CLIVE MASANGO*
In 2025, Zimbabwe introduced the Indigenisation and Economic Empowerment (Foreign Participation in Reserved Sectors) Regulations, 2025 ("the Regulations"). These Regulations apply to foreign nationals who are not citizens of Zimbabwe and wish to participate in any reserved sector of the economy in Zimbabwe.
What is a reserved sector?
A reserved sector refers to parts of a country's economy that are set aside by the government for exclusive operation by local citizens. This means that foreigners or foreign companies usually cannot own or operate in these areas, aiming to boost local businesses, protect key industries, and ensure local benefits from resources, among other objectives.
In Zimbabwe, the Indigenisation and Economic Empowerment Act [Chapter 14:33] defines a reserved sector of the economy as a sector comprising those kinds of businesses reserved for citizens of Zimbabwe, as listed in the First Schedule.
The reserved sectors are listed in the Schedule as:
- Transportation (passenger buses, taxis, and car hire services)
- Retail and wholesale trade
- Barber shops, hair dressing, and beauty salons
- Employment agencies
- Estate agencies
- Valet services
- Grain milling
- Bakeries
- Tobacco grading and packaging
- Advertising agencies
- Provision of arts and crafts
- Artisanal mining
- Haulage and logistics industry
- Borehole drilling
- Clearing and customs
- Shipping and forwarding
- Pharmaceutical retailing
How does a foreign national qualify to participate in a reserved sector?
To qualify for participation in a reserved sector, a foreign national must meet the following criteria:
(a) be an individual or legal entity registered or incorporated in Zimbabwe, with the majority or minority of the stake or shares owned by the foreigner;
(b) meet a certain threshold as stated in the Regulations' Schedule;
(c) be registered for tax purposes with ZIMRA;
(d) maintain a bank account under the Bank Use Promotion Act [Chapter 24:24];
(e) present a sound business plan containing factors required by the Indigenisation and Economic Empowerment Act [Chapter 14:33].
Note that qualification for participation does not mean automatic participation in the reserved sector, as the foreign national must apply to the Minister for permission to participate in the relevant reserved sector. The Minister may issue a permit or reject the application.
Impact of the regulations on foreign businesses already operating in reserved sectors
Foreign businesses that were already operating in the reserved sectors without a permit were granted thirty (30) days to submit a regularisation plan. A regularisation plan is a detailed, time-bound written plan outlining the specific actions a foreign-owned business operating in a reserved sector will take to achieve full compliance with the Regulations within the stipulated time.
These foreign businesses are further required, within a period of three (3) years, to divest a minimum of seventy-five percent (75%) of their equity to Zimbabwean citizens. If a foreign-owned business operating in the reserved sector fails to do so, it shall be subject to suspension or revocation of its business licences.
In summary, the regulations provide a framework for foreign participation in reserved sectors, aiming to balance local empowerment with economic growth.
Foreign nationals and businesses must understand the rules, meet the requirements, and comply with the regulations to operate successfully in these sectors.
*Clive Masango is an attorney practising with Sarimana-Takawira Attorneys and writes here in his personal capacity. You can get in touch with him via email: cm@stattorneys.co.zw or clivemasangoo@gmail.com.
Disclaimer: The information and opinions contained above are for general information purposes only. They do not constitute a legal opinion or other professional advice.
0 Comments