Zimbabwe - Foreign investment



Zimbabwe Foreign Investment 2041
Photo by: Kheng Guan Toh

From independence in 1980 until 1991, the government was very defensive toward foreign investment, subjecting each proposal to careful scrutiny and requiring foreign investors to get permission from the Foreign Investment Center for the development of any new enterprise in Zimbabwe. Enterprises could be 100% foreign owned, especially in priority areas, but there was (and is) in effect a strong preference for joint ventures with at least 30% local participation.

In 1991 there was some revision of the regulations but the emphasis on indigenization remained at least as strong as the emphasis on the need to attract foreign investment. There is a long list of reserved sectors, but priority areas are offered a schedule of tax and tariff exemptions and incentives. Incentives are aimed at encouraging capital investments, the transfer of technology, the utilization of local raw materials, the development of rural areas, the use of labor-intensive methods, and the hiring of local personnel. Industries geared toward exporting that meet EPZ requirements receive tax holidays and customs free trade. In 1992, as part of a structural reform program under the IMF's Enhanced Structural Adjustment Facility (ESAF), the Zimbabwe Investment Centre (ZIC) was established as a one-stop shop for investment approval. In 1995, disbursements under the ESAF program were suspended for failure to meet IMF targets, and in 1996, the government substituted a second plan, the Zimbabwe Program for Economic and Social Transformation (ZIMPREST), whose operations investors have found much less satisfactory. By the late 1990s, political turbulence and the government's defiance of the IMF had greatly increased investor risk, and brought foreign direct investment flows to a standstill.

In 1998, foreign direct investment (FDI) in Zimbabwe totaled over $444 million; by 2001, FDI in-flow had fallen to $5.4 million. There has been a comparable decline in foreign portfolio investment, reflected in the transformation of Zimbabwe's capital account balance, from a surplus in 1995 equal to 7.1% of GDP to a deficit in 2002 equal to 6.5% of GDP. The lack of foreign currency in the country has made investment even less attractive because of the near-impossibility of converting earnings out of the rapidly depreciating local currency, which the government in any cases restricts. The suspension of IMF funding, with its negative implications about the credit-worthiness of the country, has limited most business transactions to a cash basis. The situation was worsened in June 2003, when the IMF suspended Zimbabwe's voting rights in the organization for failure to make effective efforts to repay arrears of about $305 million to the fund. Zimbabwe's total arrears increased from $700 million at the end of 2001 to $1.5 billion at the end of 2002. Somewhat ironically, the Zimbabwe Stock Exchange (ZSE), founded in 1896 and open to foreign investment since 1993, has been the best- or second-best-performing emerging market stock exchange since 1999, propelled by inflation rates that in 2003 were reaching 300%.

Most foreign investment in Zimbabwe has roots in the colonial era, such as the mining conglomerate Anglo-American of Zimbabwe (AMZIM), and the timber company Lonrho, long the country's two largest investors. In 2001 Lonrho sold its timber holdings in Zimbabwe to Brotherhood Holdings Ltd. for a cash payment of $275 million. AMZIM, after selling off a number of subsidiaries, announced in June 2003 that it was relocating its headquarters to South Africa. Government policy allows squatters to take over, at times forcefully, white-owned commercial farms. When Zimbabwe was Rhodesia, white farmers, constituting less than 1% of the population, controlled over one-third of the land. Under Zimbabwe's investment regime investments in agriculture were discouraged and underutilized land was subject to fair-value purchase by the government for redistribution to family farmers. This policy primarily affected the 50% of the 11 million ha of agricultural estates created prior to independence. The United States provided some funding for a land-for-purchase program from 1980 to 1997, but by 1998 the government had rejected this gradualist approach as too slow. By 2003, over 4,000 white-owned farms had been taken against the will of the owners.

User Contributions:

praise
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Jun 19, 2008 @ 6:06 am
thank you for your information.I am doing my project on forign direct investment in zimbabwe pliz send me a lot of related information
Johannes Chiminya
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Aug 25, 2008 @ 4:16 pm
Thank you for your piece o useful information. Can you please send me some more information, especially data on FDI as I am doing a dissertation on the impacts of FDI on Stock market performance on the Zimbabwe Stock Exchange. I am finding it hard to get current data on the inflows of FDI.
suzanne
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Sep 25, 2008 @ 8:08 am
thanks for the material.
im doing a term paper on mncs influence on zimbabwe's political economy theres little written on mncs n their operations as well as their impact.
i hope to get more info from you.thanks!
yeu
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Sep 21, 2009 @ 12:12 pm
thanks for the information.however i also need statistical data on foreign direct investment in zimbabwe and any other 2 southern african countries from 1980 to date
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Jun 9, 2010 @ 8:08 am
i am working on a project on FDI and Economic Growth in Zimbabawe. i need statistics of these variables since 1985 or so.

