Zimbabwe - Opportunities for Investment

A Closer Look at Zimbabwe:  Opportunities for Investment

After over three decades of one-man rule, Zimbabwe is making strides towards greater economic growth. The country’s natural resource abundance, educated population and recent structural and institutional reforms are key factors that are transforming its economy and therefore attracting potential investors. 

Zimbabwe is one of the fastest growing economies in Africa with a GDP growth rate of 6.1% in 2022 and 5.3% in 2023. The country’s growth in 2023 and 2024 was affected by droughts which saw reduced agricultural outputs. Nevertheless, Zimbabwe’s economy is on a positive trajectory mainly due to mining, agricultural expansion and a growing services industry. The country’s growth is expected to rise back to 6% in 2025.  

Zimbabwe is rich in natural resources, arable land, a skilled and educated population, overall presenting opportunities to investors. The country is home to the world’s largest Lithium deposits,a crucial source of income especially given the global demand for the mineral. Zimbabwe’s large lithium reserves have particularly attracted Chinese investors. The mining sector attracts well above 50% of the country’s foreign direct investments (FDI). This sector is critical to the national economy as it contributes to sustainable infrastructure development. The country is sitting on untapped wealth as some of its mineral reserves are yet to be exploited.  Moreover, Zimbabwe is among the world’s largest producers of tobacco. The agricultural sector is of key importance as it employs up to 70% of the workforce. The government is currently targeting an agricultural output of 12.5 billion, the industry is expected to increase by 13%. The services industry is also crucial for Zimbabwe's economy as it remains a major GDP contributor, reaching 55% in 2023. 

Significant areas of investment are in irrigation systems and farm mechanisation. To attract (FDI), the Zimbabwean government has taken significant initiatives including the adoption of the ‘open for business’ policy in 2018. The policy was to announce that Zimbabwe is a ‘safe investment destination’. In 2020 the Zimbabwe Investment and Development Agency (ZIDA) was created to facilitate both foreign and domestic investments in the country. These initiatives coincide with the country’s vision to become a middle income economy by 2030. Incentives such as tax breaks and tax deductibility have been adopted in hopes of encouraging value-added manufacturing. The government has also been working towards improving regulatory laws and licensing requirements.

Therefore, it is clear that Zimbabwe has the economic potential sufficient for it to reach middle income status, as well as be profitable to investors. Initiatives such as increasing government transparency, macroeconomic stability,  strengthening and reforming institutional structures are all steps Zimbabwe's government is pursuing to attract FDI. Economic and governance reform is imperative to the country as it aims to earn international trust after decades of  economic mismanagement and failure. Overall, observers like the World Bank view Zimbabwe’s economy to be on a positive outlook. Hence, there are great expectations for the Southern African country to maximise its potential.