecture to provide a clear demarcation of supervisory responsibilities and consumer accountability and to consolidate banking and non-banking regulation.

South Africa has access to deep pools of capital from local and foreign investors that provides sufficient scope for entry and exit of large positions. Financial sector assets are more than GDP by approximately 48 percent, and the JSE is the largest on the continent with market capitalization of approximately USD 1.282 billion as of October 2021 and 442 companies listed on the main, alternative, and other smaller boards as of January 2021. Non-bank financial institutions (NBFI) hold about two thirds of financial assets. The liquidity and depth provided by NBFIs make these markets attractive to foreign investors, who hold more than a third of equities and government bonds, including sizeable positions in local-currency bonds. A well-developed derivative market and a currency that is widely traded as a proxy for emerging market risk allows investors considerable scope to hedge positions with interest rate and foreign exchange derivatives.

SARB’s exchange control policies permit authorized currency dealers, to buy and borrow foreign currency freely on behalf of domestic and foreign clients. The size of transactions is not limited, but dealers must report all transactions to SARB. Non-residents may purchase securities without restriction and freely transfer capital in and out of South Africa. Local individual and institutional investors are limited to holding 25 percent of their capital outside of South Africa.

Banks, NBFIs, and other financial intermediaries are skilled at assessing risk and allocating credit based on market conditions. Foreign investors may borrow freely on the local market. In recent years, the South African auditing profession has suffered significant reputational damage with allegations that two large foreign firms aided, and abetted irregular client management practices linked to the previous administration or engaged in delinquent oversight of listed client companies. South Africa’s WEF competitiveness rating for auditing and reporting fell from number one in the world in 2016, to number 60 in 2019.

South African banks are well capitalized and comply with international banking standards. There are 19 registered banks in South Africa and 15 branches of foreign banks. Twenty-nine foreign banks have approved local representative offices. Five banks – Standard, ABSA, First Rand (FNB), Capitec, and Nedbank – dominate the sector, accounting for over 85 percent of the country’s banking assets, which total over USD 390 billion. SARB regulates the sector according to the Bank Act of 1990. There are three alternatives for foreign banks to establish local operations, all of which require SARB approval: separate company, branch, or representative office. The criteria for the registration of a foreign bank are the same as for domestic banks. Foreign banks must include additional information, such as holding company approval, a letter of comfort and understanding from the holding company and a letter of no objection from the foreign bank’s home regulatory authority. More information on the banking industry may be found at .

The Financial Sector Conduct Authority (FSCA) is the dedicated market conduct authority in South Africa’s Twin Peaks regulatory model implemented through the Financial Sector Regulation Act. The FSCA’s mandate includes all financial institutions that provide a financial product and/or a financial service as defined in the Financial Sector Regulation Act. The JSE Securities Exchange South Africa, the sixteenth largest exchange in the world measured by market capitalization, enjoys the global reputation of being one of the best regulated. Market capitalization stood at USD 1.282 billion as of October 2021, with 442 firms listed. The Bond Exchange of South Africa (BESA) is licensed under the Financial Markets Control Act. Membership includes banks, insurers, investors, stockbrokers, and independent intermediaries. The exchange consists principally of bonds issued by the GoSA, state-owned enterprises, and private corporations. The JSE acquired BESA in 2009. More information on financial markets may be found at . Non-residents can finance 100 percent of their investment through local borrowing. A finance ratio of 1:1 also applies to emigrants, the acquisition of residential properties by non-residents, and financial transactions such as portfolio investments, securities lending and hedging by non-residents.

Although President Ramaphosa and the finance minister announced in February 2020 the aim to create a Sovereign Wealth Fund, no action has been taken.

7. State-Owned Enterprises

State-owned enterprises (SOEs) play a significant role in the South African economy in key sectors such as electricity, transport (air, rail, freight, and pipelines), and telecommunications. Limited competition is allowed in some sectors (e.g., telecommunications and air). The GoSA’s interest in these sectors often competes with and discourages foreign investment.

There are over 700 SOEs at the national, provincial, and local levels. Of these, seven key SOEs are overseen by the Department of Public Enterprises (DPE) and employee approximately 105,000 people. These SOEs include Alexkor (diamonds); Denel (military equipment); Eskom (electricity generation, transmission, and distribution); Mango (budget airlines); South African Airways (national carrier); South African Forestry Company (SAFCOL); and Transnet (transportation). For other national-level SOEs, the appropriate cabinet minister acts as shareholder on behalf of the state. The Department of Transport, for example, oversees South African’s National Roads Agency (SANRAL), Passenger Rail Agency of South Africa (PRASA), and Airports Company South Africa (ACSA), which operates nine of South Africa’s airports. The Department of Communications oversees the South African Broadcasting Corporation (SABC). A list of the seven SOEs that are under the DPE portfolio are found on the DPE website at: . The national government directory contains a list of 128 SOEs at: .

SOEs under DPE’s authority posted a combined loss of R13.9 billion (USD 0.9 billion) in 2019 (latest data available). Many are plagued by mismanagement and corruption, and repeated government bailouts have exposed the public sector’s balance sheet to sizable contingent liabilities. The debt of Eskom alone represents about 10 percent of GDP of which two-thirds is guaranteed by government, and the company’s direct cost to the budget has exceeded nine percent of GDP since 2008/9.

Eskom, provides generation, transmission, and distribution for over 90 percent of South Africa’s electricity of which 80 percent comes from 15 coal-fired power plants. Eskom’s coal plants are an average of 41 years old, and a lack of maintenance has caused unplanned breakdowns and rolling blackouts, known locally as “load shedding,” as old coal plants struggle to keep up with demand. Load shedding reached a record 1136 hours as of November 30, 2021, costing the economy an estimated USD eight billion and is expected to continue for the next several years until the GoSA can increase generating capacity and increase its Energy Availability Factor (EAF). In October 2019 the DMRE finalized its Integrated Resource Plan (IRP) for electricity, which outlines South Africa’s policy roadmap for new power generation until 2030, which includes replacing 10,000 MW of coal-fired generation by 2030 with a mix of technologies, including renewables, gas and coal. The IRP also leaves the possibility open for procurement of nuclear technology at a “scale and pace that flexibly responds to the economy and associated electricity demand” and DMRE issued a Request for Information on new nuclear build in 2020. In accordance with the IRP, the GoSA approved the procurement of almost 14,000 MW of power to address chronic electricity shortages. The GoSA held the long-awaited Bid Window 5 (BW5) of the Renewable Energy Independent Power Producer Procurement Program (REIPPPP) in 2021, the primary method by which renewable energy has been introduced into South Africa. The REIPPPP relies primarily on private capital and since the program launched in 2011 it has already attracted approximately ZAR 210 billion (USD 14 billion) of investment into the country. All three major credit ratings agencies have downgraded Eskom’s debt following Moody’s downgrade of South Africa’s sovereign debt rating in March 2020, which could impact investors’ ability to finance energy projects.

Transnet National Ports Authority (TNPA), the monopoly responsible for South Africa’s ports, charges some of the highest shipping fees in the world. High tariffs on containers subsidize bulk shipments of coal and iron. According to the South African Ports Regulator, raw materials exporters paid as much as one quarter less than exporters of finished products. TNPA is a division of Transnet, a state-owned company that manages the country’s port, rail, and pipeline networks. In May 2020 S&P downgraded Transnet’s local currency rating from BB to BB- based on a generally negative outlook for South Africa’s economy rather than Transnet’s outlook specifically.

South Africa’s state-owned carrier, South African Airways (SAA), entered business rescue in December 2019 and suspended operations indefinitely in September 2020. The pandemic exacerbated SAA’s already dire financial straits and complicated its attempts to find a strategic equity partner to help it resume operations. Industry experts doubt the airline will be able to resume operations. United Airlines and Delta Air Lines provide regular service between Atlanta (Delta) and Newark (United) to Johannesburg and Cape Town.

The telecommunications sector, while advanced for the continent, is hampered by poor implementation of the digital migration. In 2006, South Africa agreed to meet an International Telecommunication Union deadline to achieve analogue-to-digital migration by June 1, 2015. The long-delayed migration is scheduled to be completed by the end of March 2022, and while potential for legal challenges remain, most analysts believe the migration will be completed in 2022. The independent communications regulator initiated a spectrum auction in September 2020, which was enjoined by court action in February 2021 following suits by two of the three biggest South African telecommunications companies. After months of litigation, the regulator agreed to changes some terms of the auction, and the auction took place successfully in March 2022. One legal challenge remains, however, as third-largest mobile carrier Telkom has alleged the auction’s terms disproportionately favored the two largest carriers, Vodacom and MTN. Telkom’s case is due to be heard in April 2022, and its outcome will determine whether the spectrum allocation will proceed.

The GoSA appears not to have fulfilled its oversight role of ensuring the sound governance of SOEs according to OECD best practices. The Zondo Commission of Inquiry into allegations of state capture in the public sector has outlined corruption at the highest echelons of SOEs such as Transnet, Eskom, SAA and Denel and provides some explanation for the extent of the financial mismanagement at these enterprises. The poor performance of SOEs continues to reflect crumbling infrastructure, poor and ever-changing leadership, corruption, wasteful expenditure and mismanagement of funds.

The GoSA has taken few concrete actions to privatize SOEs; on the contrary, even minor reorganizations are roundly criticized as attempts to privatize state assets. Meanwhile, failing SOEs like PRASA are propped up by the fiscus. In 2021, the GoSA sought to sell a controlling 51 percent interest in South African Airways to a bespoke consortium funded in large part by the Public Investment Corporation, which controls investments of state pensions. A year later, however, the airline remains under government control because critical terms of the deal, including the sale price, have not been agreed upon. Transnet, Eskom, and defense contractor Denel have been subjects of various reorganization plans, but ultimately remain accountable to Cabinet shareholders.

President Ramaphosa, during his February 10, 2022, State of the Nation Address (SONA), announced that the cabinet had approved amendments to the Electricity Regulations Act (ERA) that would liberalize South African electricity markets. The amendment provides changes to definitions that will enable the legal framework for a liberalized energy market and allow for a more competitive and open electricity market in the country including the establishment of a Transmission System Operator, a necessary part of state-owned utility Eskom’s unbundling process. The Eskom generation and distribution divisions are set to be restructured by December 2022. The market structure in the bill provides for a shift to a competitive multimarket electricity supply industry, which represents a significant departure from South Africa’s long-standing vertically integrated model monopolized by Eskom. According to a press release from the DMRE, the changes will provide for “an open market that will allow for non-discriminatory, competitive electricity-trading platform.”

South Sudan

Executive Summary

Trade and investment conditions in South Sudan improved slightly in the past year, but many challenges remain. The Revitalized Transitional Government of National Unity (R-TGoNU) continued to implement the 2018 Revitalized Agreement on the Resolution of the Conflict in the Republic of South Sudan (R-ARCSS), although key provisions on security, governance, and transitional justice remain outstanding. The transitional government continued implementing public financial management (PFM) reforms including stabilizing the South Sudanese Pound (SSP).

In its February 2022 report entitled “ Towards a Jobs Agenda,” the World Bank provided a “cautiously positive” forecast the economy could grow by 3.5 to 5.0 percent in productive sectors including household processing and artisanal production “if the peace process holds.” However, peace agreement implementation is significantly behind schedule. The country remains plagued by large-scale population displacement, widespread food insecurity, restricted humanitarian access, harassment of aid workers and journalists, and catastrophic flooding for the third straight year.

The South Sudan economy is highly dependent on oil-revenue. The transitional government did not institute any new programs in the past year to diversify the country’s economy. South Sudan’s oil sector is fraught with corruption and mismanagement. The country’s oil-producing firms and the Ministry of Petroleum remain on the U.S. Department of Commerce Bureau of Industry and Security (BIS) Entity List . The U.S. government assesses the 15 entities BIS added to the Entity List are contributing to the ongoing crisis in South Sudan “because they are a source of substantial revenue that, through public corruption, is used to fund the purchase of weapons and other material that undermine the peace, security, and stability of South Sudan rather than support the welfare of the South Sudanese people.”

Corruption and malfeasance extend beyond the oil sector. Transparency International ranked South Sudan the world’s most corrupt country in its 2021 rankings . Additionally, a September 2021 UN Human Rights Commission report highlighted the link between South Sudan’s human rights violations and economic crimes.

Humanitarian and development aid is a major source of employment. The difficulties humanitarian service providers face of arbitrary and conflicting regulations, multiple layers of taxation, airport and border obstructions, labor harassment, and looting of warehouses demonstrate what private investors can expect to encounter.

The legal system is underfunded, dysfunctional, and subject to corrupt practices and interference. Government entities do not enforce laws equitably or consistently. Corrupt government officials operate with impunity. The legal framework governing investment and private enterprises remains underdeveloped. Contract dispute litigants are sometimes arrested and imprisoned until they agree to pay a financial settlement even when never charged an offense or brought to court.

Other factors inhibiting investment in South Sudan include a lack of skilled and unskilled labor and limited physical infrastructure riddled with arbitrary checkpoints. The International Peace Information Service (IPIS) published a December 2021 report  that found checkpoints make transport in South Sudan among the most expensive in the world.

The U.S. Department of State maintains a Do Not Travel Advisory for South Sudan due to crime, kidnapping, and armed conflict.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 180 of 180
Global Innovation Index 2021 N/A
U.S. FDI in partner country ($M USD, historical stock positions) 2021 N/A
World Bank GNI per capita 2015 1,090

1. Openness To, and Restrictions Upon, Foreign Investment

The Ministry of Investment continued to refine South Sudan’s investment policies in 2021 and into 2022 to increase opportunities for international investors. The Council of Ministers approved some of those investment policies in September 2021, including re-establishing directorates to manage administration and finance, research and planning, investment promotion, service, and investment coordination at the state level.

The government seeks to unlock South Sudan’s economic potential and boost diversified growth by facilitating investment in economic priority sectors such as agriculture, transport infrastructure, petroleum, mining, and energy. But while the government claims to have such incentives, it is difficult to take advantage of them.

In theory the Ministry of Investment has a One Stop Shop Investment Center. However, both organizations are poorly resourced and neither maintains an active website. The ministries that handle company registration include the Ministry of Trade and Industry, Ministry of Investment, Ministry of Finance, and Ministry of Justice. There is no single window registration process, and an investor must visit all the above-mentioned agencies to complete the registration of a company. It is estimated that the registration process could take several months with companies routinely approached to provide bribes to move the process forward. Because registering a business in South Sudan is a lengthy, laborious process involving multiple national, state, and local entities, the Chamber of Commerce recommends hiring a local lawyer to register a business.

South Sudan is a member of the African Trade and Insurance Agency , which provides export insurance and other assistance to foreign investors and traders. Local lawyers, some of whom are listed in the Legal Assistance section of the U.S. Embassy Juba website, are willing to advise investors and guide them through the registration process, for a fee. South Sudan’s Chamber of Commerce is government-run with a government-employed director and private business chairpersons whose business interests are linked to government contracts. There is no ombudsman.

Despite these resources, foreign investors continue reporting unfair practices including expropriation of assets, unpredictable tax policies, harassment by security services, extortion attempts, and inconsistent results in legal proceedings and labor disputes.

Years of conflict and internal displacement have left a complex land rights picture with many properties occupied by squatters or soldiers. Land-based ventures often encounter pre-existing ownership claims and, therefore, claims on royalties or rents. There is no title insurance and no formal way to determine ownership outside of current possession. Under the 2009 Land Act, non-citizens may lease – not own – land in South Sudan. Under the Tax Exemptions and Concessions schedule of the 2009 Investment Promotion Act, foreign investors may lease agricultural land for 30-60 years with the possibility of renewal while mining leases may not exceed the life of the mine or quarry.

The 2012 South Sudan Companies Act allows non-South Sudanese to invest in medium and large size companies on the condition a South Sudanese has at least a 31 percent share. Government officials will not issue a business license to a foreign investor without such a local shareholder. Foreign companies that want to establish a subsidiary in South Sudan are not subject to local shareholder requirements. Private security companies operating in South Sudan must have a South Sudanese citizen hold a 51 percent share of the company pursuant to the 2013 Private Security Companies Rules and Regulations. Extractives sector companies must have a South Sudanese national as part owner, but the exact percentage of ownership required is unclear.

According to the 2009 Investment Act, foreign investors must apply for an investment certificate from the Ministry of Investment to ensure the project will benefit South Sudan’s society and economy. The government does not make public statements about how it screens applications. Investors must rely on the Act’s language. The Ministry of Investment began issuing a new type of investment certificate in February 2022 citing malpractices and forgeries with older versions.