Thank u
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Aug 23, 2010 @ 7:07 am
Thanks for the article, it is educative. I would appreciate if you can research on the same topic for the period of the Government of National Unity.
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Sep 13, 2010 @ 1:13 pm
Thank you for the information. Do you have effects of FDI in Mining Industry
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Oct 8, 2010 @ 4:16 pm
Thanks for the information. I am doing a project on the impacts of interest rates on foreign direct investment. Do you have any information and statistical data related to this topic?
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Dec 14, 2010 @ 3:03 am
what has been the impact of the fiscal and monetary policies on investment in zimbabwe for the past 10 years?
Douglas Chidodo
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Feb 15, 2011 @ 3:03 am
may you please send me current information on Zimbabwe's FDI because i am doing a research on the impact of multi ccurrency on FDI'S.
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Feb 25, 2011 @ 5:05 am
may you please send me information on whether our Zimbabwean environment is conducive for Foreign direct investments
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Mar 31, 2011 @ 7:07 am
Thanks for the article, do you have data on FDI from 1990 to 2005, I am doing a research on effects of FDI in the manufacturing sector.
rufenje
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May 19, 2011 @ 1:01 am
nice article more statistics on fdi in zimbabwe from 1980 to date
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Jun 4, 2011 @ 12:12 pm
Thank so much for the information. Please provide more on the effects of indeginisation laws to FDI in the manufacturing and mining sectors in Zimbabwe
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Aug 3, 2011 @ 2:02 am
Thank for the essential information.i am carrying out a dissertation on the on the Zimbabwean export function can please send me the guidelines.lam finding it difficult to do my data analysis .
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Aug 23, 2011 @ 2:02 am
thanks for the information. Please can you provide me with the information on the changes in Agricultural Credit Policy in Zimbabwe from 1980 to date. many thanks
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Aug 31, 2011 @ 1:13 pm
thanks so much for giving me this chance to ask question.lm a student and lm doing my dissertation on the causal relationship between foreign direct investment and capital account, may you do me favor by posting me FDI and capital account from 1980 upto date.
thanks in advance
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Sep 9, 2011 @ 5:05 am
Thank you for the information on FDI. Can you help me with more information on the impact of FDI on economic growth in zimbabwe, which is my research project topic. i am a student at Great Zimbabwe University
Qhelile
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Jan 4, 2012 @ 2:02 am
well writtern article. please if u have any more information or articles that you have written on the subject at hand could you mail them to me. i like the clarity in tone used in ur article it makes a lame man easily understand the topic without too much confusion.
Gari
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Jan 24, 2012 @ 3:03 am
Thank you for such an informative article. Can you please send me more articles on the impact of indiginisation policy on foreign direct investment in zimbabwe. I am working on am MBA term paper.
Tinashe
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Feb 12, 2012 @ 11:11 am
Thanx for great supervision i was doing the impact of government policies n programs on business
Nomore Sabato
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Feb 26, 2012 @ 3:03 am
Thank you for your piece of useful information. Can you please send me some more information, especially data on Interest rates as I am doing a dissertation on the impacts of interest rates on Stock market performance on the Zimbabwe Stock Exchange.
Hussein Robai
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Jun 6, 2012 @ 9:09 am
how have a visa to Zimbabwe from a cantry where there is no embassy for Zimbabwe in it?
innocent
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Jun 20, 2012 @ 2:14 pm
thank you for the powerful insight on Zim's economy.i happen to be doing a quantitative analysis of the determinants of Zim's private investment. i will be grateful if you would send me more stuff on coutry risk profile for the past 10/12 years, FDI, GDP and trade terms esp the current account.
moses musikambesa
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Sep 12, 2012 @ 8:08 am
thanks very much for your information,my project needs the effects of taxation of capital on investment,can yu please sent me information,thanks
Tinashe
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Sep 21, 2012 @ 2:02 am
Thank you for the information i greatly appretiate this useful article. if you have some statistical information which can be useful for a research please send it to my e-mail i am doing a dissertation on something to do with investment and national output relation since 1988 up to now.
geraldine
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Mar 27, 2013 @ 2:14 pm
my project needs information on the extent to which MNCs support indigenisation or empowerment.
mary
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Apr 9, 2013 @ 12:00 am
Thank you for the information. Im doin a dissertation on tax incentives and the impact on fdi. Can you please send me mo information, thank you
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May 27, 2013 @ 9:09 am
Thanks for the information. I need information on "Give an overview of FDI in the agro-based and mining sectors in Zimbabwe".
Kudzai Gomiwa
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Jun 26, 2013 @ 7:07 am
Thank you, for the information however was kindly asking if you could expose how much China as the major investor in the economy of Zimbabwe has contributed to the Zimbabwean economy in terms of the FDI. i am doing a dissertation on Chinese labour practises in Zimbabwe.
Ruuds
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Oct 8, 2013 @ 6:06 am
this is good. Can you provide help on the sources of this information, it is very useful.
Vivian ngwezuka
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Feb 7, 2014 @ 10:10 am
Good staff can i have determinants of FDI currently doing a desertation
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Feb 20, 2014 @ 3:03 am
Thank you for the information. My project needs the effects of tax regulations on foreign investments.

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