US notes Zimbabwe's progress in improving the business environment

A recent 2025 Zimbabwe Investment Climate Statement by the United States Department of State acknowledges Zimbabwe's progress in improving the business environment but warns that persistent corruption, weak institutions, and inconsistent policies continue to deter investor confidence.

The report highlights several reforms undertaken by President Emmerson Mnangagwa's government in recent months, including reducing regulatory costs and removing certain barriers to investment. While these measures mark the first decisive efforts to improve the business climate since 2017, the US cautioned that institutional weaknesses and corruption must be addressed for reforms to translate into tangible investor confidence.

"Corruption remains rife and is a major cost to doing business in the country," the report said. It also noted that the Zimbabwe Anti-Corruption Commission (ZACC) lacks prosecutorial authority, limiting its effectiveness in tackling graft.

The report commended Zimbabwe's review of long-standing regulatory hurdles and the use of statutory instruments to improve transparency in sectors such as mining. However, it warned that frequent policy reversals and the use of temporary presidential powers continue to surprise businesses, causing disruption.

Judicial independence was another area of concern. "The judicial system, based on Roman-Dutch law, is theoretically independent, but political interference remains a concern," the report stated.

Despite these challenges, Zimbabwe remains attractive to investors due to its vast mineral wealth, skilled labor force, high literacy rate, and emerging opportunities in mining, agriculture, energy, and tourism. Foreign direct investment (FDI) has shown growth, rising from US$280 million in 2019 to US$597 million in 2024, although this remains low compared with regional peers.

Economic challenges persist, with the African Development Bank projecting GDP growth to slow to 4% in 2026, citing inflation and exchange-rate volatility. The banking sector continues to face liquidity shortages, high inflation, and currency instability. The recently introduced Zimbabwe Gold (ZiG) currency suffered significant devaluation in 2024.

The report also highlighted labor market constraints, including high informal employment, youth unemployment, strict labor laws, and tensions between government and unions.

Zimbabwe's debt remains a heavy burden. The World Bank estimates public debt at 64.6% of GDP (US$33.78 billion) in 2025, projecting a decline to 59% in 2026, while the IMF estimates debt at US$23.53 billion this year and US$21.75 billion in 2026.

The US report concludes that while Zimbabwe has made strides in improving its business climate, sustained institutional reform, anti-corruption enforcement, and policy consistency are crucial to attracting and retaining foreign investment.