The Third Schedule of the 2009 Investment Act states South Sudanese will receive preferential treatment if they invest in micro-enterprises, postal services, car hire and taxi operations, public relations, retail, and security services, and the cooperative services.

The last time a third-party conducted an investment policy review was the 2016 East African Community’s assessment. South Sudan is yet to harmonize its internal laws to conform to the East African Community plans for regional integration.

An investor looking to establish a business in South Sudan may spend months interacting with the Ministries of Investment, Justice, Trade and Industry, and Finance and Planning. The 2009 Investment Promotion Act requires the Ministry of Investment to create a “One Stop Shop” investment center, but there is still no active website for this center. The Ministry of Justice established a business registration website ( ) in 2021 offered through the government’s broader  platform. There is little information regarding how effective this new registration process is due to the platform’s newness. Investors may still need to hire a local lawyer to register a business.

South Sudan does not have a formal mechanism to promote or incentivize outward investment nor does it restrict domestic investors from investing abroad. However, due to the lack of banking services, it is difficult for investors to move money outside the country.

4. Industrial Policies

The 2009 Investment Promotion Act provides tax exemptions ranging from 20 to 100 percent of the cost of eligible research and capital expenditures, deductible annual allowances ranging from 20 to 40 percent of the cost of certain equipment, and depreciation allowances on certain assets ranging from 8 to 10 percent. A foreign tax credit is available to any resident company paying foreign taxes on income from business activities outside South Sudan. In practice, the exact incentive structure is unclear due to irregular enforcement.

The Ministry of Finance and Planning has the legal authority to approve tax exemptions.

The government previously used future oil deliveries to attract finance and contract foreign direct investment projects, but in 2021 the Council of Ministers agreed to cease this practice as part of reforms it agreed to with the International Monetary Fund (IMF) and World Bank. However, due to a lack of transparency in government procurement and finance, it is unclear to what extent the country’s oil production has already been leveraged through past decisions collateralized against future oil production.

There are currently no special incentives for businesses owned by underrepresented investors such as women.

The government does not offer incentives for clean energy investment and in early 2022 had a land dispute with a solar company looking to invest in South Sudan causing delays and possible future cancelation of the project.

South Sudan has not established any free trade zones.

The 2017 Labor Act requires 80 percent of staff at different levels of management to be South Sudanese nationals. Additionally, authorities in some localities attempt to force NGOs to hire employees from the specific area or from a specific ethnic group even though the law does not require this. The Labor Act does not specifically discuss senior management and boards of directors. The government requires work permit fees for foreign nationals. These are typically several thousand dollars per employee, but the exact amounts change regularly. Foreigners are also subject to a variety of registration requirements, which also change frequently and unpredictably. In February 2022, the Ministry of Petroleum approved a Unified Human Resources Policy Manual which will standardize salary structures for personnel working in the oil sector.

The 2009 Investment Promotion Act states that when the Ministry of Investment evaluates an application for an investment certificate, the Ministry must consider whether the investment will generate tax revenues, create jobs, and provide new skills for the people of South Sudan. The Investment Act applies these requirements equally to domestic and foreign investors. The Ministry may also consider whether the investment will provide South Sudan with new technology through transfers, use local raw materials and supplies, and contribute to the local community. The Ministry of Investment may revoke an investment certificate due to breach of performance requirements with 30 days’ notice. There are no provisions regarding adjustments to performance requirements.

There are no known requirements for foreign IT providers to turn over source code or provide access to encryption. There are no known prohibitions on transferring customer or other business data outside the country. There are no known rules requiring data storage within the country.

5. Protection of Property Rights

There was no progress in 2021 towards comprehensive land reform. There are no laws on mortgages, valuation, or the registration of titles. The 2009 Land Act and the 2009 Investment Promotion Act both state that non-citizens can lease land for investment purposes. However, foreign ownership of land is prohibited and there are no clear regulations governing how a business can access land for investment use.

Years of war and recurring natural disasters created increased uncertainty regarding land tenure. According to USAID’s January 2022 South Sudan Complex Emergency Fact Sheet , 4.3 million South Sudanese are internally or internationally displaced from their homes. During the five-year civil war, people illegally occupied land and most remain there. While the rightful owners may hold clear land titles, the legal system is not equipped to handle their claims.

Ownership of land is generally unclear, with communities and government often claiming the same property. Land grabbing accusations are common. Property owners or public authorities may try to evict unauthorized occupants under the Land Act, but doing so frequently leads to violent clashes. For example, in December 2021 in Juba law enforcement fired on residents who resisted demolition of their homes resulting in three people killed. The government claimed the evicted residents had built their homes on illegally acquired land. President Kiir formed a committee in 2021 to review land grabbing in Juba, but the committee has not released their findings.

The 2014 World Bank-funded South Sudan Country Report Findings of the Land Governance Assessment Framework  concluded South Sudan’s underdeveloped legal and institutional framework reflects the difficulties the country faces in establishing effective governance and rule of law institutions after decades of conflict. The report’s conclusions remain accurate and, given the fighting since, perhaps understated the complexity of problem. Most land governance institutions operate according to procedures developed in the colonial era, and there is a wide divergence between law and practice. Bridging this gap has been one of the most difficult challenges of the post-independence period. Poor coordination between different levels of government undermines property rights enforcement.

Some businesses lease land from the government, while others lease directly from local communities and/or individuals. Under the Land Act, investment in land acquired from local communities must contribute economically and socially to the development of the local community. Businesses will often sign a memorandum of understanding with the local communities in which they agree to employ locals or invest in social services in exchange for use of the land. Land negotiations can take months or years to complete.

The legal structure for intellectual property rights (IPR) is weak and enforcement is lax. Recorded instances of intellectual property theft are rare due to lack of capacity. While the 2009 Investment Promotion Act includes an article on the protection of IPR, neither the legislature nor any government ministry implemented laws or regulations governing trademarks, copyrights, or patents. The government did not enact any new IP-related laws or regulations in 2021. To date, the only intellectual property law South Sudan has is the 2013 Trade Marks Bill (sic).

South Sudan does not track or seize counterfeit goods. There has been no known prosecution of IPR violations and there are no estimates available for traffic of counterfeit goods.

South Sudan is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .

6. Financial Sector

South Sudan does not have a functioning stock market or any other system of exchange for financial assets.

It is difficult for foreign investors to obtain credit on the local market due to the shortage of hard currency, the inability to obtain reliable figures or audited accounts, the absence of a credit reference bureau, and South Sudan’s failure to document land ownership properly. Banks are often unwilling to lend because they claim lenders receive inadequate legal protection and because South Sudan lacks verifiable state or national personal identification methods, making most borrowers high risk.

Depositors are still reluctant to deposit money in banks after the Bank of South Sudan in 2015 confiscated commercial banks’ deposits at the central bank and diverted then to the government, making it difficult or impossible for companies and individuals to access their funds.

The Bank of South Sudan issued treasury bills briefly between 2016 and 2017 and said it would issue them again in 2020, but still has not.

The Bank of South Sudan, the central bank, has limited assets and functions more as a commercial bank servicing the federal governments’ transactions; however, in 2021 ongoing public financial management reforms implemented by the Bank of South Sudan led to a change in monetary policy. The central bank helped stabilize the South Sudanese Pound through currency auctions.

The banking sector faces significant challenges because of U.S. and United Nations sanctions against certain South Sudanese entities and individuals. South Sudan is on the Financial Action Task Force’s (FATF) “grey list,” meaning FATF increased its monitoring due to South Sudan’s deficiencies in countering money laundering and terrorist financing.

South Sudan’s banking sector is small and underdeveloped with limited use of demand deposits and few foreign banks. Analysts believe many domestic banks are undercapitalized.

South Sudan is one of the most underbanked countries. Most people hold their savings in cash. Banks usually only lend to businesses with well-documented contracts with international organizations.

There are two main mobile payment providers: mGurush and Nilepay. However, users of these platforms must have a bank account, which over 90 percent of South Sudanese do not have.

There are no known restrictions on a foreigner’s ability to establish a bank account.

The 2013 Petroleum Revenue Management Act created a Petroleum Revenue Savings Fund consisting of two accounts into which the government was to deposit oil revenues. One was the Oil Revenue Stabilization Account, which was to receive 10 percent of oil revenues and serve as a buffer against volatility in oil prices in South Sudan’s budgeting process. The other was the Future Generation Fund, which was to receive 15 percent of oil proceeds and serve as a repository for funds meant to help future generations transition to a post-oil economy. To date, however, neither has received any financing despite the government sometimes including allocations to these accounts in the budget process.

The revenue sharing provisions in the 2013 Petroleum Revenue Management Act require the national government to distribute two percent of oil revenue to oil-producing states and three percent to local oil-producing communities. There are no publicly available documents that explain how the states and localities use those funds or whether the funds are actually provided.

None of these wealth funds follow the voluntary code of good practices for transparency and accountability known as the Santiago Principles. South Sudan does not participate in the International Forum of Sovereign Wealth Funds.

7. State-Owned Enterprises

The Nile Petroleum Corporation (Nilepet) is the primary SOE in South Sudan. The government, through Nilepet, holds minority stakes in other oil producing joint ventures operating in South Sudan. The 2013 Petroleum Revenue Management Act governs how Nilepet’s profits are invested, but Nilepet does not release information on its activities, even though Chapter IX of the 2013 Petroleum Revenue Management Act states comprehensive, audited reports on the company’s finances must be made publicly available. Nilepet’s revenues and expenditures are not disclosed in the central government budget.

Nilepet’s director does not report to the Minister of Petroleum and the government is not transparent about how it exercises ownership or control of Nilepet.

Nilepet is on the U.S. Department of Commerce Bureau of Industry and Security (BIS) Entity List. See 83 FR 12475 .

The government also owns stakes in construction and trade companies and several banks. It is difficult to obtain information on the number, total income, and employment figures of SOEs in South Sudan. There is no published list of SOEs.

The country does not adhere to the OECD Guidelines on Corporate Governance for SOEs.

South Sudan does not have a privatization program.


Executive Summary

Following the end of the 30-year regime of Omar Bashir in 2019, Sudan’s military and a coalition of civilian opposition groups agreed to a three-year power-sharing agreement under the Civilian-Led Transitional Government (CLTG) that was to culminate with a popularly elected government in 2022. The clock on that agreement was reset to 2024 with the integration of former armed opposition groups into the CLTG following the signing of the Juba Peace Agreement on October 3, 2020. The transition ended abruptly on October 25, 2021, when the country’s military, led by General Abdul Fattah al-Burhan, seized power and ousted the CLTG, including Prime Minister Abdalla Hamdok. The military takeover precipitated a political crisis that continues into 2022. Sudanese citizens, angered and frustrated by the military’s seizure of power, initiated a series of regular nationwide protests demanding a return to civilian rule. In January 2022, the United Nations Integrated Transition Assistance Mission in Sudan (UNITAMS) launched a mediation effort aimed at bringing together a broad range of civilian actors to begin negotiations on a political solution to restore Sudan’s democratic transition; the African Union and Intergovernmental Authority on Development later joined that effort.

During its two-year administration, the CLTG initiated a series of political, economic, and legal reforms. In cooperation with the International Monetary Fund (IMF), the government pursued a program that reduced or eliminated several costly subsidy programs, improved fiscal discipline and public financial management, adopted currency and tariff reforms, and launched a revision of its commercial laws. The international community, under U.S. government leadership, took actions to dramatically reduce Sudan’s outstanding $56 billion international debt by paying off debt arrears owed to International Financial Institutions and organizing debt relief among creditors nations. A popularly supported “Dismantling Committee,” in concert with the Ministry of Justice, was intended to root out corruption, identify and seize illegally obtained assets, and return much of the national wealth that was spirited out of the country by Bashir-era cronies.

The October 25 military takeover stalled most CLTG reform efforts and threatens to reverse the gains of the previous two years. Sudan’s current military leadership dismissed most of the civilian ministers, including the Prime Minister, appointing in their place “caretaker” ministers absent legal authority to do so. The international community has imposed significant costs on Sudan’s military regime for its actions. The United States has paused all non-humanitarian assistance to Sudan, and much assistance from bilateral donors and International Financial Institutions also remain paused. The United States government has been clear that the only path to restoring financial assistance is predicated on restoring Sudan’s democratic transition. The ongoing political turmoil has produced economic uncertainty, a depreciating national currency, price increases, and shortages of grain, fuel, medicine, and other imported commodities.

The sectors of greatest interest to foreign investors remain mineral extraction (primarily gold, non-precious metals, oil, and natural gas) and agriculture. Sudan’s infrastructure is in significant need of modernization and expansion. Many American companies have inquired about investment opportunities and visited Sudan with an expressed interest in direct investment and promotion of U.S. products. The Sudanese have expressed a robust interest in obtaining U.S. goods, services, technologies, and training/capacity building programs. However, a lack of domestic investment capital, poor infrastructure, burdensome bureaucracy, endemic corruption, and low household incomes create challenges for any company considering the Sudanese market.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 164 of 175 
Global Innovation Index 2021 N/A 
U.S. FDI in partner country ($M USD, historical stock positions) 2021 N/A 
World Bank GNI per capita 2020 $650 

1. Openness To, and Restrictions Upon, Foreign Investment

The Sudanese government eagerly encourages foreign direct investment (FDI). The Ministry of Investment and International Cooperation acts as the government’s investment promotion agency for foreign investors seeking to initiate projects that include domestically produced content. The Ministry offers, depending on the type of project, a range of tax incentives, customs exclusions, and land grants to attract investment. The Ministry provides “single window” service for potential investors who submit project proposals and feasibility studies for review and possible approval. Project proposals are reviewed by officials and technical experts from related ministries. Potential investors are informed in writing of decisions to approve or reject project proposals.

The Investment Encouragement Act of 2021 establishes equal treatment to foreign and domestic business owners, allowing foreign investors to own business enterprises in Sudan. [Note: The law is new and its applicability untested. Officials at the Ministry of Investment and International Cooperation strongly encourage foreign investors to engage with a Sudanese partner when considering entering the market.] The Act requires foreign investors to deposit at least $250,000 to obtain a business license. Furthermore, it clarifies the definitions of the various types of investment projects which were regulated in the 2013 Act, including state projects, investment projects, national projects, and strategic projects.

There are foreign investment restrictions in the transportation sector, specifically in railway, freight transportation, inland waterways barge service, and airport operations. Most telecommunications and media, including television broadcasting and newspaper publishing, are closed to foreign capital participation. Foreign ownership is also restricted in the electrical power generation and financial services sectors. In addition to those overt statutory ownership restrictions, a comparatively large number of sectors are dominated by government monopolies, including those mentioned above. Such monopolies, together with a high perceived difficulty of obtaining required operating licenses, make it more difficult for foreign companies to invest.

Sudan has not undergone any third-party investment policy reviews (IPR) through the Organization of Economic Cooperation and Development (OECD), the World Trade Organization (WTO), or the UN Conference on Trade and Development (UNCTAD) in the last five years.  No civil society organization, including those based in the host country or in third countries, have published reviews of investment policy-related concerns. UNCTAD’s last IPR of Sudan was in 2015.

In late 2020, the CLTG launched a series of economic reforms designed to meet the benchmarks established under the IMF’s Staff Monitored Program (SMP). The SMP focused on addressing major macroeconomic imbalances caused by decades of mismanagement, laying the groundwork for inclusive growth, and establishing a track record of sound policies required for debt relief. The CLTG subsequently enacted structural reforms which slashed costly and unsustainable subsidies, adopted foreign exchange liberalization, reduced the government’s fiscal gap, and improved public financial management. The CLTG’s significant progress under the SMP led to an Extended Credit Facility (ECF) program launched in June 2021. However, most IMF assistance was paused after the military’s October 25 government takeover.

On March 7, 2022, the Central Bank of Sudan abandoned its managed float policy and allowed the Sudanese Pound to freely float against other currencies. However, Sudan faces a severe foreign exchange reserves shortage and the national currency faces depreciation pressures. Domestic businesses have no assurance of obtaining needed levels of foreign currency for international transactions. The government strictly controls incoming hard currency from exports and business owners wishing to retrieve cash can only make withdrawals denominated in Sudanese pounds at the time of this report. Foreign companies operating in Sudan must have the Central Bank of Sudan’s permission to repatriate profits and foreign currency. The Investment Act of 2013 enshrines the right to repatriate capital and profits, provided the investor has opened an investment account at the Central Bank of Sudan before entering into business. To avoid banking delays, many Sudanese firms complete a significant number of transactions outside of official channels or complete transactions abroad in U.S. Dollars, Euros, Riyals, or Dirhams. Whether or not the government will revise its practices to ensure a steady stream of foreign exchange, if international correspondent banking ever resumes, remains to be seen. The Investment Act also established courts to handle investment issues and disputes.

