1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The government’s policies are nominally designed to attract greater FDI in order to improve the country’s competitiveness, though it does not fully support the policies in practice. While the government appears to encourage public-private partnerships in order to enhance technological development and the need to improve the investment climate by restoring the rule of law and sanctity of contracts, the statements and actions of many senior government officials undermine Zimbabwe’s ability to attract FDI and ultimately undermine investor confidence.
Zimbabwe has an Indigenization and Economic Empowerment law that limits the amount of shares owned by foreigners in an organization to 49 percent with a requirement for the remaining 51 percent to be owned by indigenous blacks.
The Zimbabwe Investment Authority (ZIA) promotes and facilitates both foreign direct investment and local investment. ZIA’s website is . The country encourages companies to register with ZIA and the process currently takes approximately 90 days.
Limits on Foreign Control and Right to Private Ownership and Establishment
While there is a right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity, foreign ownership of businesses is limited to 49 percent (or less in certain sectors), as outlined above.
In 2007, the government passed the Indigenization and Economic Empowerment Act, which requires that “indigenous Zimbabweans” (i.e. black Zimbabweans) own at least 51 percent of all enterprises valued over $500,000.
In the natural resources sectors such as mining, the government restricts foreign ownership to 49 percent with the remainder reserved to indigenous Zimbabweans or the government. In the non-resource sectors, the government grants waivers based on achievements of certain initiatives such as technology transfer, creation of employment, and value addition. In certain sectors, such as primary agriculture, transport services, and retail and wholesale trade including distribution, foreign investors may not own more than 35 percent equity. The government reserves certain sectors such as passenger busses, taxis and car hire services, employment agencies, grain milling, bakeries, advertising, dairy processing and estate agencies for Zimbabweans.
The country screens FDI through the Zimbabwe Investment Authority (ZIA) in liaison with relevant line ministries to confirm compliance with the country’s investment and indigenization regulations. Once an investor meets the criteria, ZIA issues the company or entity with an investment certificate.
Other Investment Policy Reviews
In the past three years, the government has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) or the United Nations Conference on Trade and Development (UNCTAD).
Zimbabwe does not have an online registration process. The Zimbabwe Investment Authority (ZIA) is the country’s investment promotion body set up to facilitate both foreign direct investment and local investment. ZIA’s website is . The country encourages companies to register with ZIA and the process currently takes 90 days.
Zimbabwe does not promote or incentivize outward investment because of tight liquidity constraints.
2. Bilateral Investment Agreements and Taxation Treaties
The United States does not have a bilateral taxation and/or investment treaty with Zimbabwe.
Zimbabwe has investment treaties with 17 countries but ratified only seven of these treaties (with the Netherlands, Denmark, Germany, South Korea, South Africa, Botswana, and Switzerland). Three other investment agreements with Russia, India, and Iran are awaiting ratification before they go into effect. In spite of these agreements, the government has failed to protect investments undertaken by nationals from these countries, particularly with regard to land. In 2009, for example, an army officer seized a farm belonging to a German national but the government did not intervene, despite its assurance that Zimbabwe would honor all obligations and commitments to international investors.
The United States does have a Trade and Investment Framework Agreement (TIFA) with the Common Market for Eastern and Southern Africa (COMESA), of which Zimbabwe is a member. This TIFA provides a mechanism to talk about disputes, although the protection offered by the TIFA is much more limited than protection typically provided by a bilateral investment treaty.
5. Protection of Property Rights
The government enforces interests in residential and commercial properties in cities although this is not the case with agricultural land. Mortgages and liens do exist for urban properties although liquidity constraints have led to a fall in the number of mortgage loans. According to the World Bank’s 2015 Doing Business Report, Zimbabwe is ranked 94 out of 189 countries in terms of registering property. The recording of mortgages is generally reliable. With regard to agricultural land, the government provides and protects use rights of indigenous people and it is currently in the process of developing new 99-year leases that will guarantee use, with the government retaining ownership of all agricultural land.
Intellectual Property Rights
Zimbabwe applies international patent and trademark conventions, and it is a member of the World Intellectual Property Organization. Generally, the government seeks to honor intellectual property ownership and rights, although a lack of expertise and manpower and rampant corruption limit its ability to enforce these obligations. Pirating of videos, music, and computer software is common.
It does not appear that the government enacted new IP related laws or regulations over the past year. The country does not publish information on the seizures of counterfeit goods.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
*Zimbabwe National Statistical Agency
(D) Data suppressed to avoid disclosure of data of individual companies
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available