Section 11 of the Zimbabwe Investment Development Agency Act provides that all investments must comply with the investment laws in Zimbabwe. Section 12 provides for freedom of investment and places foreign investors on an equal footing with citizens of Zimbabwe. Essentially therefore, there must be no difference in treatment by government agencies between Zimbabweans and foreigners doing business in Zimbabwe.

However, one must be wary that there are some technical limitations to this freedom of investment. For instance, Zimbabwe has a legal provision which reserves the controlling ownership stake in diamond and platinum mining to indigenous Zimbabweans through a state designated entity. Further, pursuant to an amendment in the nation’s Indigenisation laws, at any time the Minister responsible for Industry and Commerce is authorized to gazette a law that applies this same Indigenisation policy across the entire mining industry.

Despite the above, the ZIDA Act also provides a non-discrimination law in respect of which the agency is obliged not to grant foreign investors any less favourable treatment than local investors with the exception of the following: -

a. The non-conforming measures set out in section 3 and 3A of the Indigenisation and Economic Empowerment Act, the Land Commission Act and the Legal Practitioners Act.

(In simple terms these are the exemptions regarding diamond and platinum mining. In those industries, the law provides for a mandatory 51% ownership stake by Zimbabwean indigenous people, through a state designated entity.)

b. An amendment to the non-conforming measure set out in the first schedule to the Indigenisation and Economic Empowerment Act.

Section 16 of the Act provides for fair and equitable treatment and as such investors are protected against denial of justice in civil, criminal and administrative procedures and breaches of due process. The new law has a guarantee that no investment shall be expropriated or nationalized except for a public purpose and where that happens, it shall be subject to prompt payment of compensation which shall be determined by the fair market value of the investment. The affected investor has a right to cause the review of any perceived unfair valuation.

Section 19 of the same Act provides for transfer of funds into and outside of Zimbabwe. Ideally, the law seeks to ensure that investors transfer funds into and outside of Zimbabwe without delay. However, the government reserved itself the right to restrict transfers and payments pertaining to investments in the event of serious balance of payments and external financing difficulties. There is no given threshold of what would constitute a serious balance of payments difficulty. Investors have the obligation to abide by Zimbabwean laws.

Applying for an investment license

Any foreign investor wishing to invest in Zimbabwe and wishing to obtain the protections afforded by the Act should apply for an investment license whether or not the intended investment is in a special economic zone. The investment license is non-transferable in nature and the scope of investment is limited according to what is described in the license. The period of validity of a license in respect of areas outside the special economic zones is as described in the investment license. An investment license in respect of special economic zones is valid for ten years.

Dispute Resolution

Any dispute pertaining to investments is by matter of law governed by the laws of Zimbabwe except where the parties by mutual agreement consent to referring a dispute to international arbitration. In the case of a foreign investor, the dispute may also be resolved in terms set out in a treaty on the promotion and protection of investments between Zimbabwe and the country from which the investor originates. It is important for an investor who has established his or her investment in Zimbabwe and wishes to claim special protection under a Bilateral Investment Protection and Promotion Agreement to register with the Agency ninety days after the date of commencement. Where one fails to make such registration, one risks losing the special protection under the Bilateral Investment Protection and Promotion Agreement. This law is likely to stir future controversy in the realm of International relations and diplomacy, as it establishes extra burdens for one to enjoy protection which ordinarily would come by mere existence of the BIPPA.