According to the 2015 UNCTAD report, Sudan has put in place a relatively open investment legislative framework and many laws are in line with international best practices. However, their implementation is often impeded by the absence of secondary legislation, insufficient institutional capacity, and lack of coordination between different levels of government. 

Sudan’s investment authority lists the process by which businesses must register to operate at: .  The website outlines procedures for companies that wish to invest, including forming and ending relationships and license applications.  There is no online business registration process.  Officials at the Ministry of Investment and International Cooperation recommend enlisting the service on an agent to help facilitate the business registration process.  provides an outline of investment facilitation proposals.  provides links to business registration sites worldwide.

Sudan’s government does not have policies in place to promote outward investment. It does not restrict domestic investors from investing abroad. 

4. Industrial Policies

The Sudanese government lists the following investment incentives:

  • Exemption from taxes on profits for a term of not less than ten years.
  • Free land or land at an incentivized price for the project.
  • Nondiscriminatory treatment of the capital of investment, whether be it public, private, cooperative, or multi-sector capital.
  • Guarantees the capital shall not to be nationalized, confiscated, or expropriated except through a law and against indemnity.
  • Guarantees that money invested in a project shall not be confiscated or frozen, except through a judicial order.
  • Recognition that the investor is entitled to transfer his or her money and profits; and
  • Customs privileges for vehicles. 

The Investment Encouragement Act of 2021 included a provision to establish a specialized insurance company to insure investors against various risks (e.g., risks of nationalization, risks of war, domestic conflict and civil disobedience, risks of recession, etc.) for an annual premium. However, the government has not acted on this provision in the law.

The government currently does not offer any special incentives for clean energy investments, including renewable energy, energy storage, energy efficiency, clean hydrogen, carbon sequestration, low-carbon transport and fuels, or other decarbonization technologies.

Sudan currently operates free trade zones in Port Sudan and Garri. The Free Zones and Free Markets Law of 1994 govern these zones.  The investment authority reports that projects in areas designated as Free Trade Zones and Duty-Free Zones enjoy the following policies:

  • Exemption from a tax on profits for 15 years, renewable for an extra period;
  • Exemption from personal income tax for salaries of expatriates;
  • Exemption from all customs fees and taxes except service fees for products imported into or exported abroad from the zone;
  • Exemption from all taxes and fees for real estate inside the zone;
  • Authorization to transfer invested capital and profits from Sudan abroad through any bank licensed to operate in the zone;
  • Exemption from customs fees for products of industrial projects established in the zones depending on materials used and local costs incurred in production and provided the value be estimated by a designated committee;
  • Guarantees that money invested in the zones may not be frozen, confiscated, or arrested;
  • Authorization to store goods transiting Sudan in zones under the supervision of customs police; and,
  • Authorization to rent its land and buildings according to the terms it agrees upon and without being bound by any other law. 

The government does not follow “forced localization” policies but offers tax incentives to foreign investors to establish “value-added” industries within Sudan.

5. Protection of Property Rights

Sudanese laws protect private property rights. However, these laws are poorly enforced, and the government has a history of arbitrary property seizures without providing adequate compensation. Mortgages and liens exist, but the property registration system is antiquated. Property disputes, often involving claims over traditional lands, can take years to resolve.

The government offers foreign investors restricted leases on land for specific projects. These leases are for five years but can be renewed in five-year increments for up to thirty years. Investors can transfer the leases to other investors, but only if the new investors maintain the general purpose of the original project.

The legislative framework on intellectual property rights (IPR) is adequate, but enforcement remains uneven. Trademarks of popular American businesses, usually chain restaurants, are often used or changed slightly to suggest the original brand. Many grocery and hardware stores display American name-brand products shipped from Egypt and the United Arab Emirates. Sudan is not listed in the U.S. Trade Representative (USTR) 2021 Special 301 report or the 2021 Notorious Markets List. Sudan is in the accession process to join the World Trade Organization (WTO) and is not currently a party to the WTO’s Agreement on Trade-Related Intellectual Property Rights (TRIPS). Sudan is a member of the World Intellectual Property Organization (WIPO).

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at 

6. Financial Sector

Sudan has a stock market (KSE) which is located in Khartoum. The KSE has over 67 companies ( ) that include banks, brokerage firms, communication/media companies, investment and development houses, and industrial firms. Market trading occurs Sunday-Thursday from 1000-1200 local time. KSE has not published an annual report since 2019.

Historically, Sudan has not had access to international banking institutions as it was under comprehensive U.S. economic and financial sanctions until late 2017. The U.S. government delisted Sudan as a State Sponsor of Terrorism in December 2022. Despite lifting of these comprehensive sanctions, international banks remain reluctant to operate in Sudan. Most foreign banks operating in Sudan are based in Gulf states, such as Saudi Arabia, United Arab Emirates, or Qatar. Sudan faces a monetary crisis, with limited foreign exchange and a significant currency black market. The Central Bank of Sudan lists banks operating in Sudan at: 

Under the IMF’s ECF program, Sudan has committed to strengthening financial sector soundness and mitigating risks, including through enhanced risk-based anti-money laundering and countering terrorist financing (AML/CTF) supervision. In June 2021, Sudanese authorities had completed ten required AML/CTF onsite inspections of local banks. The inspections focused on politically exposed persons, suspicious transaction reporting, and higher-risk customers and transactions in the real estate sector. Following the conclusion of these onsite inspections, the Central Bank planned to provide aggregate data to the IMF on violations identified and sanctions levied, in line with Sudan’s existing legal framework. Under the ECF, Sudan has agreed to complete a money laundering and terrorist financing national risk assessment (NRA) and to disseminate the results of the NRA to financial institutions, designated non-financial businesses and professions, and the general public. Sudanese civilian authorities also committed to endorse and adopt a national AML/CTF strategy to mitigate risks identified in the NRA. These are fundamental steps necessary to building an AML/CTF regime which can effectively respond to identified money laundering and terrorist financing threats.

Sudan has a sovereign wealth fund called the Oil Revenue Stabilization Account, established in 2008.  The Natural Resource Governance Institute (NRGI) ranked it 32 out of 34 funds in its 2017 Resource Governance Index, and eight of nine funds in sub-Saharan Africa, ahead of Nigeria’s Excess Crude Account. ( .) The CLTG established a sovereign wealth fund in 2020 to manage real estate recovered by the Dismantling Committee. This fund is not operational.

7. State-Owned Enterprises

State-owned enterprises (SOEs) associated with the military and security services play an unusually large role in the Sudanese economy and are currently involved in a range of commercial activities, including fuel storage, natural gas projects, solar panel manufacturing, infrastructure, the railroad sector, cotton and textiles, and food industries, including flour milling, bread production, and animal husbandry. Approximately 220 out of approximately 650 SOEs cataloged by the CLTG are associated with Sudan’s military and security services. Reportedly, many of these SOEs are inefficient and poorly managed; however, reforming and transferring them to civilian control has been politically sensitive. Although the CLTG made SOE reform a centerpiece of its broader economic and governance reform program, this agenda has stalled because of the military takeover.

As part of the IMF’s Extended Credit Facility (ECF) program, Sudanese authorities committed to take the following actions by June 2022: (1) endorse an ownership strategy that sets forth the oversight and management framework for SOEs and guiding principles for a review of the existing stock of SOEs; (2) publish end-2021 financial statements and audit reports for ten priority SOEs and creating a calendar for annual publication of these reports thereafter; and (3) publish a complete list of SOEs, including those in the intelligence sector. SOE audits from previous years exist but authorities have not yet made them public. The U.S. government, in concert with the IMF, continues to press the Sudanese authorities to accelerate their review of SOE operations and publish the aforementioned documents as steps toward greater transparency and adherence to its IMF program. However, military authorities have resisted these reform efforts.

Sudan does not have an active privatization program in place for SOEs.


Executive Summary

The United Republic of Tanzania achieved lower-middle income country status in July 2020, following two decades of sustained economic growth. The country’s solid macroeconomic foundation, sound fiscal policies, rich natural endowments, and strategic geographic position have fostered a diverse economy resilient to external shocks. This proved critical as the COVID-19 pandemic resulted in an economic downturn, though Tanzania avoided a more severe pandemic-induced recession.

The Government of Tanzania (GoT) welcomes foreign direct investment. In March 2021, President Samia Suluhu Hassan assumed the presidency following the death of President John Pombe Magufuli. In her first months in office, President Hassan promised reforms to improve the business climate and identified attracting foreign investment as a key priority. This commitment to increasing investment has continued throughout her tenure and economic issues remain at the forefront of the administration’s policies, strategies, and goals. President Hassan’s government has sought to engage stakeholders, including local private sector organizations and development partners, to improve the business climate and regain investor confidence. Consistent with this shift in rhetoric, significant changes to improving the business environment and investment climate have been made over the past year: improving the complex, and sometimes inconsistent, work permit issuance process for foreign workers and investors; streamlining Tanzania Investment Center (TIC) operations; disbandment of the special ‘Tax Task Force’ previously associated with heavy-handed and arbitrary tax enforcement; and strengthening regional trade cooperation.

However, while several laws have been reviewed, business climate legislative reforms have not yet been sweeping. There remain significant legislative obstacles to foreign investment such as the Natural Resources and Wealth Act, Permanent Sovereignty Act, Public Private Partnership Act, and the Mining Laws and Regulations. Despite pledges by President Hassan and senior government officials, these have yet to be resolved; rather, the administration has selectively eased the application of these laws. The primary business and investment challenges lie in tax administration; opening and closing businesses; inconsistent institutions compounded by corruption and requests for “facilitation payments” at many levels of government; late payment issues; and cross-border trade obstacles. In recent years, aggressive and arbitrary tax collection policies targeted foreign and domestic companies and individuals alike, and tough labor regulations made it difficult to hire foreign employees, even when the required skills were not available within the local labor force. Corruption, especially in government procurement, taxation, and customs clearance remains a concern for foreign investors, though the government has prioritized efforts to combat the practice.

The country’s drastic and improved shift in its acknowledgement of and approach to COVID-19 in 2021 led to the creation and implementation of a national COVID-19 response plan that addressed both health and socio-economic impacts of the pandemic. Tanzania has reengaged with the international community to support implementation of its robust national pandemic response plan with key pillars for improving data sharing, welcoming vaccines, and conducting vaccination outreach campaigns.

Sectors traditionally attracting U.S. investment include infrastructure, transportation, energy, mining and extractive industries, tourism, agriculture, fishing, agro-processing, and manufacturing. Other opportunities exist in workforce development, microfinance solutions, technology, and consumer products and services.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 87 of 180 
Global Innovation Index 2021 90 of 132 
U.S. FDI in partner country (historical stock positions) 2020 USD 1,510 Million 
World Bank GNI per capita 2019 USD 1,080 

1. Openness To, and Restrictions Upon, Foreign Investment

The United Republic of Tanzania welcomes foreign direct investment (FDI) as it pursues its industrialization and development agenda. On her inauguration in March 2021, President Samia Suluhu Hassan identified removing obstacles to inward foreign investment as a key priority, along with other measures to improve the overall business climate and rebuild trust between the private sector and government. This follows declining FDI and investor confidence over the past six years, with UNCTAD’s 2021 World Investment Report indicating around $1.0 billion in FDI for 2020, stagnant growth in recent years and well below 2015 levels. The development of a $3.5 billion 1,400 km oil pipeline to transport crude oil extracted in Uganda to the Tanzanian port of Tanga could sustain investment in both countries in the future. Investors and potential investors note the biggest challenges to investment include difficulty in hiring foreign workers, unfriendly and opaque tax policies, increased local content requirements, regulatory and policy instability, lack of trust between the GoT and the private sector, and mandatory initial public offerings (IPOs) in key industries. In 2020 and 2021, the GoT recognized many of these concerns’ impacts on both foreign and domestic investment and created task forces and working groups to engage the private sector to identify solutions. These efforts were expanded by President Hassan’s government.

The United Republic of Tanzania has framework agreements on investment and offers various incentives and the services of investment promotion agencies. Investment is mainly a non-Union matter (i.e., different laws, policies, and practices apply between mainland Tanzania and the semi-autonomous state of Zanzibar). Zanzibar updated its investment policy in 2019, while the mainland/Union policy dates from 1996. Efforts to update the Mainland Investment Policy and Investment Act are underway, but incomplete as of the date of this publication. International agreements on investment are covered as Union matters and therefore apply to both regions.

The Tanzania Investment Center (TIC) is intended to be a one-stop center for investors, providing services such as permits, licenses, visas, and land ( view TIC’s portal ). The Zanzibar Investment Promotion Authority (ZIPA) provides the same function in Zanzibar ( view ZIPA ).

The GoT has an ongoing dialogue with the private sector via the Tanzania National Business Council (TNBC). TNBC meetings are chaired by the President of the United Republic of Tanzania and co-chaired by the head of the Tanzania Private Sector Foundation (TPSF). President Hassan reinvigorated this formal mechanism during her first months in office. There is also a Zanzibar Business Council (ZBC), as well as Regional Business Councils (RBCs), and District Business Councils (DBCs).

Investors have found that technical expertise of their negotiating partners is a stumbling block to completing their investment plans.  Investors should examine the level of sophistication of their negotiating partners at the onset of discussions to determine if outside expertise or training may be necessary.  The U.S. government offers programs to develop expertise to facilitate investments and investors are encouraged to work with the Embassy’s economic and commercial sections to determine what, if any, programs may be available.

Foreign investors generally receive treatment equivalent to domestic investors, though limits persist in a number of sectors. There are no geographical restrictions on private establishments with foreign participation or ownership, no limitations on number of foreign entities that can operate in any given sector, and no sectors in which approval is required for greenfield FDI but not for domestic investment.

However, Tanzania discourages foreign investment in several sectors through limitations on foreign equity ownership or other activities, including aerospace; agribusiness (fishing); banking; insurance; construction and heavy equipment; travel and tourism; energy and environmental industries; information and communication; and publishing, media, and entertainment. In 2020, Tanzania relaxed but did not eliminate the foreign ownership limitations in the mining sector.

Specific examples include the following:

  • The Tourism Act of 2008 bars foreign companies from engaging in mountain guiding activities, and states that only Tanzanian citizens can operate travel agencies, car rental services, or engage in tour guide activities (with limited exceptions).
  • Per the Merchant Shipping Act of 2003, only citizen-owned ships are authorized to engage in local trade, a requirement that can be waived at the minister’s discretion. Furthermore, the Tanzania Shipping Agencies Act of November 2017 gives exclusive monopoly power to the Tanzania Shipping Agency Corporation (TASAC) to conduct business as shipping agent, shipping regulator, and licensor of other private shipping agencies. The Act also gives TASAC an exclusive mandate to provide clearing and forwarding functions relating to imports and exports of minerals, mineral concentrates, machinery and equipment for the mining and petroleum sector, products and/or extracts related to minerals and petroleum. arms and ammunition, live animals, government trophies, and any other goods that the minister responsible for maritime transport may specify. A 2019 amendment extended this exclusive mandate to additional imports, including fertilizers, sugar (both industrial and domestic), cooking oil, wheat, oil products, liquefied gas, and chemicals related to the products. As of May 2021, the extended mandate has yet to go into effect, following extensive objections for private sector stakeholders.
  • A 2009 amendment to the Fisheries Regulations imposes onerous conditions for foreign citizens to engage in commercial fishing and the export of fishery products, sets separate licensing costs for foreign citizens and Tanzanians, and limits the types of fishery products that foreign citizens may work with.
  • Foreign construction contractors can only obtain temporary licenses, per the Contractors Registration Act of 1997, and contractors must commit in writing to leave Tanzania upon completion of the set project. 2004 amendments to the Contractors Registration By-Laws limit foreign contractor participation to specified, more complex classes of work.
  • Foreign capital participation in the telecommunications sector is limited to a maximum of 75 percent.
  • All insurers require one-third controlling interest by Tanzania citizens, per the Insurance Act.
  • The Electronic and Postal Communications (Licensing) Regulations 2011 limits foreign ownership of Tanzanian TV stations to 49 percent and prohibits foreign capital participation in national newspapers.
  • Mining projects must be at least partially owned by the GoT and “indigenous” companies, and hire – or at least favor – local suppliers, service providers, and employees. (See Chapter 4: Laws and Regulations on FDI for details.). Gemstone mining is limited to Tanzanian citizens with waivers of the limitation at ministerial discretion. In February 2019, responding to low growth and investment in the sector, the government revised the 2018 Mining Regulations to reduce local ownership requirements from 51 percent to 20 percent.

