Foreign capital dominates Zida-licensed projects

Local investor participation in Zimbabwe's licensed projects has plummeted by a staggering 97.55% to just US$3.15 million in the third quarter of 2025, according to new data from the Zimbabwe Investment and Development Agency (Zida).

The latest Zida report, released this week, underscores a decisive shift toward foreign-dominated investment activity, with overseas players now driving nearly all of the country's US$3.26 billion in projected investment value for the quarter.

"The number of new investment licences increased by 23.4% year-on-year, while the total proposed investment value rose sharply by 178.6%," Zida said in its third-quarter report.

This surge was primarily fuelled by large-scale, capital-intensive projects in mining and energy, backed mainly by foreign financing.

However, the same report reveals a steep decline in local participation - from US$128.28 million in Q3 2024 to US$3.15 million a year later.

Zida attributed the imbalance to "the predominance of foreign-driven projects," saying it nonetheless reflected "sustained international confidence in Zimbabwe's investment framework and the agency's effectiveness in mobilising cross-border capital into strategic sectors."

While the influx of foreign capital boosts headline figures, analysts warn it also concentrates economic control externally and leaves Zimbabwe vulnerable to global financial shocks.

Economist Trust Chikohora said the collapse of local investment highlights deep liquidity constraints and waning confidence in the domestic economy.

"It means locals have no confidence in the economy and that they also don't have cash - they don't have funds to invest," Chikohora said. "Liquidity is very tight, and businesses are struggling to survive, let alone invest. The environment is not really conducive."

He cautioned that persistently weak domestic participation could deter foreign investors, except those targeting extractive industries.

Economist Stevenson Dhlamini echoed the concern, saying the reluctance of local entrepreneurs to invest sends negative signals about market stability.

"The local entrepreneur's hesitancy, born from the fear of future re-denomination or unforeseen fiscal changes, challenges the government to formalise and guarantee long-term asset value protection," Dhlamini said.

He added that a resilient economy requires both foreign and domestic capital working in tandem.

"A robust economy needs a two-pronged approach where resilient domestic capital complements foreign direct investment," he said, urging policies that prioritise local participation and strengthen supply chains.

Dhlamini said ensuring broad-based, inclusive growth means creating conditions where local investors can meaningfully participate in - and benefit from - major projects.

"This means actively encouraging domestic participation where profits are more likely to circulate through local supply chains, supporting smaller and medium-sized enterprises," he added.

The figures mark one of the sharpest contractions in domestic investment participation in years, raising fresh concerns over liquidity shortages, policy uncertainty, and the sustainability of Zimbabwe's foreign-led recovery model.