Financial Data
Updated 23 Sep 2017


Zimbabwe

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Business opportunities and risks

Opportunities for you to do business in Zimbabwe

Zimbabwe-Brochure-Image

There are many opportunities that could make investment in Zimbabwe a viable option. The following are potential opportunities and benefits that could come from an improvement to the business environment in the country:

  • Zimbabwe’s Internet and mobile capacity are variables that have potential for improvement. The Internet uptake in the country is at 38.8%, which is quite low. Mobile phone penetration is 81%, which means that for every 100 people in the population, 81 of them have a mobile phone subscription. You can get involved in e-commerce or offer online services to meet the population’s growing desire to be connected with the rest of the world.
  • With regard to the business environment, Zimbabwe is ranked 12th in sub- Saharan Africa for its conduciveness in starting and conducting a business. When operating in-country, you will find low social hostility. This is based on an index influenced by religious restrictions. There is, however, high political instability as well as poverty. A good opportunity lies in offering the population access to affordable products and services across a variety of sectors, such as food, clothing, technology, healthcare and more.
  • There are many features that attract investors to Zimbabwe, such as mining opportunities, tax incentives to new foreign investments, a good air freight network and a labour force with basic skills, including literacy. It’s also a fairly safe business environment when compared to other sub-Saharan African countries.
  • If you’re involved in mining, Zimbabwe offers an abundance of resources, such as coal, chromium ore, asbestos, gold, nickel, copper, iron ore, vanadium, lithium, tin and platinum group metals.
  • Its largely literate labour force is rated highly for their commitment, particularly when compared to other African countries in the region. You could upskill your Zimbabwean workers to become an even bigger competitor in the sector you’ve set your sights on.
Business opportunities
  • Zimbabwe recognises the need to boost investment. It has implemented a number of incentives that are designed to attract foreign direct investment (FDI). These include tax breaks for new investment by foreign and domestic companies, and allowing capital expenditures on new factories, machinery, and improvements to be fully tax deductible. The government also waives import taxes and surtaxes on capital equipment.
  • The allure of Zimbabwe’s mineral resources has supported FDI inflows. This sector is the largest recipient of foreign investment.
Operational risks to consider

While there are several opportunities worth tapping into in Zimbabwe, the country is not without its challenges, and smart investors and businesses should carefully consider and plan for these encounters before establishing a presence in the country.

Operational challenges in Zimbabwe include:

  • Zimbabwe’s labour force, although willing to work, is the least productive in the sub-Saharan Africa region, presenting a substantial detraction to investors. A chief contributing factor to this low labour productivity is the unreliable supply of water and electricity to energy dependent businesses;
  • The country boasts a comparatively well-educated work force; however, the education system has deteriorated in recent years due to the exodus of teachers as a result of lack of funding. Even though the country has a fairly young population, Zimbabwe’s government has been unable to provide opportunities to upskill its people. This impacts the skilled workforce available in the country. Zimbabwe has placed stringent regulations on the hiring of foreign professionals;
  • Corruption is rife in the government and police force. This hinders the ability to prevent and investigate crime and to effectively monitor and collect taxes;
  • Zimbabwe’s landlocked position in the centre of Southern Africa, with no direct access to sea ports, presents challenges to the country’s trade routes. You could end up spending more than anticipated when setting up supply chains;
  • Investors are unable to set up a business and begin trading quickly in Zimbabwe. The burden of red tape in areas such as business registration and closure, and obtaining construction permits is stifling. This creates significant inefficiencies in the business environment and is a powerful barrier to investment. Similarly, start-up costs are high, as are the costs associated with obtaining a construction permit;
  • The economic situation for the average Zimbabwean family has weakened since 2003. This negatively impacts their propensity to spend and consume, which means you need to compete on price to be in business here.

 

Business challenges
  • It would take approximately three months (90 days) to start a business in Zimbabwe; this is much higher than the regional average of 26.8 days in sub-Saharan Africa.
  • Businesses operating in the country are hindered by relatively expensive labour costs due to extensive national minimum wage regulations, high severance pay packages and generous annual leave allowances. Businesses do, however, benefit from a low rate of labour tax and contributions.
  • Zimbabwe’s landlocked position in the centre of Southern Africa, with no direct access to sea ports, presents challenges to the country’s trade routes.
  • Extensive investment is needed to improve the quality of the road network and increase the efficient functioning of supply chains.
  • Zimbabwe lacks a sovereign currency. This limits the country’s ability to improve money supply through the issue of notes and lending.
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