Currently, foreigners can invest in stock traded on the Dar es Salaam Stock Exchange (DSE), but only East African residents can invest in government bonds. East Africans, excluding Tanzanian residents, however, are not allowed to sell government bonds bought in the primary market for at least one year following purchase.

There have not been any third-party investment policy reviews (IPRs) on Tanzania in the past several years, the most recent OECD report is for 2013. The World Trade Organization (WTO) published a Trade Policy Review in 2019 on all the East African Community states, including Tanzania.

The Business Registration and Licensing Agency (BRELA) issues certificates of compliance for foreign companies, certificates of incorporation for private and public companies, and business name registrations for sole proprietor and corporate bodies. After registering with BRELA, the company must: obtain a taxpayer identification number (TIN) certificate, apply for a business license, apply for a VAT certificate, register for workmen’s compensation insurance, register with the Occupational Safety and Health Authority (OSHA), receive inspection from OSHA, and obtain a Social Security registration number.

The Tanzania Investment Center (TIC) now sits under the Prime Minister’s Office (PMO), after being moved around several times in recent years. The TIC is a one-stop shop which provides simultaneous registration with BRELA, TRA, and social security for enterprises whose minimum capital investment is not less than USD 500,000 if foreign-owned or USD 100,000 if locally owned. Throughout 2021, TIC has streamlined its operations to facilitate the process of business registration.

The government has been slow to implement its May 2018 Blueprint for Regulatory Reforms to improve the business environment and attract more investors. The reforms seek to improve the country’s ease of doing business through regulatory reforms and to increase efficiency in dealing with the government and its regulatory authorities. The official implementation of the Business Environment Improvement Blueprint started in July 2019, though there have been few tangible changes or advancements. President Hassan’s government identified implementation of the Blueprint as a priority for her first term.

Tanzania does not promote or incentivize outward investment. There are restrictions on Tanzanian residents’ participation in foreign capital markets and ability to purchase foreign securities. Under the Foreign Exchange (Amendment) Regulations 2014 (FEAR), however, there are circumstances when Tanzanian residents may trade securities within the East African Community (EAC). In addition, FEAR provides some opportunities for residents to engage in foreign direct investment and acquire real assets outside of the EAC.

4. Industrial Policies

The Tanzania Investment Center (TIC) offers a package of investment benefits and incentives to both domestic and foreign investors without performance requirements. A minimum capital investment of $500,000 if foreign owned or $100,000 if locally owned is required. (At the time of this publication, the government was revising these incentives. Investors are advised to consult the TIC for up-to-date information.)

Current investment incentives include the following:

  • Discounts on customs duties, corporate taxes, and VAT paid on capital goods for investments in mining, infrastructure, road construction, bridges, railways, airports, electricity generation, agribusiness, telecommunications, and water services.
  • 100 percent capital allowance deduction in the years of income for the above-mentioned types of investments – though there is ambiguity as to how this is accomplished.
  • No remittance restrictions. The GoT does not restrict the right of foreign investors to repatriate returns from an investment.
  • Guarantees against nationalization and expropriation. Any dispute arising between the GoT and investors may be settled through negotiations or submitted for arbitration.
  • Allowing interest deduction on capital loans and removal of the five-year limit for carrying forward losses of investors.

Investors may apply for “Strategic Status” or “Special Strategic Status” to receive further incentives. The criteria used to determine whether an investor may receive these designations are available on TIC’s website ( view TIC’s website ).

The government introduces waivers through the Public Finance Act with the aim of attracting investment in certain targeted sectors. In Financial year 2021/2022, the government introduced VAT exemption on entities with agreements with the GoT for the operation or execution of strategic projects, to the extent that the agreements provide for such exemption; a strategic project is defined as a project that has been so determined by the Cabinet of Ministers. The government also re-introduced VAT exemption for non-governmental organizations having agreements with the GoT, to the extent that the agreements provide for such exemption. The minister of finance may make regulations prescribing the manner of application, granting and monitoring of exemptions, which previously required the minister to appoint a technical committee for guidance on these matters.

The government does not currently offer any incentives for clean energy investments.

The Export Processing Zones Authority (EPZA) oversees Tanzania’s Export Processing Zones (EPZs) and Special Economic Zones (SEZs). EPZA’s core objective is to build and promote export-led economic development by offering investment incentives and facilitation services ( view EPZA ). Minimum capital requirements for EPZ and SEZ investors are $500,000 for foreign investors and $100,000 for local investors. Investment incentives offered for EPZs include the following:

  • An exemption from corporate taxes for ten years.
  • An exemption from duties and taxes on capital goods and raw materials.
  • An exemption on VAT for utility services and on construction materials.
  • An exemption from withholding taxes on rent, dividends, and interests.
  • Exemption from pre-shipment or destination inspection requirements.
  • SEZs offer similar incentives, excluding the ten-year exemption from corporate taxes.

The Zanzibar Investment Promotion Agency (ZIPA) and the Zanzibar Free Economic Zones Authority (ZAFREZA) offer the following incentives:

Category “A” Free Economic Zone Developers: Development of Infrastructure

The developer of a Free Economic Zone shall benefit to the following incentives:

  • exemption from payment of taxes and duties for machinery, equipment, heavy duty vehicles, building and construction materials, and any other goods of capital nature to be used for purposes of development of the Free Economic Zone infrastructure.
  • exemption from payment of corporate tax for an initial period of ten years and thereafter a corporate tax, shall be charged at the rate specified in the Income Tax Act.
  • exemption from payment of withholding tax on rent, dividends ‘and interest for the first ten years.
  • exemption from payment of property tax for the first ten years.
  • remission of customs duty, value added tax and any other tax payable in respect of importation of one administrative vehicle, ambulances, firefighting equipment and firefighting vehicles and up to two buses for employees’ transportation to and from the Free Economic Zone.
  • exemption from payment of stamp duty on any instrument executed in or outside the Free Economic Zone relating to transfer, lease or hypothecation of any movable or immovable property situated within the Free Economic Zone or any document, certificate, instrument, report or record relating to any activity, action, operation, project, undertaking, or venture in the Free Economic Zone;
  • treatment of goods destined into Free Economic Zones as transit goods; and
  • on site customs inspection of goods within Free Economic Zones.

Category “B” Free Economic Zones Operators: Approved Investors Producing for Sale into the Customs Territory

Approved Investors whose primary markets are within the customs territory shall be entitled to the:

  • remission of customs duty, value added tax and any other tax charged on raw materials and goods of capital nature related to the production in the Free Economic Zones;
  • exemption from payment of withholding tax on interest on foreign sourced loan;
  • remission of customs duty, value added tax and any other tax payable in respect of importation of one administrative vehicle, one ambulances, firefighting equipment and firefighting vehicles and up to two buses for employees’ transportation into and from the Free Economic Zones;
  • exemption from pre-shipment or destination inspection requirements;
  • on site customs inspection of goods within Free Economic Zones;
  • access to competitive, modern and reliable services available within the Free Economic Zones; and
  • subject to compliance with applicable conditions and procedures for foreign exchange and payment of tax whenever appropriate, unconditional transfer through any authorized dealer bank in freely convertible currency of:

(i) net profits or dividends attributable to the investment; (ii) payments in respect of loan servicing where a foreign loan has been obtained;

(ii) payments in respect of loan servicing where a foreign loan has been obtained; (iii) royalties, fees and charges for any technology transfer agreement;

(iii) royalties, fees and charges for any technology transfer agreement; (iv) the remittance of proceeds in the event of sale or liquidation of the licensed business or any interest attributable to the licensed business;

(iv) the remittance of proceeds in the event of sale or liquidation of the licensed business or any interest attributable to the licensed business; and

(v) payments of emoluments and other benefits to foreign personnel employed in Tanzania in connection with the licensed business.

Category “C” Free Economic Zone Operators: Approved Investors Producing for Export Markets

  • Approved Investors producing for export markets in non-manufacturing or processing sectors shall be entitled to the:
  • subject to compliance with applicable conditions and procedures, accessing the export credit guarantee scheme;
  • remission of customs duty, value added, and any other tax charged on raw materials and goods of capital nature related to the production in the Free Economic Zones;
  • exemption from payment of corporate tax for an initial period of ten years and thereafter, a corporate tax shall be charged at the rate specified in the Income Tax Act;
  • exemption from payment of withholding tax on rent, dividends and interests for the first ten years;
  • exemption from payment of all taxes and levies imposed by the Local Government Authorities for products produced in the Free Economic Zones for a period of ten years;
  • exemption from pre-shipment or destination inspection requirements;
  • on site customs inspection of goods in the Free Economic Zones;
  • remission of customs duty, value added tax and any other tax payable in respect of importation of one administrative vehicle, ambulances, firefighting equipment and vehicles and up to two buses for employees’ transportation to and from the Free Economic Zones;
  • treatment of goods destined into Free Economic Zones as transit goods;
  • access to competitive, modern and reliable services available within the Free Economic Zones; and
  • subject to compliance with applicable conditions and procedures for foreign exchange and payment of tax whenever appropriate, unconditional transfer through any authorized dealer bank in freely convertible currency of:

(i) net profits or dividends attributable to the investment;

(ii) payments in respect of loan servicing where a foreign loan has been obtained;

(iii) royalties, fees and charges for any technology transfer agreement;

(iv) the remittance of proceeds in the event of sale or liquidation of the business enterprises or any interest attributable to the investment;

(v) payments of emoluments and other benefits to foreign personnel employed in Tanzania in connection with the business enterprise; twenty percent of total turnover is allowed to be sold to the local market and is subject to the payment of all taxes;

  • twenty percent of total turnover is allowed to be sold to the local market and is subject to the payment of all taxes;
  • hundred percent foreign ownership is allowed; and
  • no limit to the duration that goods may be stored in the Freeport Zones.

2. For purposes of this section, investors licensed primarily for export markets are investors whose exports are more than eighty percent of total annual production.

Incentives and allowances outside Free Economic Zones

1. Approved investor investing outside Free Economic Zones, may be granted the:

  • exemption from payment of import duty, excise duty Value Added Tax and other similar taxes on machinery, equipment, spare parts, vehicles and other input necessary and exclusively required by that enterprise during construction period indicated in the Investment Certificate;
  • exemption from payment of business license fee for the first three months of trial operation;
  • corporate tax exemption for up to five years;
  • hundred percent foreign ownership;
  • hundred percent retention of all profits after tax;
  • hundred percent allowance Research and Development; and
  • hundred percent allowance for free repatriation of profit after tax.

2. Without prejudice to the provisions of paragraph 1 of this Part, approved investor investing in manufacturing sector may further be granted the:

  • exemption from payment of any tax on all goods produced for exports;
  • exemption from payment of trade levy for raw materials and industrial inputs procured from Tanzania mainland;
  • exemption from payment of import duty, VAT, and other similar taxes on raw and packaging materials during project operations;
  • exemption of Income Tax on interest on registered borrowed capital; and
  • hundred percent allowance investment deduction on capital expenditure within five years.

3. Without prejudice to the provisions of paragraph 1 of this Part, Approved Investor investing in real estate business may also be granted the:

  • exemption of income tax on interest on borrowed capital;
  • stamp duty exemption;
  • hundred percent allowance investment deduction on capital expenditure within five years; and
  • capital gains tax on properties sold or purchased.

Tanzania’s export processing zones (EPZs) and special economic zones (SEZs) are assigned geographical areas or industries designated to undertake specific economic activities with special regulations and infrastructure requirements. EPZ status can also be extended to stand-alone factories at any geographical location. EPZ status requires the export of 80 percent or more of the goods produced. SEZ status has no export requirement, allowing manufacturers to sell their goods locally. There are currently 14 designated EPZ/SEZ industrial parks, 10 of which are in development, and 75 stand-alone EPZ factories.

The Non-Citizens (Employment Regulation) Act of 2015 (see Section 12 Labor Policies and Practices below) requires employers to attempt to fill positions with Tanzanian citizens before seeking work permits for foreign employees, and to develop plans to transition all positions held by foreign employees to local employees over time. The Act was amended in June 2021 to extend the time limit for work permits of non-citizen employees from the initial five years to eight years; applications are now submitted through the Online Work Permit Application and Issuance System (OWAIS). The amendment also allows an investor who has been granted incentives and registered with the TIC and Export Processing Zone Authority (EPZA) to employ up to ten non-citizens. Prior to the amendment, an investor could employ up to five non-citizens during the initial period of investment.

Because the local content (LC) initiative cuts across all economic sectors, the government decided that oversight of LC development should take a multi-sector approach, rather than being confined to a single ministry or sector. In 2015, the government directed the National Economic Empowerment Council (NEEC) to oversee implementation of local empowerment initiatives. The objective of the local content policy is to put local products and services – delivered by businesses owned and operated by Tanzanians – in an advantageous position to exploit opportunities emanating from inbound foreign direct investments. In 2015, the GoT enacted The Petroleum Act and, subsequently, issued The Petroleum (Local Content) Regulations 2017. Similarly, in 2017, the GoT amended mining laws, issuing The Mining (Local Content) Regulations 2018. (See Chapter 4: Laws and Regulations on Foreign Direct Investment for more on recent local content laws.)

Bank of Tanzania (BoT) regulations require banks to physically house their primary data centers in Tanzania or face steep penalties.

The GoT launched a USD 94 million National Internet Data Center (NIDC) in 2016, which is operated by the GoT’s Tanzania Telecommunications Company Limited (TTCL). Under the Tanzania Telecommunications Corporation (TTC) Act 2017, the TTC plans, builds, operates and maintains the “strategic telecommunications infrastructure,” which is defined as transport core infrastructure, data center and other infrastructure that the GoT proclaims “strategic” via official public notice.

5. Protection of Property Rights

All land is owned by the government and procedures for obtaining a lease or certificate of occupancy may be complex and lengthy. Less than 15 percent of land has been surveyed, and registration of title deeds is handled manually, mainly at the local level. Foreign investors may occupy land for investment purposes through a government-granted right of occupancy (“derivative rights” facilitated by TIC), or through sub-leases from a granted right of occupancy. Foreign investors may also partner with Tanzanian leaseholders to gain land access.

Land may be leased for up to 99 years, but the law does not allow individual Tanzanians to sell land to foreigners. There are opportunities for foreigners to lease land, including through TIC, which has designated specific plots of land (a land bank) to be made available to foreign investors. Foreign investors may also enter into joint ventures with Tanzanians, in which case the Tanzanian provides the use of the land (but retains ownership, i.e., the leasehold).

Secured interests in property are recognized and enforced. Though TIC maintains a land bank, restrictions on foreign ownership may significantly delay investments. Land not in the land bank must go through a lengthy approval process by local-level authorities, the Ministry of Lands, Housing, Human Settlements Development (MoLHHSD), and the President’s Office to be designated as “general land,” which may be titled for investment and sale.

The MoLHHSD handles registration of mortgages and rights of occupancies and the Office of the Registrar of Titles issues titles and registers mortgage deeds. Title deeds are recognized as collateral for securing loans from banks. In January 2018, the GoT amended the land law, requiring that loan proceeds secured by mortgaging underdeveloped land be used solely to develop the specific piece of land used as collateral. The changes apply to general land managed by the MoLHHSD’s Commissioner for Lands, who must receive a report from the lender showing how loan proceeds will be used to develop the land. The law does not apply to village land allocated by village councils, which cannot be mortgaged to a financial institution.

The GoT’s Copyright Society of Tanzania (COSOTA) is responsible for registration and enforcement of copyrighted materials, while the Business Registrations and Licensing Agency (BRELA) within the Ministry of Trade administers trademark and patent registration. It is the responsibility of the rights holders to enforce their rights where relevant, retaining their own counsel and advisors. The Fair Competition Commission (FCC) promotes competition, protects consumers against unfair market conduct, and has quasi-judicial powers to determine trademark and patent infringement cases. The FCC is also tasked with combating the sale of counterfeit merchandise. However, the Tanzania Medicines and Medical Devices Authority (TMDA) handles counterfeit human medicines, cosmetics, and packaged food materials, and its mandate is stipulated in the Tanzania Food, Drugs, and Cosmetics Act (TFDCA) as per the amendment of 2019. Despite its efforts, limited resources make it difficult for the GoT to adequately combat counterfeiting.

