Zimbabwe presents a compelling investment opportunity with its rich natural resources, strategic location in Southern Africa, and ongoing economic reforms aimed at improving the business climate. The country boasts vast mineral reserves, including gold, platinum, lithium, and diamonds, alongside a thriving agricultural sector and growing tourism potential. Recent government efforts to stabilize the economy, streamline regulations, and incentivize foreign investment such as tax breaks for priority sectors and special economic zones, further enhance its appeal. While challenges like currency volatility and bureaucratic hurdles persist, Zimbabwe’s untapped potential, skilled workforce, and improving infrastructure make it a frontier market with high growth prospects. Investors can benefit from early-mover advantages, particularly in mining, energy, agribusiness, and manufacturing, supported by a legal framework that welcomes foreign capital. A proactive approach to tax planning and compliance will be essential to navigate the evolving fiscal landscape and maximize returns.
1. Legal framework
1.1. What laws and regulations govern exchange control regime in your jurisdiction?
Exchange control regulations are governed by the Exchange Control Act [Chapter 22:05], which provides the Reserve Bank of Zimbabwe (RBZ), with the authority to implement and enforce policies. The President, under Section 2 of the Act, confers powers to the RBZ to administer exchange control regulations. Supporting this Act are various statutory instruments and circulars issued by the RBZ to address specific aspects of foreign currency management.
1.2. Which bilateral and multilateral exchange control instruments have an effect in your jurisdiction? How is regulatory cooperation and consolidated supervision ensured?
- The RBZ administers the exchange control regulations, ensuring compliance through licensing and monitoring of authorized dealers, money transfer agencies, and bureaux de change. Regulatory cooperation and consolidated supervision are assured through the RBZ’s enforcement powers, which include extraterritorial reach to regulate transactions involving Zimbabwean residents or assets abroad. The RBZ also collaborates with authorized dealers to implement policies, monitor foreign currency flows, and combat illicit financial activities, ensuring alignment with national economic objectives. While primarily governed by domestic laws, Zimbabwe aligns with several bilateral and multilateral agreements that influence its foreign exchange policies. Regionally, it adheres to SADC protocols, particularly the Finance and Investment Protocol, which promotes harmonized exchange controls to facilitate cross-border trade, and COMESA’s monetary cooperation framework, which encourages forex liberalization among member states.
- As an AfCFTA signatory, Zimbabwe is gradually adjusting its trade and forex policies, though it maintains strict controls to protect reserves. Internationally, while not bound by formal IMF exchange control rules, Zimbabwe’s engagements with the IMF and World Bank inform its reserve management and balance of payments strategies. Bilaterally, the country has investment treaties and tax agreements (e.g., with China and South Africa) that include provisions on fund repatriation, subject to RBZ approval. Zimbabwe is currently not a signatory to specific exchange control treaties but has agreement's in investment treaties containing provisions for exchange control.
1.3. What are the current priorities of regulators and how do they work with the banking industry?
Sibia system
The current priorities of regulators include managing foreign exchange resources efficiently, maintaining balance of payments stability, and curbing illicit financial flows. The RBZ engages with the banking sector through strict licensing requirements, regular monitoring, and enforcement of compliance with exchange control regulations. Authorized dealers are required to adhere to RBZ directives, submit detailed reports on foreign currency transactions, and ensure proper allocation of forex to priority sectors such as manufacturing, mining, and critical imports. The RBZ also issues circulars and public notices to provide guidance on permissible transactions, retention policies for exporters, and cross-border payment approvals, ensuring transparency and accountability in the banking sector. Additionally, the RBZ imposes penalties for non-compliance, including civil fines and forfeitures, to maintain financial discipline and protect Zimbabwe’s foreign exchange reserves.
2. Exchange control regime
2.1. Can a subsidiary or affiliate repatriate money to a non-resident parent company?
The Exchange Control Act [Chapter 22:05] and S.I. 109 of 1996 govern such transactions, requiring prior authorization for outward remittances, including dividends, profits, or capital repayments. The RBZ evaluates these requests based on factors such as the availability of foreign currency, compliance with surrender requirements for export proceeds, and adherence to Zimbabwe’s exchange control policies. While repatriation is permitted, it is not automatic and must align with regulatory conditions, including potential restrictions or phased approvals to manage foreign currency outflows.
