Foreign Direct Investment (FDI) inflows to Zimbabwe have risen to US$588 million in 2023, marking an improvement from previous years. However, the figure remains strikingly low compared to other countries in the region, reflecting ongoing challenges in the country’s business environment.
A 2025 Post-Budget Analysis Paper by the Zimbabwe Congress of Trade Unions (ZCTU) highlights the persistent difficulties faced by investors, citing a high cost of doing business as a significant deterrent.
Regional Disparities
Data from the United Nations Conference on Trade and Development (UNCTAD) shows Zimbabwe’s FDI inflows grew from US$250 million in 2021 to US$395 million in 2022, and US$588 million in 2023. However, these figures pale in comparison to regional peers:
- South Africa: US$5.2 billion
- Mozambique: US$2.5 billion
- Namibia: US$2.3 billion
- Malawi: US$208 million
- Botswana: US$198 million
- Zambia: US$108 million
The stark disparities underscore Zimbabwe’s struggle to attract foreign investment at a competitive level.
High Taxation and Limited Competitiveness
The ZCTU attributes the subdued FDI levels to Zimbabwe’s onerous tax regime, which it argues stifles economic growth and investor confidence.
“No country can prosper with high taxes,” the paper states, citing Ireland’s 26% economic growth in 2015 following tax reforms as an example. High taxes in Zimbabwe have reportedly driven informality and low confidence among investors.
The mining sector, a critical component of Zimbabwe’s economy, exemplifies these challenges. According to the Chamber of Mines of Zimbabwe (CoMZ), the sector’s effective tax rate of 69% in 2024 is higher than Zambia’s 60%, the Democratic Republic of Congo’s 61%, Ghana’s 56%, and South Africa’s 44%. This heavy tax burden is compounded by 157 separate charges, ranging from US$4,000 to US$15,000, imposed by various Rural District Councils, ministries, and government agencies.
Impact of the 2025 National Budget
The situation has worsened with the introduction of additional taxes under Finance Minister Mthuli Ncube’s 2025 National Budget, further eroding the country’s competitiveness.
“Overall, all these challenges have left the local economy with a huge competitiveness gap, implying that Zimbabwean businesses and products are not able to effectively and successfully compete with those from other countries,” the ZCTU report states.
Consequences for Employment
The report also links the high-tax environment to limited job creation and a decline in the quality of employment opportunities. ZCTU contends that this economic structure undermines both the labour market and the broader economy.
Path Forward
As Zimbabwe looks to boost FDI and drive economic recovery, stakeholders are calling for comprehensive reforms, including reduction of taxes, streamlining of regulatory processes, and the creation of an investor-friendly climate.
Without such changes, experts warn that Zimbabwe risks remaining a laggard in the region’s FDI race, with significant implications for its economic prospects and the livelihoods of its citizens.