Tanzania is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at   

6. Financial Sector

Tanzania’s Dar es Salaam Stock Exchange (DSE) is a self-listed publicly owned company. In 2013, the DSE launched a second-tier market, the Enterprise Growth Market (EGM) with lower listing requirements designed to attract small and medium sized companies with high growth potential. As March 2022, the total market capitalization was $7.076 billion, a 5.6 percent increase from March 2021 ($6.7 billion). The Capital Markets and Securities Authority (CMSA) Act facilitates the flow of capital and financial resources to support the capital market and securities industry. Tanzania, however, restricts the free flow of investment in and out of the country, and Tanzanians cannot sell or issue securities abroad unless approved by the CMSA.

Under the Capital Markets and Securities (Foreign Investors) Regulation 2014, there is no aggregate value limitation on foreign ownership of listed non-government securities. Only companies or citizens from EAC nations are permitted to participate in the government securities market. Even with this recent development allowing EAC participation, foreign ownership of government securities is still limited to 40 percent of each security issued.

Tanzania’s Electronic and Postal Communications Act 2010 amended in 2016 by the Finance Act 2016 requires telecom companies to list 25 percent of their shares via an initial public offering (IPO) on the DSE. Of the seven telecom companies that filed IPO applications with the CMSA, only Vodacom’s application received approval.

As part of the Mining (Minimum Shareholding and Public Offering) Regulations 2016, large scale mining operators were required to float a 30 percent stake on the DSE by October 7, 2018. Currently, no mining companies are listed on the DSE.

Tanzania’s financial inclusion rate increased significantly over the past decade thanks to mobile phones and mobile banking. However, participation in the formal banking sector remains low. Low private sector credit growth and high non-performing loan (NPL) rates are persistent problems. The NPL ratios further deteriorated with the COVID 19 pandemic.

According to the IMF’s most recent Financial System Stability Assessment ( view assessment ), Tanzania’s bank-dominated financial sector is small, concentrated, and at a relatively nascent stage of development. Financial services provision is dominated by commercial banks, with the ten largest institutions being preeminent in terms of mobilizing savings and intermediating credit. The report found that nearly half of Tanzania’s 45 banks are vulnerable to adverse shocks and risk insolvency in the event of a global financial crisis.

The two largest banks are CRDB Bank and National Microfinance Bank (NMB), which represent almost 30 percent of the market. The only U.S. bank operating in Tanzania is Citibank Tanzania Limited. Private sector companies have access to commercial credit instruments including documentary credits (letters of credit), overdrafts, term loans, and guarantees. Foreign investors may open accounts and earn tax-free interest in Tanzanian commercial banks, however a special exemption is required from the Bank of Tanzania to open an account as a “foreign entity.” A foreign entity account is an account owned by a company without a registered, legal business presence in Tanzania.

The Banking and Financial Institution Act 2006 established a framework for credit reference bureaus, permits the release of information to licensed reference bureaus, and allows credit reference bureaus to provide to any person, upon a legitimate business request, a credit report. Currently, there are two private credit bureaus operating in Tanzania: Credit Info Tanzania Limited and Dun & Bradstreet Credit Bureau Tanzania Limited.

Tanzania does not have a sovereign wealth fund.

7. State-Owned Enterprises

Public enterprises do not compete under the same terms and conditions as private enterprises because they have access to government subsidies and other benefits. SOEs are active in the power, communications, rail, telecommunications, insurance, aviation, and port sectors. SOEs generally report to ministries and are led by a board. Typically, a presidential appointee chairs the board, which usually includes private sector representatives. SOEs are not subjected to hard budget constraints. SOEs do not discriminate against or unfairly burden foreigners, though they do have access to sovereign credit guarantees.

Specific details on SOE financials and employment figures are not publicly available.

As of June 2019, the GoT’s Treasury Registrar reported shares and interests in 266 public parastatals, companies and statutory corporations ( view the most recent Treasury Registrar report ).

The government retains a strong presence in energy, mining, telecommunication services, and transportation. The government is increasingly empowering the state-owned Tanzania Telecommunications Corporation Limited (TTCL) with the objective of safeguarding the national security, promoting socio-economic development, and managing strategic communications infrastructure. The government also acquired 51 percent of Airtel Telecommunication Company Limited and became the majority shareholder. In the past, the GoT has sought foreign investors to manage formerly state-run companies in public-private partnerships, but successful privatizations have been rare. Though there have been attempts to privatize certain companies, the process is not always clear and transparent. The GoT currently has 20 companies/assets awaiting privatization.


Executive Summary

Uganda’s investment climate presents both important opportunities and major challenges for U.S. investors. With a market economy, ideal climate, ample arable land, a young and largely English-speaking population, and development underway of fields containing at least 1.4 billion barrels of recoverable oil, Uganda offers numerous opportunities for investors. Despite the negative effects of COVID-19 related countermeasures on the economy, including a 40-day July-August 2021 national lockdown, according to the Bank of Uganda (BOU), the economy grew by 6.5% in 2021, recovering from 1.5% contraction in 2020. On a fiscal year basis, the economy grew by 3.3% in FY 2020/21 (July 1, 2020-June 30, 2021) compared to 3% in FY 2019/20. Foreign direct investment (FDI) is still yet to recover from pre-pandemic levels, with receipts dropping by 35% to $847 million in FY 2020/21 compared to $1.3 billion in FY 2019/20. The International Monetary Fund (IMF) expects FDI to rebound due to oil-related investments projected at $10 billion over the next five years and the IMF also projects Uganda’s economy to return to pre-pandemic growth that averaged 5.3% from 2014 to 2019. Oil-related investments were spurred by the February 1, 2022 announcement by Uganda and its partners – Tanzania, TotalEnergies, China National Offshore Oil Corporation (CNOOC), and the state-owned Uganda National Oil Company (UNOC) – of final investment decision (FID) on upstream oil production, with first oil expected in 2025.

Uganda maintains a liberal trade and foreign exchange regime. In 2021, the IMF approved a $1 billion Extended Credit Facility (ECF) to the government to enable the country to deal with the COVID-19 crisis and spur economic recovery. Uganda received the first tranche of $258 million in June 2021 and the second tranche of $125 million in March 2022. As the economy begins to recover, Uganda’s power, agricultural, construction, infrastructure, technology, and healthcare sectors present attractive potential opportunities for U.S. business and investment.

President Yoweri Museveni and government officials vocally welcome foreign investment in Uganda. However, the government’s actions sometimes do not support its rhetoric. The closing of political and democratic space, poor economic management, endemic corruption, growing sovereign debt, weak rule of law, growing calls for protectionism from some senior policymakers, and the government’s failure to invest adequately in the health and education sectors all create risks for investors. U.S. firms often find themselves competing with third-country firms that cut costs and win contracts by disregarding environmental regulations and labor rights, dodging taxes, and bribing officials. Shortages of skilled labor, a complicated land tenure system, and increased local content requirements, also impede the growth of businesses and serve as disincentives to investment.

An uncertain mid-to-long-range political environment also increases risk to foreign businesses and investors. President Museveni was declared the winner in the widely disputed and discredited January 2021 general elections and started a five-year term in May 2021 after 35 years already in power. Domestic political tensions increased following election-related violence and threats to democratic institutions. Many of Uganda’s youth, a demographic that comprises 77% of the population, openly clamor for change. However, the 77-year-old President has not provided any indication that he or his government are planning reforms to promote more inclusive, transparent, and representative governance.

On the legislative front, Uganda’s parliament passed a Mining and Minerals Bill on February 17, 2022, aimed at reforming the mining sector and attracting larger mining companies to exploit Uganda’s cobalt, copper, nickel, rare earth, and other mineral deposits. However, the private sector has noted that the bill could limit potential international investment since it contains high tax and free carried interest provisions and insufficient legal protections for mining firms.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 144 of 180
Global Innovation Index 2021 119 of 132
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $50
World Bank GNI per capita 2020 $800


1. Openness To, and Restrictions Upon, Foreign Investment

The Ugandan government and authorities vocally welcome FDI and celebrate its job creation benefits. Furthermore, the country’s free market economy, liberal financial system, and close to 45-million-person consumer market together attract investors. However, rampant corruption, weak rule of law, threats to open and free internet access – including a five-day complete internet shutdown surrounding January 2021 elections and an ongoing, year-long ban on Facebook – and an increasingly aggressive tax collection regime by the Uganda Revenue Authority (URA) create a challenging business environment. In June 2021, the government scrapped the $0.056 Over the Top (OTT) daily tax for consumers to access social media channels. The tax was replaced by a 12% excise duty levy on each internet package purchased.

The 2019 Investment Code Act (ICA) abolished restrictions on technology transfer and repatriation of funds by foreign investors, and established new incentives (e.g., tax waivers) for investment. However, the ICA also set a minimum value of $250,000 for FDI and a yet-to-be-specified minimum value for portfolio investment. Additionally, the ICA authorized the Ugandan government to alter these thresholds at any time, thereby creating potential uncertainty for investors. Under the ICA, investment licenses carry specific performance conditions varying by sector, such as requiring investors to allow the Uganda Investment Authority (UIA) to monitor operations, or to employ or train Ugandan citizens, or to use Ugandan goods and services to the greatest extent possible. Further, the ICA empowers the Ugandan government to revoke investment licenses of entities that “tarnish the good repute of Uganda as an attractive base for investment.” The government has yet to revoke any investor license on this ground.

In December 2021, MTN Uganda – the largest telecom company in Uganda – sold 13% of its shares to the public when it listed on the Uganda Securities Exchange (USE). MTN listed the shares in order to move toward compliance with the 2020 Communications Licensing Framework (CLF). The CLF requires telecommunication (telecom) companies to list 20% of their equity on the USE with the aim of increasing local ownership and reducing the repatriation of profits. Airtel, the second largest telecom, is expected to float shares by mid-2022. In 2020, MTN and Airtel paid $100 million and $75 million, respectively, to renew their licenses for 12 years and 20 years, respectively.

The Uganda Investment Authority (UIA) facilitates investment by granting licenses to foreign investors, and is tasked with promoting, facilitating, and supervising foreign investments. UIA provides a “one-stop shop” online where investors can apply for a license, pay fees, register businesses, apply for land titles, and apply for tax identification numbers. In practice, however, investors may also need to liaise with other authorities to complete legal requirements. The UIA also triages complaints from foreign investors. The UIA’s website ( ) and the International Trade Administration’s website ( ) provide information on the laws and reporting requirements for foreign investors. Investors often bypass the UIA, citing bureaucratic delays and corruption. For larger investments, companies have reported that political support from and relationship-building with high-ranking Ugandan officials is a prerequisite.

President Museveni hosts an annual investors’ roundtable to consult a select group of foreign and local investors on increasing investment, occasionally including U.S. investors. However, the last meeting was held in March 2020, a few days before the first national lockdown was announced to control the spread of COVID-19.

Every Ugandan embassy has a trade and investment desk charged with advertising investment opportunities in the country.

Except for land, foreigners have the right to own property, establish businesses, and make investments. Ugandan law permits foreign investors to acquire domestic enterprises and to establish greenfield investments. The Companies Act of 2010 permits the registration of companies incorporated outside of Uganda.

Foreigners seeking to invest in the oil and gas sector must register with the Petroleum Authority of Uganda (PAU) to be added to its National Supplier Database. More information on this process is available on the Embassy’s website (select – Registering a U.S. Firm on the National Supplier Database): ( HYPERLINK “” h

The Petroleum Exploration and Development Act and the Petroleum Refining, Conversion, Transmission, and Midstream Storage Act require companies in the oil sector to prioritize using local goods and labor when possible and give the Minister of Energy and Mineral Development (MEMD) the authority to determine the extent of local content requirements in the sector.

All investors must obtain an investment license from the UIA. The UIA evaluates investment proposals based on several criteria, including potential for generation of new earnings; savings of foreign exchange; the utilization of local materials, supplies, and services; the creation of employment opportunities in Uganda; the introduction of advanced technology or upgrading of indigenous technology; and the contribution to locally or regionally balanced socioeconomic development.

The United Nations Commission on Trade and Development (UNCTAD) issued its World Investment Report, 2020, available at:

The IMF issued an Article IV Consultation and Review of the Extended Credit Facility Arrangement and Requests for Modifications of Performance Criteria in 2022, and its concluding statement is available at: 

The World Trade Organization (WTO) issued its most recent Trade Policy Review in 2019; the report is available at:,251521,117054,95202,80262,80232,82036,106989&CurrentCatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True 

Global Witness reviewed the state of the mining sector in 2017 and proposed reforms to the mining code: 

The UIA “one-stop shop” website assists in registering businesses and investments. In practice, investors and businesses may need to liaise with multiple authorities to set up shop, and the UIA lacks the capacity to play a robust business facilitation role.

Prospective investors can also register online and apply for an investment license at . The UIA also assists with the establishment of local subsidiaries of foreign firms by assisting in registration with the Uganda Registration Services Bureau ( ). New businesses are required to obtain a Tax Identification Number (TIN) from the URA, by clicking the “My TIN” link at  or through the UIA. Businesses must also secure a trade license from the municipality or local government in the area in which they intend to operate. Investors in specialized sectors such as finance, telecoms, and petroleum often need an additional permit from the relevant ministry in coordination with the UIA.

Under the Uganda Free Zones Act of 2014, the government continues to establish free trade zones for foreign investors seeking to produce goods for export and domestic use. Such investors receive a range of benefits including tax rebates on imported inputs and exported products. An investor seeking a free zone license may apply to the Uganda Free Zones Authority ( ).

The Ugandan government does not promote or incentivize outward investment nor does it restrict domestic investors from investing abroad.

4. Industrial Policies

The Public Private Partnership Act of 2015 creates a legal framework for the government to partner with private investors, both local and foreign, to finance investments in key sectors. The government has undertaken joint ventures with foreign investors in the oil and gas sector and for infrastructure projects.

In June 2020, the government scrapped 18% excise duty on cooking gas in order to encourage clean energy cooking. This is meant to reduce the use of charcoal that contributes to deforestation. While the scrapping of this excise duty is positive, the usage of cooking gas is still limited to major cities because the cost is still high.

The Uganda Free Zones Authority (UFZA) ( ) regulates free trade zones, which offer a range of tax advantages. The government’s process in awarding free trade zone status is generally transparent. In 2021, UFZA licensed three private Free Zone Developers, bringing the total number of free zones to 27. Estimates from UFZA indicate that in FY 2020/2021, the 27 free zones attracted $527 million worth of capital investment, created 8,610 jobs, and contributed $1.25 billion to total exports.

The ICA does not impose any direct requirements regarding local employment or specify mandatory numbers for local employment in management positions. The broadness of its provisions, however, arguably leaves the door open for enforcement of local employment requirements. The Petroleum Exploration, Development, and Production Act and the Petroleum Refining, Conversion, Transmission, and Midstream Storage Act require investors in the oil sector to contribute to the creation of a locally skilled workforce.

While the UIA has significantly improved its processing of work permits and investment licenses for foreigners, bureaucratic hurdles, inconsistent enforcement, and corruption can still make obtaining visas and work permits onerous and expensive. All foreign investors must acquire an investment license from the UIA.

No general localization law exists in Uganda, but sector-specific laws impose localization requirements. The petroleum laws require foreign oil companies to prioritize the use of local goods and labor when available, and the MEMD has the authority to determine the extent of local content requirements in the sector. The Public Procurement and Disposal of Public Assets Act, which regulates government procurements, also imposes thresholds on the contracts for which a foreign company can apply. Per the petroleum laws, MEMD has the responsibility to monitor companies in the oil sector to ensure they are meeting the local content requirements. Additionally, the Office of the Auditor General carries out audits of the oil and gas sector to ensure adherence to local content requirements. These performance reviews can form grounds for granting incentives or enforcement of the restrictions. Since the 2013 oil laws were passed, no company has been punished for breaching local content rules. Investment incentives in Uganda are quite controversial because they are applied on a case-by-case basis, even though the ICA lists seven grounds for granting investment incentives.

While there are no general requirements for foreign information technology (IT) providers to hand over to the Ugandan government any source code or information related to encryption, the National Information Technology Authority Act allows the Minister for Information, Communication, and Technology (ICT) to order an IT provider to submit any information to the National Information Technology Authority (NITA). However, it is unclear to what extent, if any, the Ugandan government has invoked this law. Similarly, the Computer Misuse Act allows the government to “compel a service provider…to co-operate and assist the competent authorities in the collection or recording of traffic data in real time, associated with specified communication transmitted by means of a computer system.” These regulatory requirements apply to all IT providers, both foreign and local. There are no measures to prevent or unduly impede companies from freely transmitting customer or other business-related data outside of Uganda. In 2017, however, the BOU interpreted Uganda’s cyber security legislation as providing it with the mandate to require financial institutions to relocate their data centers to Uganda to provide the government with access to customers’ digital financial information. Supervised financial institutions are currently implementing this policy. A U.S.- owned data center firm inaugurated in May 2021 a Tier III data center targeting the market for localizing data storage and opportunities for cloud services.