2.2. Is there limitation of transfer of foreign currency to procure goods or payment for services to non-resident person?
- The country imposes limitations on foreign currency transfers for payments to non-residents for goods or services. Under Part IV (Control of Payments) of S.I. 109 of 1996, all cross-border payments, including imports, royalties, management fees, and service payments, require RBZ approval. The RBZ prioritizes foreign currency allocations for critical sectors (e.g., fuel, medicine) and may restrict or delay approvals for non-essential transactions. Additionally, businesses must provide supporting documentation (e.g., invoices, contracts) to justify payments, and unauthorized transactions may attract penalties, including civil fines or criminal prosecution under the Exchange Control Act.
- The current framework requires exporters to surrender 30% of their foreign currency earnings (up from 25%), while the RBZ continues to prioritize forex allocation to critical sectors such as fuel, medicines, and industrial inputs. The introduction of the ZiG currency in 2024, backed by gold and foreign currency reserves (now standing at approximately US550million), has contributed to relative exchangerate stability, with the parallel market premium narrowing significantly in recent months.The RBZ maintains a cautious monetary policy stance, reflected in highstatutory reserve requirements, has contributed to relative exchange rate stability, with the parallel market premium narrowing significantly in recent months. In addition, the RBZ has put a cap of 3% of total turnover on payment of management fees and royalties.
2.3. Can a subsidiary easily make payments for intra-group transactions?
Intercompany payments by a subsidiary to related non-resident entities are permissible but not automatic. The RBZ scrutinizes such transactions to prevent profit shifting, over-invoicing, or illicit outflows. Under S.I. 109 of 1996, subsidiaries must obtain RBZ approval for intercompany payments (e.g., royalties, management fees, or loan repayments) and demonstrate that the transactions are arms-length and commercially justified. The RBZ may impose conditions, such as caps on payment amounts or mandatory use of retained export earnings. Non-compliance can result in penalties, including forfeitures or suspension of foreign currency access. Thus, while possible, intercompany payments require strict adherence to regulatory procedures.
2.4. Are there rules against intercompany netting off?
While the exchange control regulations emphasize streamlining forex allocations and enhancing transparency in the interbank market, they do not specifically mention netting off.
2.5. Are permits required to transfer money to a third party or non-resident entity for procurement of goods or services?
Permits or approvals are required for outward remittances to third parties or non-residents. Payments outside Zimbabwe, including for imports, royalties, management fees, or services, must be authorized by the RBZ. The regulations prohibit payments to foreign residents without exchange control approval, and banks will only process transfers after verifying RBZ clearance. Documentation such as invoices, contracts, and proof of underlying transactions must be submitted to justify the remittance.
2.6. What requirements or documentation must be in place before banks authorize requests for international transfers?
Banks require the following for international transfers, as per S.I. 109 of 1996 and RBZ circulars:
- RBZ Approval: Prior authorization for cross-border payments (e.g., Form A2 for imports).
- Supporting Documents: Invoices, contracts, shipping documents (for imports), or service agreements.
- Tax Clearance: Proof of tax compliance from the Zimbabwe Revenue Authority (ZIMRA).
- Foreign Currency Allocation: Evidence of forex availability (e.g., from the RBZ auction or FCA).
- Purpose Declaration: A detailed justification for the transfer (e.g., dividend remittance requires RBZ approval)
2.7. Have there been recent directives issued by your Central Bank on Exchange Control?
The RBZ has recently issued several key exchange control directives as part of its February 2025 Monetary Policy Statement. These measures aim to stabilize the exchange rate, enhance foreign currency liquidity, and promote the use of the local currency (ZiG). Key directives include a reduction in the foreign currency retention threshold for exporters from 75% to 70%, with the option to deposit the ZiG equivalent of the additional 5% into a US Dollar Denominated Deposit Facility (USDDDF) for value preservation. The RBZ has also removed weekly trading limits on the interbank foreign exchange market, abolished the 5% margin rule in favour of market-driven pricing, and doubled the annual limit for prepaid international debit/credit cards from US$500,000 to US$1 million to discourage cash usage in cross-border transactions. Additionally, banks are required to comply with foreign currency exposure limits (10% single/20% aggregate of net capital), and all entities must now use ZiG as the presentation currency in financial statements to standardize reporting.
