Zimbabwe

Zimbabwe, a landlocked country in Southern Africa, is bordered by Zambia to the northwest, Mozambique to the east, South Africa to the south, and Botswana to the southwest. Zimbabwe, which the United Kingdom annexed as Southern Rhodesia from the British South Africa Company in 1923, obtained its independence in 1980. It is divided into eight provinces and two cities with provincial status. Zimbabwe's capital is Harare, and the official languages are English, Shona, and Ndebele.

A new local currency, called the RTGS dollar (RTGS stands for Real Time Gross Settlement - a system for transferring funds electronically; note that the currency is also called ZWL), was introduced in February 2019, and the foreign exchange control regulations are occasionally modified by the Central Bank. While some concessions have been made to exporters to retain and utilise export earnings in order to import goods and services, a 30-day time limit has been imposed to use the funds, and failure to do so will mean that any remaining balance will be converted to ZWL at the ruling weighted auction rate (foreign currency is auctioned once a week by the Central Bank) together with funds that are sold at auction by the government of Zimbabwe. Businesses must show the prices of their goods and services in both RTGS and United States dollars (USD). Payment of various taxes (e.g. VAT, PAYE, and CIT) must be paid in foreign currency on earnings that are made in foreign currency. In addition, various statutory levies are denominated in US dollars.

Zimbabwe has had a troubled investment environment in the recent past. This was largely due to an unstable political situation and the land reform policy that the government embarked on. The land reform programme, in brief, entailed the grabbing of white-owned land to resettle landless black people. The government's position has been that the reform programme was agreed on with the former colonisers and compensation of USD 3.5 billion for the improvements and not the land is to be paid.

The political situation has relatively stabilised following the ruling party ousting the former President and replacing him with a former Deputy President. The ‘new’ government has been trying to attract foreign investment with limited success, whilst they are attempting to improve the country's investment policy (ease of doing business). Inflation has once again taken centre stage in our economy, as the costs of goods and services increase as the value of the local currency diminishes.

Zimbabwe opposes foreign domination of certain sectors of its economy. In this regard, the investment legislation, on the one hand, prescribes local participation requirements in most enterprises and, on the other hand, provides for limited investment protection and investment incentives. The indigenisation laws that used to require 51% ownership of all foreign-owned companies have been abolished.

Various tax incentives have been introduced in an attempt to grow foreign direct investment (FDI). A new Stock Exchange has recently been created at Victoria Falls, where their listed shares will be denominated in foreign currency. This is still in its infancy and is designed to attract foreign investors. No other significant developments have occurred.

PwC Zimbabwe supports clients with the local knowledge and skills of its people and with access to a broad range of other professionals across the PwC global network of firms. This is especially true regarding the close relationship that the Zimbabwe office has with other firms across Africa.