Strengthen measures to curb fronting in reserved sectors: Parliament
Source: Strengthen measures to curb fronting in reserved sectors: Parliament – herald Michael Tome, Business Reporter SAFEGUARDS to curtail the fronting of foreigners in reserved sectors must be initiated to avoid undermining the Government’s efforts to promote indigenous entrepreneurs in low-barrier industries, a parliamentary committee has said. The team noted that the tendency by some […]
SAFEGUARDS to curtail the fronting of foreigners in reserved sectors must be initiated to avoid undermining the Government’s efforts to promote indigenous entrepreneurs in low-barrier industries, a parliamentary committee has said.
The team noted that the tendency by some foreign investors to use local citizens as proxies to gain entry into reserved sectors was defeating efforts to facilitate local participation in key segments of the economy, as stipulated under Statutory Instrument (SI) 215 of 2025.
Fronting refers to the practice where local citizens act as the owners of businesses to evade laws that reserve specific economic sectors for locals or require majority local ownership.
This allows foreign investors to continue operating illegally in restricted industries by hiring a local person who acts as the owner or operator of the business in the designated area.
Confederation of Zimbabwe Retailers
Such practices make it difficult for regulators to pick out anomalies.
The Parliamentary Portfolio Committee on Industry and Commerce raised the concerns during a meeting organised by the Indigenous Advisory Practitioners Association of Zimbabwe (IAPAZ) to discuss the implementation modalities and implications of the reserved sector regulations.
The Government said the ring-fencing of certain sectors, reserving less capital-intensive areas for Zimbabweans, was designed to empower local entrepreneurs.
A total of 14 sectors have been reserved for Zimbabweans.
These include artisanal and small-scale mining, barbershops, hairdressing and beauty salons, employment agencies, valet services and passenger transport services (buses, taxis, car hire etc).
Customs clearing, tobacco grading and packaging, bakeries, advertising agencies, estate agencies, pharmaceutical retailing, borehole drilling, and the marketing and distribution of local arts and crafts have also been set aside for locals.
The committee said the growing practice where foreigners use Zimbabweans as fronts while they retain control of the enterprise distorts the policy framework and disadvantages genuine local entrepreneurs.
Chief Director in the Ministry of Industry and Commerce, Dr Douglas Runyowa
Such arrangements also undermine the objectives of the reserved sector policy and rob locals of economic opportunities by acting as figureheads without real decision-making authority or commensurate benefits.
The Government recently said the reserved sector policy is part of efforts to stimulate local enterprise development, enhance job creation and support the country’s drive towards achieving an upper-middle-income economy by 2030.
However, the committee called for stronger enforcement mechanisms, tighter monitoring of company ownership structures and stricter penalties for offenders to address the illegal practice of fronting.
Addressing participants at the meeting, the chairperson of the committee, Mr Clemence Chiduwa, said gaps remained that allowed locals to be manipulated as fronts by foreigners.
“You will find that our Statutory Instrument still has some gaps, including a weak verification infrastructure. If we rely solely on a permit system without independent verification, the risk of fronting remains high,” he said.
“There is, therefore, a need to establish strong anti-fraud enforcement mechanisms. In addition, the current framework does not provide for mandatory training or technology requirements to support effective compliance and monitoring.
“We recommend the establishment of an independent oversight body with the authority to investigate cases, verify compliance and address fronting practices.”
He said effective enforcement of the reserved sectors policy was key to ensuring that the initiative delivers intended empowerment benefits while maintaining investor confidence in the broader economy.
Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said Zimbabwe risks failing to achieve the goals of the reserved sector policy if the fronting issue is not fully addressed.
CZR said the success of the policy depends on effective implementation, monitoring and safeguards to empower locals and protect reserved sectors.
“If these kinds of issues are not carefully examined and addressed, Zimbabwe risks failing to achieve the intended outcomes of Statutory Instrument 215 of 2025,” said Mr Mutashu.
“The success of the SI depends not only on its provisions but also on the strength of the systems put in place to implement and monitor it effectively.
“Without proper safeguards, oversight and enforcement mechanisms, the objectives of empowering locals and protecting reserved sectors could be undermined, thereby limiting the impact the SI is meant to deliver for the country’s economic development.”
Chief director in the Ministry of Industry and Commerce, Dr Douglas Runyowa said the policy was part of a broader strategy to ensure more equitable distribution of economic opportunities across society.
“We want our own locals to be able to own businesses, rather than continuously participating as employees or as onlookers in the development that is going on,” he said.
“We want them to be able to commercially exploit their natural resources and have the ability not only to benefit but also to participate in the production process itself.
“As we come up with the issue of reserving certain sectors for locals, we want equitable distribution of wealth across the broad spectrum of society.
“We also want to support the implementation of the National Development Strategy 2, which is anchored in achieving an upper middle-income economy.”
IAPAZ national chairman Mr Nyasha Gonese said implementing the reserved sector policy could reshape local value chains, boost local businesses and grow indigenous enterprises.
“If implemented, the reserved sector policy presents a pathway to reconfigure domestic value chains, expand local enterprise participation and strengthen indigenous business development,” he said.
“It can stimulate domestic investment, encourage formalisation and reduce economic leakages in sectors where citizens possess latent or underutilised capacity.
“There is a strong case for enhanced legal and operational clarification. This includes sector-specific guidelines, technical definitions and harmonised interpretation frameworks. Clarity reduces disputes. Predictability encourages compliance.”