3. Exchange control contraventions
Enforcement
3.1. Which entities are responsible for enforcing the relevant laws and regulations? What powers do they have?
The RBZ is the primary body responsible for enforcing exchange control laws and regulations and derives its authority from Section 2 of the Act, which grants it extensive regulatory powers, including the administration of foreign currency transactions, licensing of authorized dealers (such as banks and bureaux de change), and oversight of cross-border financial activities. The RBZ monitors compliance through audits, requires detailed reporting from financial institutions, and imposes penalties for violations, including fines, forfeitures, and criminal prosecution under Section 5 of the Act. Additionally, the Exchange Control Division of the RBZ issues directives, statutory instruments, and circulars to clarify regulations and ensure consistent enforcement. The RBZ also collaborates with other entities, such as customs and law enforcement, to investigate illicit financial flows, conduct searches, and seize unlawfully held foreign currency. Its powers extend extraterritorially, allowing it to regulate transactions involving Zimbabwean residents or assets abroad. The Financial Intelligence Unit is also one of the key regulatory authorities in exchange control, responsible for managing illicit financial flows and instigating recovery measures such as bank seizures. The President of Zimbabwe may also exercise regulatory authority under the Act, particularly in matters affecting national economic stability.
Sanctions
3.2. What sanctions are applicable in the event of a violation of the exchange control regime?
The RBZ enforces civil penalties through designated officers, who may issue fines ranging from ZWG 1 million to ZWG 5 million (or 5% daily cumulative penalties for non-payment) for violations like misuse of auction-allocated forex or refusal to accept local currency for mandated transactions (Section 11). Authorized dealers submitting false documentation face penalties up to ZWG 5 million. Additional measures include suspension of licenses for non-compliant financial institutions and rewards for whistleblowers (10% of recovered funds under Section 10). The RBZ’s extraterritorial powers ensure penalties apply even to offshore breaches involving Zimbabwean residents or assets.
4. Trends and forecasts
4.1. How would you describe the current exchange control regime and trends in your jurisdiction? Are there any plans for further developments in the next 12 months, including proposals for legislative reforms?
The regime prioritizes allocating scarce forex to critical sectors (e.g., fuel, medicines, and raw materials), enforcing export proceeds surrender requirements, and curbing parallel market activity. Key features include mandatory foreign currency account (FCA) regulations, RBZ approval for cross-border payments, and strict monitoring of authorized dealers. Recent trends show increased enforcement against illicit flows, with civil penalties and criminal sanctions for non-compliance. The RBZ has also expanded the forex auction system, though delays in allotments and exchange rate disparities persist.
Looking ahead, the RBZ has signalled limited but strategic adjustments to the exchange control regime over the next 12 months. Key anticipated developments include the removal of weekly transaction limits on the interbank foreign exchange market to improve liquidity, the expansion of the US Dollar Denominated Deposit Facility (USDDDF) to help exporters manage ZiG conversions, and an increase in prepaid international card limits from US$500,000 to US$1 million annually to encourage formal cross-border transactions. While no major legislative overhauls are expected, the RBZ may introduce targeted refinements to the Exchange Control Act to enhance compliance and align with regional trade agreements such as the African Continental Free Trade Area (AfCFTA). The central bank also plans to continue accumulating gold and foreign currency reserves, targeting 40 tonnes of gold production in 2025 to further bolster the ZiG's backing.
Despite these measures, challenges persist, including ongoing dollarization pressures and liquidity constraints in the banking sector. The RBZ's approach remains focused on gradual, stability-oriented reforms rather than rapid liberalization, with any further adjustments likely contingent on sustained inflation control and reserve accumulation.
4.2. Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with regard to cryptocurrencies or financial technologies in general?
Zimbabwe does not currently have a comprehensive regulatory framework specifically for cryptocurrencies, but the Reserve Bank of Zimbabwe (RBZ) has taken steps to monitor and manage risks associated with digital assets. The regulatory body has directed financial institutions to adopt cybersecurity audits and is working to integrate fintech into its oversight framework, particularly for payment systems (e.g., ISO 20022 standards for RTGS, Paragraph 149). While cryptocurrencies are not yet formally regulated, the RBZ’s Financial Intelligence Unit (FIU) monitors their use to curb illicit flows (Paragraph 227), and the Bank Use Promotion Act discourages informal transactions that bypass banking channels.