5. Protection of Property Rights

Land rights are complicated in Uganda and present a significant barrier to investment. Uganda enforces property rights through the courts; however, corruption often influences final judgments. The Mortgage Act and associated regulations make provision for mortgages, sub-mortgages, trusts, and other forms of lien. However, due to widespread corruption and an inefficient bureaucracy, investors frequently struggle with the integrity of land transactions and recording systems.

Foreigners cannot own land directly and may only acquire leases. Such leases cannot exceed 99 years. However, foreign investors can create a Ugandan-based firm to purchase and own real estate.

The Land Act provides for four forms of land tenure: freehold, customary, “Mailo” (a form of freehold), and leasehold. Freehold, leasehold, and Mailo tenure owners hold registered titles, while customary or indigenous communal landowners – who account for up to 80% of all landowners – do not. Ugandan law provides for the acquisition of prescriptive rights by individuals who settle onto land (squatters) and whose settlement on such land is unchallenged by the owner for at least twelve years.

Ugandan law provides for the protection of intellectual property rights (IPR), but enforcement mechanisms are weak. The country lacks the capacity to prevent piracy and counterfeit distribution. As a result, theft and infringement of IPR is common and widespread. Uganda did not enact any IP-related laws and regulations in the past year. In August 2021, Uganda did adopt the African Regional Intellectual Property Organization (ARIPO)’s draft protocol on regional voluntary registration of Copyright and Related Rights. The Protocol was adopted by ARIPO member countries with the aim of ensuring African creators benefit from their creative works.

Uganda does not track seizures of counterfeit goods or prosecutions of IPR violations. Agriculture experts estimate some 20% of agriculture products under copyright in Uganda are counterfeit.

Uganda is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles .

6. Financial Sector

The government generally welcomes foreign portfolio investment and has put in place a legal and institutional framework to manage such investments. The Capital Markets Authority (CMA) licenses brokers and dealers and oversees the USE, which is now trading the stock of 18 companies. USE liquidity remains low, constraining entry and exit from sizeable positions. Capital markets are open to foreign investors and there are no restrictions for foreign investors to open a bank account in Uganda. However, the government imposes a 15% withholding tax on interest and dividends. Foreign-owned companies may trade on the stock exchange, subject to some share issuance requirements. The government respects IMF Article VIII and refrains from restricting payments and transfers for current international transactions.

Credit is available from commercial banks on market terms, and foreign investors can access credit. However, persistently high yields on Ugandan government-issued securities push up lending rates more broadly, including interest rates on commercial loans, undermining the private sector’s access to affordable credit. For instance, commercial lending rates averaged 19.4% and government 10-year bonds averaged 14% at the end of February 2022.

Formal banking participation remains low, with only 35.5% of Ugandans having access to bank accounts, many via their membership in formal savings groups. However, there are 19 million total bank accounts and more than 32 million mobile money accounts used to conduct basic financial transactions as some Ugandans hold multiple accounts. Uganda’s banking and financial sector is generally healthy, though non-performing loans remain a problem. According to the Bank of Uganda’s Financial Soundness Indicators, Uganda’s non-performing loan rate stood at 4.25% at the end of June 2021, down from 6% in June 2020. Uganda has 26 commercial banks, with the top six controlling at least 62% of the banking sector’s total assets, valued at $10 billion. The Bank of Uganda regulates the banking sector, and foreign banks may establish branches in the country. In June 2021, the BOU started the direct regulation of mobile money service providers under the National Payment Systems Act, 2020. In February 2020, the Financial Action Taskforce added Uganda to its “Grey List” due to the country’s insufficient implementation of its anti-money laundering and countering financing of terrorism (AML/CFT) policies. As of the end of February 2021, Uganda was still on this watch list due to seven strategic deficiencies in the implementation of AML/CFT policies. As a result, Uganda’s correspondent banking relationships face increased oversight. Uganda has made a high-level political commitment to work with the FATF and (Eastern and Southern Africa Anti-Money Laundering Group) ESAAMLG to strengthen its AML/CFT regime and plans to implement FATF’s recommendations by May 2022. Uganda does not restrict foreigners’ ability to establish a bank account.

In 2015, the government established the Uganda Petroleum Fund (PF) to receive and manage all government revenues from the oil and gas sector. By law, the government must spend a portion of proceeds from the fund on oil-related infrastructure, with parliament appropriating the remainder of revenues through the normal budget procedure. As of June 2021, the PF had a balance of $65 million. Uganda does not have a sovereign wealth fund but established a fund called the Petroleum Revenue Investment Reserve (PRIR) to ensure responsible and long-term management of revenue from Uganda’s oil resources when oil production begins. As of the end of 2021, the government had not passed the Petroleum Revenue Investment policy to determine where petroleum revenue would be invested. In the 2021 – 2026 Charter of Fiscal Responsibility, the government has committed to spending oil revenue worth 0.8% of non-oil GDP from the previous fiscal year as part of the national budget. The balance would be sent to the PRIR for Investment.

7. State-Owned Enterprises

Uganda has thirty State Owned Enterprises (SOEs). However, the Ugandan government does not publish a list of its SOEs, and the public is unable to access detailed information on SOE ownership, total assets, total net income, or number of people employed. The government has not established any new SOEs in 2021 but has ramped up expenditure for car manufacturer Kiira Motors Corporation. While there is insufficient information to assess the SOEs’ adherence to the OECD Guidelines of Corporate Governance, the Ugandan government’s 2021 Office of Auditor General report noted corporate governance issues in seven SOEs. In February 2021, the Ugandan government embarked on a plan to merge some of the SOEs to reduce duplication of roles and costs of administration. This process is still ongoing. SOEs do not get special financing terms and are subject to hard budget constraints. According to the Ugandan Revenue Authority Act, they have the same tax burden as the private sector. According to the Land Act, private enterprises have the same access to land as SOEs. One notable exception is the Uganda National Oil Company (UNOC), which receives proprietary exploration data on new oil discoveries in Uganda. UNOC can then sell this information to the highest bidder in the private sector to generate income for its operations.

The government privatized many SOEs in the 1990s. Uganda does not currently have a privatization program.


Executive Summary

Zambia is a landlocked country in southern Africa that shares a border with eight countries: Angola, Democratic Republic of the Congo, Tanzania, Malawi, Mozambique, Zimbabwe, Botswana, and Namibia. It has an estimated population of 17.86 million, GDP of $19.3 billion and GDP per capita of USD $1,086.

Zambia has been in a financial and economic crisis since at least 2020, when the country became the world’s first COVID-era default after Zambia missed a payment on $3 billion of outstanding Eurobonds. The Zambian economy contracted in 2020 by 3.0 percent and grew by a meager 1.0 percent in 2021. The IMF forecasts 2022 real GDP growth of only 1.1 percent. Zambia’s debt overhang remains a severe inhibitor of economic growth, effectively eliminating the government’s access to international capital markets and forcing it to finance a persistent budget deficit through domestic borrowing, which crowds out private sector access to capital and limits growth.

Despite broad economic reforms and debt relief under the World Bank’s Highly Indebted Poor Countries (HIPC) initiative in the early 2000s, Zambia has generally struggled to meet its full economic potential. A decade of democratic and economic backsliding under former President Edgar Lungu and the Patriotic Front resulted in widespread use of corruption and economic rent-seeking that has further damaged Zambia’s reputation as an investment destination. Cumbersome administrative procedures and unpredictable legal and regulatory changes continue to inhibit Zambia’s immense potential for private sector investment, compounded by insufficient transparency in government contracting, ongoing lack of reliable electricity, and a high cost of doing business due to poor infrastructure, high cost of capital, and the lack of skilled labor.

President Hakainde Hichilema achieved a resounding victory at the polls in August 2021 on a platform of democratic and economic reform and renewal. By December 2021, Zambia achieved staff-level agreement with the IMF on a $1.4 billion Extended Credit Facility that is expected to anchor macroeconomic and fiscal reforms and restore investor confidence. With the appointment of respected economists and technocrats to lead the Ministry of Finance and the central bank, the Hichilema administration has made significant strides reducing inflation, which has dropped from nearly 25.0 percent in July 2021 to 13.1 by the end of March 2022. The Hichilema administration is currently seeking debt restructuring under the auspices of the G-20 Common Framework, which would provide the basis for IMF board approval of Zambia’s Extended Credit Facility. A successful businessman and investor in his own right, President Hichilema has pledged to tackle fiscal and regulatory reforms aimed at strengthening Zambia’s investment climate.

Zambia remains highly dependent on its mining and extractives industry. It is Africa’s second-largest producer of copper and is an important source of several other critical minerals, including nickel and cobalt. According to the Extractives Industries Transparency Initiative, mining products accounted for 77 percent of Zambia’s total export earnings and 28 percent of government revenues in 2019. Investment in the mining sector fell substantially during the Lungu era due to multiple changes to Zambia’s minerals tax regime and an unstable regulatory environment. The Hichilema administration in its maiden budget introduced a key reform to Zambia’s minerals tax policy that is expected to attract new investment in the sector. The agriculture, healthcare, energy, financial services, and ICT sectors all offer potentially attractive opportunities for expanded U.S. trade and investment.

The U.S. Embassy works closely with the American Chamber of Commerce of Zambia (AmCham) to support its American and Zambian members seeking to increase two-way trade. Agriculture and mining remain headlining sectors for the Zambian economy. U.S. firms are present and are exploring new projects in tourism, power generation, agriculture, and services.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 117 of 180
Global Innovation Index 2021 121 of 190
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $21
World Bank GNI per capita 2020  $1,160

1. Openness To and Restrictions Upon Foreign Investment

In general, Zambian law does not restrict foreign investors in any sector of the economy, although there are a few regulations and practices limiting foreign control laid out below. Foreign Direct Investment (FDI) continues to play an important role in Zambia’s economy. The Zambia Development Agency (ZDA) is charged with attracting more FDI to Zambia, in addition to promoting trade and investment and coordinating the country’s private sector-led economic development strategy.

Zambia has undertaken certain institutional reforms aimed at improving its attractiveness to investors; these reforms include the Private Sector Development Reform Program (PSDRP), which addresses the cost of doing business through legislation and institutional reforms, and the Millennium Challenge Account (MCA), which addresses issues relating to transparency and good governance. However, frequent government policy changes have created uncertainty for foreign investors.

The ZDA does not discriminate against foreign investors, and all sectors are open to both local and foreign investors. Foreign and domestic private entities have a right to establish and own business enterprises and engage in all forms of remunerative activities, and no business ventures are reserved solely for the government. Although private entities may freely establish and dispose of interests in business enterprises, investment board approval is required to transfer an investment license for a given enterprise to a new owner.

Currently, all land in Zambia is considered state land and ownership is vested in the president. Land titles held are for renewable 99-year leases; ownership is not conferred. According to the government, the current land administration system leaves little room for the empowerment of citizens, especially the poor and vulnerable rural communities. The government began reviewing the current land policy in earnest in March 2017; though shorter terms continue to be suggested, no changes have been adopted to date.

Foreign investors in the telecom sector are required to disclose certain proprietary information to the ZDA as part of the regulatory approval process. Further information regarding information and communication regulation can be found at the website of the Zambia Information and Communication Technology Authority at 

The ZDA board screens all investment proposals and usually makes its decision within 30 days. The reviews appear to be routine and non-discriminatory, and applicants have the right to appeal investment board decisions. Investment applications are screened, with effective due diligence to determine the extent to which the proposed investment will help to create employment; the development of human resources; the degree to which the project is export-oriented; the likely impact on the environment; the amount of technology transfer; and any other considerations the Board considers appropriate.

The following are the requirements for registering a foreign company in Zambia:

  1. At least one and not more than nine local directors must be appointed as directors of a majority foreign-owned company. At least one local director of the company must be resident in Zambia, and if the company has more than two local directors, more than half of them shall be residents of Zambia.
  2. There must be at least one documentary agent (a firm, corporate body registered in Zambia, or an individual who is a resident in Zambia).
  3. A certified copy of the Certificate of Incorporation from the country of origin must be attached to Form 46.
  4. The charter, statutes, regulations, memorandum and articles, or other instrument relating to a foreign company must be submitted.
  5. The Registration Fee of K5,448.50 (~ USD 320.00) must be paid.
  6. The issuance and sealing of the Certificate of Registration marks the end of the process for registration.

This and further information can be found through the following Government of Zambia’s regulatory websites: Patents and Companies Registration Agency (PACRA), ; Zambia Development Agency ; Business Regulatory Review Agency, ; and Business License Portal, .

Zambia has not undergone any third-party investment policy reviews since 2012 through a multilateral organization such as the OECD, WTO, UNCTAD. However, domestic investment policies and legislation have been revised periodically, whenever impediments to investment laws are identified.

The Zambian government, often with support from cooperating partners, has undertaken economic reforms to improve its business facilitation process and attract foreign investors, including steps to support more transparent policymaking and to encourage competition. The impact of these progressive policies, however, has been undermined by persistent fiscal deficits, struggling economy, high cost of doing business and widespread corruption. Business surveys, including TRACE International, generally indicate that corruption in Zambia is a major obstacle for conducting business in the country.

The Zambian Business Regulatory Review Agency (BRRA) manages Regulatory Services Centers (RSCs) that serve as a one-stop shop for investors. RSCs provide an efficient regulatory clearance system by streamlining business registration processes; providing a single licensing system; reducing the procedures and time it takes to complete the registration process; and increasing accessibility of business registration institutions by placing them under one roof.

The government established RSCs in Lusaka, Livingstone, Kitwe, and Chipata, and has plans to establish additional RSCs so that there is at least one in each of the country’s 10 provinces. Information about the RSCs can be found at the following links:

The Companies Act No. 10 of 2017 was operationalized through a statutory instrument (June 2018) and implementing regulations (February 2019) aimed at fostering accountability and transparency in the management of companies. Companies are required to maintain a register of beneficial owners, and persons holding shares on behalf of other persons or entities must now disclose those beneficial owners.

In order to facilitate improved access to credit, the Patents and Company Registration Office (PACRA) established the collateral registry system, a central database that records all registrations of charges or collaterals created by borrowers to secure credits provided by lenders. This service allows lenders to search for collateral offered by loan applicants to see if that collateral already an existing claim has registered against it. Creditors can also register security interests against the proposed collateral to protect their priority status in accordance with the Movable Property (Security Interest) Act No. 3 of 2016. Generally, the first registered security interest in the collateral has first priority over any subsequent registrations.

Parliament passed the Border Management and Trade Facilitation Act in December 2018. The Act, among other things, calls for coordinated border management and control to facilitate the efficient movement and clearance of goods; puts into effect provisions for one-stop border posts; and simplifies clearance of goods with neighboring countries. While one-stop border posts have existed for several years and agencies are co-located at some border crossings, the new law seeks to harmonize conflicting regulations and processes within the interagency.

There are no incentives for outward investment.

4. Industrial Policies

Under the Income Tax Act, Chapter 323, or the Customs and Excise Act, Chapter 322, investors (local and foreign) who invest not less than USD 50,000 in a Multi-Facility Economic Zones (MFEZ), an industrial park, a priority sector (among them manufacturing, agro processing, energy and tourism), or who invest in a Rural Enterprise under the ZDA Act, are entitled to the following fiscal incentives:

  1. Zero corporate tax for five years from commencement of operations.
  2. Taxation on only 50 percent of profits in year six through year eight from commencement of operations and only 75 percent for years nine and ten.
  3. Five-year exemption on dividend taxes following the first year of declaration.
  4. Five-year customs duties exemption on imported machinery and equipment.
  5. Improvement allowance of 100 percent of capital expenditure on improvements or upgrading of infrastructure.

An investor may apply to establish and operate a bonded factory under Section 65 of the Customs and Excise Act. The GRZ created MFEZs in 2007, providing investors with waivers on customs duty on imported equipment, excise duty, and value added tax, among other concessions. It is currently unclear if the government will maintain these incentives (see Investment Incentives section).

