Foreign Investment & Trade Framework
This administrative operational framework seeks to introduce the foreign investors to the various investment promotion bodies existing in Zimbabwe as well as clarifying regulations relating to remittability of dividends, disinvestment proceeds, contraction of offshore loans as well as projects the foreign investor can invest in.
The country has three main avenues for fostering foreign investment into Zimbabwe. These include the Zimbabwe Investment Authority (ZIA), Zimbabwe Stock Exchange (ZSE) and the Reserve Bank of Zimbabwe (Exchange Control).
Exchange Control Provisions on Foreign Investment
Foreign investors willing to invest in any of the Zimbabwean sectors will enjoy the following provisions:-
- No restriction on the amount of foreign currency brought into the country;
- Equity investment in cash or capital equipment;
- 100% repatriation of disinvestment proceeds;
- 100% remittance of dividends;
- Operation of Foreign Currency Accounts (FCAs);
- Foreign investors are allowed to borrow locally and offshore.
Investment Promotion Bodies
Zimbabwe Investment Authority
The Zimbabwe Investment Authority is the prime investment promotion body that deals with “Greenfield Projects” into the country.
The Zimbabwe Stock Exchange
The ZSE provides an alternative avenue for FDI injection into the local economy through the stock market. There are currently about 58 counters listed on the ZSE from various sectors of the economy including mining, agriculture, tourism, services and manufacturing.
Foreigners willing to invest on the ZSE are guided by the following guidelines.
- The purchase of shares on the ZSE by foreigners must be financed by an inward transfer of foreign currency through normal banking channels;
- The proceeds from the investment can be fully remitted subject to the deduction of the relevant withholding tax
- Disinvestment proceeds can be fully remitted;
- Capital gains made on disposal of the shares are subject to Capital Gains Tax (CGT) and can be fully remitted thereafter.
- With regards to the participation of foreigners in the primary issues of bonds and stocks, foreign investors can take up to 100% with no limit to the level of participation of each investor. Such investments can be disposed of in the secondary market although the foreign investors cannot purchase them from the secondary market. Such participation in primary issues is subject to the purchase being funded by an inflow of foreign currency through the normal banking channels.
RBZ Exchange Control
Exchange Control provides an avenue for foreign investment into existing entities and operations. Such investments, largely take the form of dilutions, mergers and acquisitions, takeovers, restructurings and rights issues, and these require specific Exchange Control approval for such ventures.
Investment in Unlisted Companies
Foreign investors may invest in unlisted companies for existing projects and Exchange Control approval shall be sought for such investments.
These applications are in respect of investments by foreigners into existing local enterprises not listed on the Zimbabwe Stock Exchange (ZSE) .
Investment on the Money Market
Foreign investors may subscribe for up to 100% of primary issues of bonds and stocks provided the purchase is financed by inward transfer of foreign currency through normal banking channels.
There is no limit on the level of participation by each investor, who are free to dispose of their investments in the secondary market.
Cross border Investments
Local companies are allowed to make outward foreign direct investments into foreign or offshore markets, subject to meeting Exchange Control criteria.
Cross border investments can be in the form of offshore branches or subsidiaries. The payback period for all investments funded from Zimbabwean resources should not exceed 4 years.
- Listing on External Stock Exchanges
Local entities are allowed to list on an external stock exchanges.
- Creation of Offshore Holding Companies
Local companies are allowed to establish offshore companies through share swaps.
- Trading in Derivatives
Authorised Dealers (banks) are permitted to enter into derivative transactions, such as forward contracts, futures, securitization instruments, swaps, options and other similar financial instruments.
- Profit Sharing Arrangements
Foreign investors are permitted to inject capital into local entities with the view of participating in the risk and return of the company.
The following Greenfield and Brownfield projects are eligible for profit sharing arrangements;
- Mining operations; and
Exchange Control Policy on external borrowings
Local companies are allowed to contract offshore loans. All external loans and/or trade credits are processed in line with Exchange Control Guidelines on External Borrowings (ECGEB).
Banks make repayments of loans without seeking prior Exchange Control approval quoting the authority number under which the loan was approved or registered with the Reserve Bank.