Introduction
Zimbabwe is gradually positioning itself as a strategic investment destination in Southern Africa, with growth potential in sectors such as agriculture, mining, energy, infrastructure, tourism, and ICT. However, like any emerging market, investing in Zimbabwe requires careful planning and investigation. Investors must perform thorough due diligence to mitigate risk and maximize returns.
This comprehensive due diligence checklist for investing in Zimbabwe outlines the key legal, financial, and market factors you should review before proceeding with a project or acquisition.
1. Legal Due Diligence
Legal due diligence ensures your investment is compliant with Zimbabwean laws and regulations.
1.1. Company Registration and Ownership Structure
Verify that the target entity is properly registered with the Zimbabwe Companies and Intellectual Property Office (ZIMRA/CIPA).
- Review the Memorandum and Articles of Association.
- Confirm the ownership structure and shareholding percentages.
- Check for restrictions on foreign ownership, especially in sensitive sectors such as mining or media.
1.2. Compliance with Investment Laws
- Ensure the investment complies with the Zimbabwe Investment and Development Agency Act (ZIDA Act).
- Register your investment with ZIDA for protection under local and international investment treaties.
- Understand restrictions under the Indigenisation and Economic Empowerment Act, where applicable.
1.3. Licenses and Permits
- Verify all sector-specific licenses (e.g., mining claims, environmental impact assessment certificates, tourism licenses).
- Review land rights, especially for agricultural or construction projects.
1.4. Contracts and Agreements
- Examine all major contracts—supplier agreements, customer contracts, leases, and employment agreements.
- Assess enforceability under Zimbabwean law.
1.5. Pending Litigation or Disputes
- Investigate if the business is involved in any ongoing legal disputes.
- Evaluate the risk of regulatory sanctions or past violations.
2. Financial Due Diligence
This involves assessing the financial health and viability of the target business or project.
2.1. Financial Statements and Audit Reports
- Review audited financial statements for the past 3 to 5 years.
- Verify financial statements are prepared under International Financial Reporting Standards (IFRS).
- Analyze profitability, liquidity, and solvency ratios.
2.2. Tax Compliance
- Check for compliance with Zimbabwe Revenue Authority (ZIMRA) requirements.
- Ensure taxes such as corporate income tax, VAT, PAYE, and withholding tax are up to date.
- Review past ZIMRA assessments, disputes, or penalties.
2.3. Debt and Liabilities
- Assess existing debts and liabilities, including bank loans, employee benefits, and pending obligations.
- Examine loan agreements for conditions that could affect your control or cash flow.
2.4. Valuation and Asset Ownership
- Conduct an independent business valuation.
- Verify ownership and condition of key assets (equipment, land, buildings).
- Check for liens or encumbrances on assets.
3. Market and Operational Due Diligence
Understanding the local market dynamics and operational conditions is essential for long-term success.
3.1. Industry and Market Analysis
- Evaluate the size, growth, and trends in the target industry.
- Identify key competitors, market share, and customer demographics.
- Assess local demand, pricing structures, and barriers to entry.
3.2. Economic and Political Risk
- Monitor Zimbabwe’s macroeconomic indicators—inflation, interest rates, exchange rate stability.
- Understand the impact of currency risks (e.g., dual currency system and the Zimbabwean dollar).
- Consider the political landscape and risk of policy changes.
3.3. Supply Chain and Distribution
- Assess the reliability and cost of logistics, utilities (power and water), and internet connectivity.
- Examine supplier relationships and delivery lead times.
- Review warehousing and distribution channels.
3.4. Human Capital and Labor Law Compliance
- Analyze the availability and cost of skilled and unskilled labor.
- Review employment contracts and staff turnover.
- Ensure compliance with Zimbabwean labor laws, minimum wage, pensions (NSSA), and leave benefits.
4. Environmental and Social Governance (ESG)
Increasingly, investors must consider sustainability and social impact.
4.1. Environmental Compliance
- Review Environmental Impact Assessments (EIAs) where required.
- Ensure compliance with Environmental Management Agency (EMA) standards.
4.2. Community Relations and Social Risk
- Evaluate relationships with local communities and any history of disputes.
- Assess risks related to land acquisition or displacement.
5. Repatriation and Exit Strategy
Ensure your investment can yield returns and that you have a viable exit strategy.
5.1. Foreign Exchange Controls
- Understand the rules for repatriation of profits, dividends, and capital.
- Verify if the Central Bank (RBZ) allows foreign exchange conversion and transfer.
5.2. Exit Options
- Define clear exit strategies—sale, IPO, liquidation.
- Review any restrictions on the sale of shares or transfer of ownership
Conclusion
Investing in Zimbabwe offers significant opportunities, but it demands a structured and thorough approach to due diligence. By assessing legal, financial, market, and operational risks upfront, you reduce surprises and position yourself for sustainable growth.
Use this invest in Zimbabwe checklist as a starting point—but always engage legal, financial, and sector experts to support your decision-making. With the right preparation, Zimbabwe could be your next big win.
