FDI flows to Zimbabwe are far below the country's potential due to the recession the country experienced in 2019 following the passage of Cyclone Idai and drought caused by El Niño, and the economic and health crisis triggered by the Covid-19 pandemic. According to the UNCTAD's 2022 World Investment Report, FDI inflows ammounted to USD 166 million in 2021, a significant decline compared to the pre-crisis period (USD 745 million in 2018). In the same year, the total stock of FDI reached USD 6 billion. The end of Robert Mugabe reign brings hopes of reforms that should stimulate the investment. FDI is mainly directed towards the mining sector (diamonds, gold, nickel, platinum), infrastructure, the wood industry, health care, water and sanitation, financial services, tourism, manufacturing and agriculture. China is the first investor in Zimbabwe. Russia, Iran and India are also important investors in the country.
The government seeks to attract FDI and has implemented the Zimbabwe Investment Authority (ZIA), which is the country's investment promotion body set up to promote and facilitate both foreign direct investment. In recent years, Zimbabwe has made it easier to obtain building permits, obtaining loans and resolving insolvency. However, the unpredictability of the government’s economic policies and the unstable political and economic climate in recent years has undermined foreign investment. The country has a very rich natural potential (second largest reserve of platinum and chrome; diamonds, coal, gold, platinum, copper, nickel, tin) and an adequate infrastructure (except for recurrent power cuts), which represent genuine assets to foreign investors. Nevertheless, the government reserves certain part of the economy to national investors and refuses to privatise some firms. Additionally, the country has a program of naturalisation through investment (CBI). The "law of indigenisation" (applied in certain sectors) requires foreign investor to concede 51% of their capital to native Zimbabweans. In addition, in late 2013 a law was passed which forbids foreigners from owning small business in Zimbabwe. Foreign investors have been dominating the local mergers and acquisitions scene, with 73% of all approved mergers since June 2017 concluded by foreign parties. Some of the biggest M&A deals in recent years were a merger between Linde AG and Praxair incorporation, as well as the acquisition of 49% shareholdings in Niculata Investments Limited by Vilmorin Singapore (Pvt) Limited, in 2018.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||194||250||342|
|FDI Stock (million USD)||5,908||6,158||6,499|
|Number of Greenfield Investments*||5||9||15|
|Value of Greenfield Investments (million USD)||220||1,581||5,218|
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
- abundant mineral resources (platinum, gold, diamond, nickel);
- agricultural wealth (maize, tobacco, cotton);
- potential for tourism development;
- membership of the Southern African Development Community (SADC);
- normalisation of relations with the international community.
- economic and financial situation hit by a long period of hyperinflation;
- shortage of cash;
- under-investment in infrastructures (especially energy infrastructure);
- precarious food and health situation: the majority of the population depends on international aid;
- AIDS prevalence rate among the highest in Africa and in the world.
Government involvement is necessary for any new investment in strategic sectors such as energy, public water supply and railways.
The government further 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
For more information, please visit Zimbabwe Investment Authority website.
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Latest Update: September 2023