There are four MFEZs currently operating: the Chambishi MFEZ in Copperbelt Province, the Lusaka South MFEZ which houses a mix of multi-national firms, and the Lusaka East MFEZ located near Lusaka’s Kenneth Kaunda International Airport and Chibombo MFEZ in Central Province which are heavily (if not exclusively) dominated by Chinese-owned enterprises. Foreign-owned firms enjoy the same investment opportunities as domestic firms in MFEZs. The ZDA Act is the primary legislation for investment in Zambia. An investor, foreign or local, is free to identify and suggest any other location in the country deemed economical for MFEZ development, although the government has prioritized designated areas in Lusaka, Chibombo, Ndola, Mpulungu, Chembe, Nakonde, Kasumbalesa, and Mwinilunga. Investors are encouraged to provide local employment and skills transfer to local entrepreneurs and communities. Investors are also encouraged to utilize local raw materials and intermediate goods and engage in technology transfer to qualify to operate in an MFEZ.

Zambia is active in several key regional organizations that promote regional trade and regulatory harmonization. COMESA launched its FTA in October 2000 and established a customs union in June 2009.

Although performance requirements are not imposed, authorities expect commitments made in applications for investment licenses to be fulfilled. Foreign contractors bidding on infrastructure projects are required by law to give 20 percent of works to Zambian small contractors. Outside of infrastructure projects, no requirements currently exist for local content, equity, financing, employment, or technology transfers. However, in January 2018 the government issued a Statutory Instrument (SI) instructing all industries to transport 30 percent of their cargo by rail. The Data Protection Bill, which was signed into law in March 2021, mandates data localization for sensitive personal data, but also outlines conditions for the cross-border transfer of other kinds of personal data. The government does not impose offset or local content requirements or preconditions for permission to invest in a specific geographic area, but investors are encouraged to employ local nationals. There is no legal definition of local content, and the most comprehensive local content legislation is contained in the Mines and Minerals Development Act of 2008. The Citizens Economic Empowerment Act of 2006 and Statutory Instrument of 2008 also contain local content provisions.

The GRZ encourages employment of local workers for unskilled labor as well as for skilled middle or senior management workers. Under the ZDA Act, any foreign investor who invests a minimum of $250,000 or its equivalent and employs a minimum of 200 employees at certain technical or managerial levels is entitled to a self-employment permit or resident permit.

The GRZ encourages investors where possible to use domestic content in goods or technology if available. Government through the Ministry of Commerce has developed the Local Content Strategy (launched 2018) to promote inclusive and sustainable growth through increased use of locally available goods and services in development sectors. The Strategy will be implemented through a law currently under formulation in a Bill and will compels businesses to use a predetermined local content percentage of local inputs and products in the production and provision of goods and services.

Currently, there is no requirement for foreign information technology providers to turn over source code or provide access to surveillance. The telecommunications sector is governed by the Information and Communications Technology Act No. 15 of 2009 (ICT Act) and falls under the Ministry of Technology & Science and regulated by the Zambia Information and Communications Technology Authority (ZICTA).

Government is committed to ensuring compliance and consistency with multilateral obligations through Trade Related Investment Measures (TRIMs) requirements. Although performance requirements are not imposed, authorities expect commitments made in applications for investment licenses to be fulfilled.

5. Protection of Property Rights

Property rights and the regulation of property are well defined in principle, but face problems in implementation. Contractual and property rights are weak. Courts are often inexperienced in commercial litigation and are frequently slow in reaching their decisions. The ZDA Act ensures investors’ property rights are respected. Secured interests in property, both movable and real, are recognized and enforced. Property can be owned individually, jointly in undivided shares, or by an entity such as a company, close corporation or trust, or similar entity registered outside Zambia. The ZDA Act provides for legal protection and facilitates acquisition and disposition of all property rights such as land, buildings, and mortgages. The Lands and Deeds Registry Act of Zambia states that a mortgage is only to operate as security and not a transfer or lease of the estate or interest mortgaged. There are two types of mortgages in Zambia, a legal and an equitable mortgage. A legal mortgage is created in respect to a legal estate by deed. An equitable mortgage does not convey legal title to the mortgage, and no power of sale vests in the mortgagee.

The president holds all land on behalf of the people of Zambia, which he may give to any Zambian, but the process is set in law. The Lands Act, Chapter 184, places a number of restrictions on the president’s allocation of land to foreigners. The ZDA Act makes provision for leasehold tenure of land by investors. The ZDA, in consultation with the Ministry of Lands, assists an investor in identifying suitable land for investment, as well as assisting the investor to apply through the Ministry of Lands. While land is technically owned by the president, it is worth noting that traditional chiefs have jurisdiction over traditional, or customary, land, which makes up roughly 70 percent of Zambia.

The Commissioner of Lands verifies that properties can be transferred after checking if ground rent has been paid and by conducting due diligence on the purchaser. Land held under customary tenure has no title, but where a sketch plan of the area exists, the chief can give written consent to an investor and a 14-year lease can be obtained for traditional land.

Despite Zambia’s abundant land for agriculture and other purposes, the process of land acquisition and registration is a major obstacle for investors in part due to extensive traditional ownership. Its acquisition involves negotiations with traditional leaders, who have to balance the demands of their subjects against the pressure to convert land for commercial purposes. Most available land has not been surveyed or mapped and, where this has been done, records are often outdated or difficult to retrieve from the Ministry of Lands.

The Ministry of Lands is centralized in Lusaka and faces problems with poor record keeping and slow processing of title deeds. To address these challenges the government, with the support of donor partners, has been working to reform land policy, including modernization of the Lands Department at Ministry of Lands, establishment of Land Banks, establishment of a Land Development Fund, demarcation of MFEZs and industrial parks, and development of farming blocks.

Intellectual property laws in Zambia cover domain names, traditional knowledge, transfer of technology, trademarks, patents, and copyrights, etc. Zambia is party to several international intellectual property agreements. The legal framework for trademark protection in Zambia is adequate; however, enforcement of intellectual property rights (IPR) is weak, and courts have little experience with commercial litigation. Copyright protection is limited and does not cover computer applications. Of the many pirated and counterfeit goods in Zambia, the main ones are DVDs, CDs, audio-visual software, infant milk, pharmaceuticals, body lotions, motor vehicle spare parts (such as tires and brake pads), beverages, cigarettes, toothpaste, electrical appliances, fertilizer, pesticides, and corn seed. Small-scale trademark infringement occurs in connection with some packaged goods utilizing copied or deceptive packaging. The Industrial Designs Act encourages the creation of designs and development of creative industries through enhanced protection and utilization of designs, and it provides for the registration and protection of designs and the rights of proprietors of registered designs. The Protection of Traditional Knowledge, Genetic Resources, and Expressions of Folklore Act provides a transparent legal framework for the protection of, access to, and use of, traditional knowledge, genetic resources, and expressions of folklore and guarantees equitable sharing of benefits and effective participation of holders.

The Zambia Police Service Intellectual Property Unit (IPU) carries out raids in shops and markets to confiscate counterfeit and pirated materials. The IPU tracks and reports on seizures of counterfeit goods but no consolidated record is available. There are fines for revealing proprietary business information, but they are not large enough to adequately penalize possible disclosures. Zambia’s patent laws conform to the requirements of the Paris Convention for the Protection of Industrial Property, to which Zambia is a signatory. It takes a minimum of four months to patent an item or process. Duplicative patent searches are not performed, but patent awards may be appealed on grounds of infringement.

Zambia is a signatory to a number of international agreements on patents and intellectual property, including the World Intellectual Property Organization (WIPO) Paris Convention and Bern Convention, as well as the Universal Copyright Convention of UNESCO. Zambia is also a member of the African Regional Industrial Property Organization (ARIPO). The country is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which is an international legal agreement between all the member nations of the World Trade Organization.

The Ministry of Commerce, Trade, and Industry and the Patents and Companies Registration Agency (PACRA) are the leading institutions responsible for the implementation of IPR laws in Zambia. The industrial property registration system at PACRA underwent an upgrade that linked its electronic documentation management system to WIPO’s WIPOScan, which provides for digitization of IPR records.

Zambia is not included in USTR’s Special 301 Report nor its Notorious Markets List. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at .

6. Financial Sector

Government policies generally facilitate the free flow of financial resources to support the entry of resources in the product and factor market. Banking supervision and regulation by the Bank of Zambia (BoZ) has improved slightly over the past few years. Improvements include revoking licenses of some insolvent banks, denying bailouts, limiting deposit protection, strengthening loan recovery efforts, and upgrading the training of and incentives for bank supervisors. High domestic lending rates, a lack of dollar and foreign exchange liquidity, and the limited accessibility of domestic financing have constrained business for several years. High returns on government securities encourage commercial banks to invest heavily in government debt to the exclusion of financing productive private sector investments, particularly for SMEs.

The Lusaka Stock Exchange (LuSE), established in 1993, is structured to meet international recommendations for clearing and settlement system design and operations. There are no restrictions on foreign participation in the LuSE, and foreigners may invest in stocks on the same terms as Zambians. The LuSE has offered trading in equity securities since its inception and, in March 1998, the LuSE became the official market for selling Zambian government bonds. Investors intending to trade a listed security or government bond are now mandated to trade via the LuSE. The market is regulated by the Securities Act of 1993 and enforced by the Securities and Exchange Commission (SEC) of Zambia. Secondary trading of financial instruments in the market is very low or non-existent in some areas.

The financial sector is comprised of three sub-sectors according to financial sector supervisory authorities. The banking and financial institutions sub-sector is supervised by the BoZ, the securities sub-sector by the SEC, and the pensions and insurance sub-sector by the Pensions and Insurance Authority. The Banking and Financial Services Act, Chapter 387, and the Bank of Zambia Act, Chapter 360, govern the banking industry. Zambia’s banking sector is considered relatively well-developed in the African context, but the sector remains highly concentrated. There are currently 19 banks in Zambia with the largest four banks holding nearly two-thirds of total banking assets. The dominance of the four largest banks in deposits and total assets has been diluted by increased market capture of smaller banks and new industry entrants, an indication of growing competitive intensity in this segment of the banking market. Government policies generally facilitate the free flow of financial resources to support the entry of resources in the product and factor market. There continued to be a steady increase in electronic banking and related services over the last few years.

The BoZ’s current policy rate as of March 2022 is 9.0 percent. Commercial lending rates averaged 25.65 percent in 2021, among the highest in the region, making the cost of capital for investment unattractive. One factor inhibiting more affordable lending is a culture of tolerating loan default, which many borrowers view as a minor transgression. Non-performing loans (NPLs) have continued to decline, closing the 2021 financial year at 5.82 percent compared to 11.63 percent in 2020. The government contributes to this problem, with arrears to government contractors estimated at $1.3 billion.

Banking officials acknowledge the need to upgrade the risk assessment and credit management skills of their institutions to better serve borrowers but note widespread financial illiteracy limits borrowers’ ability to access credit. Banks provide credit denominated in foreign currencies only for investments aimed at producing goods for export. Banks provide services on a fee-based model and banking charges are generally high. Home mortgages are available from several leading Zambian banks, although interest rates are still very high.

To operate a bank in Zambia, the bank must be licensed by the Registrar of Banks, Financial Institutions, and Financial Businesses (“the Registrar”) whose office is based at the BoZ. The decision to license banks lies with the Registrar. Foreign banks or branches are allowed to operate in country as long as they fulfill BoZ requirements and meet the minimum capital requirement of $100 million for foreign banks and $20 million for local banks. According to the BoZ, many banks in the country have correspondent banking relationships.

Generally, all regulatory agencies that issue operating licenses have statutory reporting requirements that businesses operating under their laws and regulations must meet. For example, the Banking and Financial Services Act has stringent reporting provisions that require all commercial banks to submit weekly returns indicating their liquidity position. Late submission of the weekly returns or failure to meet the minimum core liquidity and statutory reserves incur punitive penalty interest and may lead to the placement of non-compliant commercial banks under direct supervision of BoZ, closure of the undertaking, or the prosecution of directors.

All companies listed under the Lusaka Stock Exchange (LuSE) are obliged to publish interim and annual financial statements within three months after the close of the financial year. Listed companies are also required to disclose in national print media any information that can affect the value of the price of their securities. According to the Companies Act, Chapter 388, company directors need to generate annual account reports after the end of each financial year. The annual account, auditor’s report or reports on the accounts, and directors’ report should be sent to each person entitled to receive notice of the annual general meeting and to each registered debenture holder of the company. A foreign company is required to submit annual accounts and an auditor’s report to the Registrar.

The Non-Bank Financial Institutions (NBFIs) are licensed and regulated in accordance with the provisions of the Banking and Financial Services Act of 1994 (BFSA) and related Regulations and Prudential Guidelines. As key players in the financial sector, NBFIs are subject to regulatory requirements governing their prudential position, consumer protection, and market conduct in order to safeguard the overall soundness and stability of the financial system. The NBFIs comprise eight leasing and finance companies, three building societies, one credit reference bureau, one savings and credit institution, one development finance institution, 80 bureaux de change, one credit reference bureau, and 34 micro-finance institutions.

Private firms are open to foreign investment through mergers and acquisitions. The CCPC reviews and handles big mergers and acquisitions. The High Court of Zambia may reverse decisions made by the Commission. Under the CCPA, foreign companies without a presence in Zambia and taking over local firms do not have to notify their transactions to the Commission, as it has not established disclosure requirements for foreign companies acquiring existing businesses in Zambia.

Zambia does not have a sovereign wealth fund.

7. State-Owned Enterprises

There are currently 34 state-owned enterprises (SOEs) operating in different sectors in Zambia including agriculture, education, energy, financial services, infrastructure, manufacturing, medical, mining, real estate, technology, media and communication, tourism, and transportation and logistics. Most SOEs are wholly owned, or majority owned by the government under the Industrial Development Corporation (IDC) established in 2015. Zambia has two categories of SOEs: those incorporated under the Companies Act and those established by particular statutes, referred to as statutory corporations. There is a published list of SOEs in the Auditor General’s annual reports; SOE expenditure on research and development is not detailed. There is no exhaustive list or online location of SOEs’ data for assets, net income, or number of employees. Consequently, inaccurate information is scattered throughout different government agencies/ministries. The majority of SOEs have serious operational and management challenges.

In theory, SOEs do not enjoy preferential treatment by virtue of government ownership, however, they may obtain protection when they are not able to compete or face adverse market conditions. The Zambia Information Communications Authority Act has a provision restricting the private sector from undertaking postal services that would directly compete with the Zambia Postal Services Corporation. Zambia is not party to the Government Procurement Agreement (GPA) within the framework of the WTO, however private enterprises are allowed to compete with public enterprises under the same terms and conditions with respect to access to markets, credit, and other business operations such as licenses and supplies.

SOEs in Zambia are governed by Boards of Directors appointed by government in consultation with and including members from the private sector. The chief executive of the SOE reports to the board chairperson. In the event that the SOE declares dividends, these are paid to the Ministry of Finance. The board chair is informally obliged to consult with government officials before making decisions. The line minister appoints members of the Board of Directors from within public service, the private sector, and civil society. The independence of the board, however, is limited since most boards are comprised of a majority of government officials, while board members from the private sector or civil society that are appointed by the line minister can be removed.

SOEs can and do purchase goods or services from the private sector, including foreign firms. SOEs are not bound by the GPA and can procure their own goods, works, and services. SOEs are subject to the same tax policies as their private sector competitors and are generally not afforded material advantages such as preferential access to land and raw materials. SOEs are audited by the Auditor General’s Office, using international reporting standards. Audits are carried out annually, but delays in finalizing and publishing results are common. Controlling officers appear before a Parliamentary Committee for Public Accounts to answer audit queries. Audited reports are submitted to the president for tabling with the National Assembly, in accordance with Article 121 of the Constitution and the Public Audit Act, Chapter 378.

In 2015, the government transferred most SOEs from the Ministry of Finance to the revived Industrial Development Corporation (IDC). The move, according to the government, was to allow line ministries to focus on policy making thereby giving the IDC direct mandate and authorization to oversee SOE performance and accountability on behalf of the government. The IDC’s oversight responsibilities include all aspects of governance, commercial, financing, operational, and all matters incidental to the interests of the state as shareholder.

There were no sectors or companies targeted for privatization in 2021. The privatization of parastatals began in 1991, with the last one occurring in 2007. The divestiture of state enterprises mostly rests with the IDC, as the mandated SOE holding company. The Privatization Act includes the provision for the privatization and commercialization of SOEs; most of the privatization bidding process is advertised via printed media and the IDC’s website ( ). There is no known policy that forbids foreign investors from participating in the country’s privatization programs.


