THE Zimbabwe Investment and Development Agency (Zida) has reported a near 60% decline in the projected value of new investment licences, which fell to US$1,92 billion in the first quarter of 2026, largely attributed to new indigenisation regulations issued last December.
This compares to US$4,76 billion recorded in the first quarter of 2025. The number of new licences also dropped from 214 to 146 over the same period.
The sharp decline in investment projections highlights growing investor sensitivity to Zimbabwe’s regulatory environment, particularly the impact of Statutory Instrument 215 of 2025, which restricts or reserves several key sectors for local participation.
While authorities argue the reforms are intended to deepen domestic ownership and value retention, investors have previously warned that stringent indigenisation rules risk discouraging capital inflows and reversing recent economic gains.
“The data reflects a period of strong capital mobilisation, notwithstanding fluctuations in the number of licences issued,” Zida said in its first quarter 2026 report.
“In Q1 2026, the number of licences declined significantly to 146, which may be attributed to seasonal factors or to more stringent regulatory requirements, particularly when operating in the reserved sector.”
In December, the government gazetted Statutory Instrument 215 of 2025, the Indigenisation and Economic Empowerment (Foreign Participation in Reserved Sectors) Regulations, reserving several sectors exclusively for Zimbabwean citizens. These include barber shops, hairdressing and beauty salons, employment agencies, valet services, bakeries, tobacco grading and packaging, and advertising agencies.
The restrictions also extend to borehole drilling, artisanal mining, pharmaceutical retailing, and the marketing and distribution of local arts and crafts.
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Some sectors — such as estate agencies, clearing and customs services, and passenger transport businesses including buses and car hire — are also reserved for locals, unless operated under recognised international brands.
Foreign participation is permitted in certain reserved sectors only where strict thresholds are met.
For instance, retail and wholesale trade require a minimum investment of US$20 million and the employment of at least 200 people, despite the sector already being under macroeconomic pressure.
More significantly, the regulations require existing foreign-owned businesses operating in reserved sectors to submit regularisation plans within 30 days and to divest at least 75% equity to Zimbabwean citizens within three years.
Investors have previously raised concerns over indigenisation policies, which were blamed for a sharp decline in foreign direct investment in earlier years.
“Investment rose by approximately 62%, from US$1,19 billion in Q4 2025 to US$1,92 billion. This trend indicates a strategic shift towards fewer, but larger and more capital-intensive projects,” Zida said.
Over the review period, notable changes were recorded in the structure of investment financing.
Capital equipment imports dominated, accounting for US$885,84 million or 46% of total projected investment.
Foreign currency cash injections followed at US$477,31 million, representing about 25%, reflecting continued investor confidence in direct capital deployment.
On the domestic front, local contributions surged to US$102,38 million, up from an average of US$5,5 million in previous quarters.
“This development suggests growing domestic involvement, potentially through joint venture arrangements in high-value projects,” Zida said.
Foreign currency loans and debt financing also rose to US$431,37 million, nearly double the previous peak recorded in Q4 2025.
“This indicates an increasing reliance on leveraged financing, possibly reflecting improved confidence in the financial system’s capacity to support loan servicing and repayment.”
Overall, Zida noted that although total investment value has declined, the 2026 investment profile appears more integrated into the domestic economy, with stronger local linkages and increased operating expenditure.