Executive Summary

Zimbabwe suffered serious economic contractions in 2019 and 2020 due to the economic mismanagement, the extended effects of the COVID-19 pandemic, and climate shocks that crippled agriculture and electricity generation. According to the government of Zimbabwe, the economy recovered strongly, growing by 7.8 percent, in 2021 although the International Monetary Fund (IMF) estimates the economy grew by 6.1 percent, thanks to increased agricultural production, high commodity prices, and improved capacity utilization in the manufacturing sector. The government expects the economy to grow by 5.5 percent in 2022 as the negative impacts of COVID-19 subside. International financial institutions also project positive but more modest growth, with the IMF forecasting a real GDP growth of 3.1 percent in 2022. Inflation remained high in 2021, but steadily declined to end the year at 60.6 percent. Authorities attributed the decline to the introduction of a weekly foreign exchange auction system in June 2020 and fiscal consolidation that resulted in near balanced budgets in 2020 and 2021. However, the inflation rate has continued to rise to 72.7 percent by March 2022 due to the negative effects of the Russia-Ukraine war on commodity prices as well as the depreciation of the Zimbabwe dollar. Zimbabwe’s local currency has lost 79 percent of its value relative to the U.S. dollar since the government adopted an auction system on June 23, 2020. A gap between the auction and parallel-market exchange rates has persisted, with U.S. dollars more than twice as expensive on the parallel market.

To improve the ease of 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 Finance Act (No 2) at the end of 2020 amended the Indigenization Act by removing language designating diamonds and platinum as the only minerals subject to indigenization (requiring majority ownership by indigenous Zimbabweans), finally ending indigenization requirements in all sectors. However, the new legislation also granted broad discretion to the government to designate minerals as subject to indigenization in the future. The government subsequently issued statements to reassure investors that no minerals will be subject to indigenization, including diamonds and platinum.

The government ended its 2019 ban on using foreign currencies for domestic transactions in March 2020. However, the authorities decreed businesses selling in foreign exchange must surrender 20 percent of the receipts to the central bank in exchange for local currency at the overvalued auction rate. Exporters must surrender 40 percent of foreign currency earnings at the unfavorable auction rate.

Zimbabwe owes approximately US$10.7 billion (US$6.5 billion of which is in arrears) to international financial institutions accounting for 71 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. Additionally, domestic banks do not offer financing for periods longer than two years, with most financing limited to 180 days or less. The sectors that attract the most investor interest include agriculture (tobacco, in particular), mining, energy, and tourism. Zimbabwe has a well-earned reputation for the high education levels of its workers.

Although the United States has a targeted sanctions program against Zimbabwe, it currently applies to only 83 individuals and 37 entities.  The U.S. Government imposed sanctions against specifically identified individuals and entities in Zimbabwe, as a result 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 that are not on the specially designated nationals (SDN) list.

After reaching US$745 million in 2018, Zimbabwe witnessed significant declines in foreign direct investment (FDI). According to data from the United Nations Conference on Trade and Development (UNCTAD), FDI inflows into Zimbabwe fell from US$280 million in 2019 to US$194 million in 2020.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 157 of 180 
Global Innovation Index 2021 113 of 132 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 (D)  
World Bank GNI per capita 2020 USD 1,140   

(D) – Information suppressed to avoid disclosure of data of individual companies.

1. Openness To, and Restrictions Upon, Foreign Investment

To attract FDI and improve the country’s competitiveness, the government has encouraged public-private partnerships and emphasized the need to improve the investment climate by lowering the cost of doing business as well as restoring the rule of law and sanctity of contracts. Implementation, however, has been limited.

The government amended the Indigenization Act by removing diamonds and platinum from minerals subject to indigenization (requiring majority ownership by indigenous Zimbabweans), although the new legislation appeared to grant broad discretion to the GOZ to designate minerals as subject to indigenization in the future. Subsequently, the GOZ reassured investors that no minerals will be subject to indigenization, including diamonds and platinum. However, there are smaller sectors “reserved” for Zimbabweans (see below).

To improve the ease of doing business, the government enacted legislation that led to the formation of the Zimbabwe Investment and Development Agency (ZIDA) in 2020. ZIDA replaced the Zimbabwe Investment Authority and serves as a one-stop-shop center in promoting and facilitating both domestic and foreign investment in Zimbabwe.

While the government has committed to prioritizing investment retention, there are still no mechanisms or formal structures to maintain ongoing dialogue with investors.

Foreign and domestic private entities have a right to establish and own business enterprises and engage in all forms of remunerative activity, but foreign ownership of businesses in certain reserved sectors is limited.

Foreign investors are free to invest in most sectors without any restrictions as the government aims to bring in new technologies, value-add manufacturing, and generate employment. According to the ZIDA Act, “foreign investors may invest in, and reinvest profits of such investments into, any and all sectors of the economy of Zimbabwe, and in the same form and under the same conditions as defined for Zimbabweans under the applicable laws and regulations of Zimbabwe.” However, the government reserves certain sectors for Zimbabweans such as passenger buses, taxis and car hire services, employment agencies, grain milling, bakeries, advertising, dairy processing, and estate agencies.

The country screens FDI through the ZIDA in liaison with relevant line ministries to confirm compliance with the country’s laws.

According to the country’s laws, U.S. investors are not especially disadvantaged or singled out by any of the ownership or control mechanisms relative to other foreign investors. In its investment guidelines, the government states its commitment to non-discrimination between foreign and domestic investors and among foreign investors.

In a 2019 review, Global Witness recommended reform of Zimbabwe’s shadowy diamond sector through publication of all diamond mining contracts, shareholdings, and their ultimate beneficial owners; production of timely annual reports, including audited accounts detailing revenues raised and all payments to the Treasury and all transfers to private shareholders. 

The Zimbabwe Environmental Lawyers Association (ZELA) published in October 2021 and March 2022 reports focused on the investment climate around the extractive sector. Though the reports view the extractive sector through the lens of PRC engagement, the information on laws, regulations, and gaps in legislation and enforcement remain relevant for all interested investors.

  • The Handbook of Zimbabwe-China Economic Relations:
  • Zimbabwe Open for Business: Progress Check on Implementation:

Policy inconsistency, administrative delays and costs, and corruption hinder business facilitation. Zimbabwe does not have a fully online business registration process, though one can begin the process and conduct a name search online via the ZimConnect web portal. The government created the Zimbabwe Investment Development Agency (ZIDA, ) which replaced the Zimbabwe Investment Authority (ZIA), the Special Economic Zones Authority, and the Joint Venture Unit to oversee the licensing and implementation of investment projects in the country. The Agency has established a one-stop investment services center (OSISC) which houses several agencies that play a role in the licensing, establishment, and implementation of investment projects including the Zimbabwe Revenue Authority (ZIMRA), Environmental Management Agency (EMA), Reserve Bank of Zimbabwe (RBZ), National Social Security Authority (NSSA), Zimbabwe Energy Regulatory Authority (ZERA), Zimbabwe Tourism Authority, the State Enterprises Restructuring Agency, and specialized investment units within relevant line ministries. The business registration process currently takes 27 days.

Zimbabwe does not promote or incentivize outward investment due to the country’s tight foreign exchange reserves. Although the government does not restrict domestic investors from investing abroad, any outward investment requires approval by exchange control authorities. Firms interested in outward investment would face difficulty accessing the limited foreign currency at the more favorable official exchange rate.

4. Industrial Policies

Government incentives to foreign investors depend on the form of investment, the sector, and whether the GOZ awards the investment national project status. For investment in industrial parks and tourism development zones, investors are exempt from paying tax for the first five years, after which they will pay tax at the rate of 25 percent (the normal tax rate is 35 percent). For build, own, operate, and transfer (BOOT) and build, operate, and transfer (BOT) joint ventures, investors are exempt from paying taxes for the first five years after which they will pay tax at the rate of 15 percent. Investors in the mining sector who export 50 percent of output benefit from a reduced corporation tax of 20 percent and are exempt from import duties on capital goods while losses are carried forward indefinitely for mining operations. Moreover, the government generally allows for duty exemptions in the importation of raw materials used in the manufacture of goods for export. In addition to these incentives, investments with national project status such as those in the renewable energy sector are allowed to borrow on local capital markets where lenders enjoy incentives including tax exemption on interest.

The GOZ set up a Zimbabwe Women’s Microfinance Bank in 2018 so marginalized women could access credit facilities with affordable rates and innovative women-centered financial products and services.

The GOZ encourages investment in renewable energy by waiving payment of duty on importation of solar equipment including batteries and panels.

Zimbabwe now has approximately 183 companies operating in Export Processing Zones (EPZs). Benefits include a five-year tax holiday, duty-free importation of raw materials and capital equipment for use in the EPZ, and no tax liability from capital gains arising from the sale of property forming part of the investment in EPZs. The government generally requires foreign capital comprise a majority of the investment in an EPZ-designated company and requires the company to export at least 80 percent of output. The latter requirement has constrained foreign investment in the zones. ZIDA took over the regulation of EPZs and the Special Economic Zones. However, to date, activity in special economic zones has been limited despite the incentives.

Although there are no discriminatory import or export policies affecting foreign firms, the government’s approval criteria heavily favor export-oriented projects. Import duties and related taxes range as high as 110 percent.

Foreigners intending to engage in meetings or discussions for business purposes are advised to secure a business visa for entry into Zimbabwe. Individuals found to be engaging in business-related activities on a tourist visa have been arrested, expelled from the country, and/or fined. A passport, visa, return ticket, and adequate funds are required to enter Zimbabwe.

In 2019, the government approved the Zimbabwe local content strategy to promote local value addition and linkages through utilization of domestic resources. According to the strategy, the country wants to increase local content levels in prioritized sectors from 25 to approximately 80 percent by 2023. However, the government has found it difficult to implement such a strategy.

There are no general performance requirements for businesses located outside Export Processing and Special Economic Zones. Government policy, however, encourages investment in enterprises that contribute to rural development, job creation, exports, the addition of domestic value to primary products, use of local materials, and the transfer of appropriate technologies.

Government participation is required for new investments in strategic industries such as energy, public water provision, and railways. The terms of government participation are determined on a case-by-case basis during license approval. The few foreign investors (for example, from China, Russia, and Iran) in reserved strategic industries have either purchased existing companies or have supplied equipment and spares on credit.

While foreign investors are not currently forced to use domestic content in production, the government is in the process of developing a local content policy designed to encourage the use of local inputs in production.

The government does not require foreign IT providers to turn over source code and/or provide access to surveillance. Only banks are required to maintain all their data in the country through the escrow agreement.

The new government investment guidelines do not permit mandatory and/or arbitrary performance requirements that distort or limit the expansion of trade and investment.

5. Protection of Property Rights

The government enforces property rights in residential and commercial properties in cities although this is not the case with agricultural land, as discussed above. Mortgages and liens do exist for urban properties although liquidity constraints have led to a fall in the number of mortgage loans. The recording of mortgages is generally reliable. The government retains ownership of all agricultural land with 99-year leases guaranteeing use. These leases remain too weak to serve as collateral for bank loans.

Zimbabwe follows international patent and trademark conventions, and it is a member of the World Intellectual Property Organization (WIPO). Generally, the government seeks to honor intellectual property ownership and rights, although a lack of expertise and manpower as well as corruption limit its ability to enforce these obligations. Pirating of books, videos, music, and computer software is common.

The government has not enacted new IP related laws or regulations over the past year. The country does not publish information on the seizures of counterfeit goods.

Zimbabwe is not included in the United States Trade Representative (USTR) Special 301 Report or Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at 

6. Financial Sector

Zimbabwe has two stock exchanges in Harare and Victoria Falls. The Zimbabwe Stock Exchange (ZSE) in Harare currently has 51 publicly listed companies with a total market capitalization of US$13 billion as of March 16, 2022. Stock and money markets are open to foreign portfolio investment. Foreign investors can take up to a maximum of 49 percent of any locally listed company with any single investor limited to a maximum of 15 percent of the outstanding shares. Regarding the money market, foreign investors may buy up to 100 percent of the primary issues of bonds and stocks and there is no limit on the level of individual participation.

There is a 1.48 percent withholding tax on the sale of marketable securities, while the tax on purchasing stands at 1.73 percent. Totaling 3.21 percent, the rates are comparable with the average of 3.5 percent for the region. As a way of raising funds for the state, the government mandated insurance companies and pension funds invest between 25 and 35 percent of their portfolios in prescribed government bonds. Zimbabwe’s high inflation has greatly eroded the value of domestic debt instruments and resulted in negative real interest rates on government bonds.

Zimbabwe launched the Victoria Falls Stock Exchange (VFEX) in September 2020. Four companies have listed on the VFEX with a market capitalization of US$256 million as of March 16, 2022.

The country respects the IMF’s Article VIII and refrains from restrictions on payments and transfers for current international transactions provided there is sufficient foreign exchange to finance the transactions. Depending on foreign currency availability, foreign companies with investments in Zimbabwe can borrow locally on market terms.

Although credit is allocated on market terms and foreigners are allowed to borrow on the local market, lack of foreign exchange constrains the financial sector from extending credit to the private sector.

Three major international commercial banks and several regional and domestic banks operate in Zimbabwe, but they have reduced their branch network substantially in line with declining business opportunities. The central bank (Reserve Bank of Zimbabwe (RBZ)) maintains the banking sector is generally stable despite a harsh operating environment characterized by high credit risk, high inflation, and foreign exchange constraints. Most Zimbabwean correspondent banking relationships are in jeopardy or have already been severed due to international bank efforts to reduce risk (de-risking) connected to the high penalties for non-compliance with prudential anti-money laundering/counter-terrorism finance (AML/CFT) guidelines in developed countries. However, in March 2022, the Financial Action Task Force (FATF) removed Zimbabwe from the “gray list” in response to “significant progress in improving its AML/CFT regime” and Zimbabwe is no longer subject to the FATF’s increased monitoring process.

As of December 31, 2021, the sector had 19 operating institutions, comprising 13 commercial banks, five building societies, and one savings bank. According to the RBZ, as of December 2021, 11out of 13 operating commercial banking institutions and two out of five building societies complied with the prescribed minimum core capital requirements. The level of non-performing loans rose slightly from 0.31 percent in December 2020 to 0.94 percent by December 2021. The RBZ attributed the increase to the disruptive effects of the COVID-19 pandemic. The RBZ reports the total loans-to-deposits ratio rose from 40.4 percent in December 2020 to 48.3 percent in December 2021.

According to the central bank, total deposits (including interbank deposits), rose from ZWL$204.13 billion in December 2020 to ZWL$476.35 billion in December 2021, an increase of 76 percent in U.S. dollar terms. The total assets of the banking sector stood at ZWL$763 billion or US$7 billion at the end of December 2021 up from ZWL$349.6 billion or US$4.3 billion on December 31, 2020.

The government set aside US$1 million toward administrative costs related to the setting up of a SWF in its 2016 budget. Although the government proposed to capitalize the SWF through a charge of up to 25 percent on royalty collections on mineral sales, as well as through a special dividend on the sale of diamond, gas, granite and other minerals, it has not done so. In 2021, state media listed the SWF as a shareholder of a new major mining company in Zimbabwe.

7. State-Owned Enterprises

Zimbabwe has 107 state-owned enterprises (SOEs), defined as companies wholly owned by the state. A list of the SOEs appears here . Many SOEs support vital infrastructure including energy, mining, and agribusiness. Competition within the sectors where SOEs operate tends to be limited. However, the government of Zimbabwe (GOZ) invites private investors to participate in infrastructure projects through public-private partnerships (PPPs). Most SOEs have public function mandates, although in more recent years, they perform hybrid activities of satisfying their public functions while seeking profits. SOEs should have independent boards, but in some instances such as the recent case of the Zimbabwe Mining Development Corporation (ZMDC), the government allows the entities to function without boards.

Zimbabwe does not appear to subscribe to the Organization for Economic Cooperation and Development (OECD) guidelines on corporate governance of SOEs. SOEs are subject to the same taxes and same value-added tax rebate policies as private sector companies. SOEs face several challenges that include persistent power outages, mismanagement, lack of maintenance, inadequate investment, a lack of liquidity and access to credit, and debt overhangs. As a result, SOEs have performed poorly. Few SOEs produce publicly available financial data and even fewer provide audited financial data. SOE poor management and lack of profitability has imposed significant costs on the rest of the economy.

Although the government committed itself to privatize most SOEs in the 1990s, it only successfully privatized two parastatals. In 2018, the government announced it would privatize 48 SOEs. So far, it has only targeted five in the telecommunications, postal services, and financial sectors for immediate reform, but the privatizations have not yet concluded. The government encourages foreign investors to take advantage of the privatization program to invest in the country, but inter-SOE debts of nearly USD 1 billion pose challenges for privatization plans. According to the government’s investment guidelines, it is still working out the process under which it will dispose its shareholding to the private sector.