Joseph Madzimure
FOREIGN-owned businesses operating in reserved sectors have been given a three-month window by the Government to regularise their operations or risk being barred from operating.
Authorities are moving to enforce new empowerment regulations, gazetted last month, aimed at expanding local participation in economic sectors that have low entry barriers.
In an interview with The Sunday Mail, Industry and Commerce Minister Mangaliso Ndlovu said the move follows the gazetting of Statutory Instrument (SI) 215 of 2025, which defines thresholds and compliance requirements for exemptions allowing foreign participation in sectors reserved for Zimbabweans.
The three-month window will run from January to March this year, during which period affected businesses must regularise their status.
“By the end of March, all applicants should have received a response,” he said.
“Those that qualify will be issued either a compliance certificate or an exemption, depending on their circumstances.
“Entities found to be operating illegally and therefore barred from continuing in the reserved sectors will also be formally notified. Government is confident that this will be a smooth and orderly process.”
The reserved sectors law, he said, is not new, but what has been lacking over the years was a clear framework setting the thresholds that determine who qualifies for an exemption to operate within a reserved sector.
“These thresholds have now been clearly articulated through Statutory Instrument 215 of 2025,” he said.
“What Government has now set in motion, and will be implementing over the next three months, is a structured process outlining exactly what applicants are required to submit and the documentation needed.
“At a minimum, applicants will be required to provide their memorandum and articles of association, proof that they are a bona fide business banking in Zimbabwe, and, most importantly, a valid Zimbabwe Investment and Development Agency (ZIDA) certificate. This requirement is also intended to address the reality that some entities are currently operating illegally, and such operators will find it difficult to continue with their business activities under the new framework.”
Minister Ndlovu said notwithstanding enforcement of the new regulations, Zimbabwe remains open to foreign direct investment (FDI), noting that investor confidence has grown significantly in recent years.
“Foreign direct investment has been a hallmark of the Second Republic, and we have seen phenomenal growth in investment from multiple nationalities,”he said.
“This confidence reflects President Mnangagwa’s policy that Zimbabwe is open for business and a friend to all.”
He, however, said the Government was equally committed to ensuring that economic growth translates into meaningful participation by locals, particularly in sectors where entry barriers are low.
Squeezing out locals
The Reserved Sectors Programme is an empowerment tool designed to prevent Zimbabweans from being crowded out of small-scale and medium enterprises by businesses with access to cheap or long-term foreign capital.
“If we are not careful, sectors with low entry costs can easily be flooded by players with disproportionate access to capital, squeezing out locals,” he said.
The policy targets activities that can realistically be undertaken by Zimbabweans, while allowing foreign investment to focus on capital-intensive projects.
Minister Ndlovu said activities such as quarrying, stone crushing and brick moulding — while at times presented as large investments — are support activities within the construction value chain that should primarily benefit local entrepreneurs.
He also said Government expects the process to be orderly and non-disruptive, with an awareness campaign set to be rolled out from this month.
“All foreigners in Zimbabwe are our friends, provided they operate within the law,” he said.
Government is also considering setting up a dedicated hotline to assist investors with enquiries and clarification during the transition period.
Reserved sectors are areas of economic activity legally set aside primarily for Zimbabwean citizens or majority locally owned firms.
These typically include businesses with relatively low capital requirements, such as retail and wholesale trade (excluding large supermarkets); transport services (taxis, buses and haulage below certain thresholds); brick moulding and quarrying; barber shops and hair salons; advertising agencies; estate agency services; and employment agencies, among others.
New regulations
SI 215 of 2025, officially cited as the Indigenisation and Economic Empowerment (Foreign Participation in Reserved Sectors) Regulations, 2025, was gazetted on December 11, 2025.
The regulations seek to clearly define the conditions under which foreign nationals may participate in sectors of the economy that are reserved primarily for Zimbabwean citizens.
Under the regulations, all foreign nationals wishing to operate in reserved sectors are required to apply for a permit or exemption through the designated unit under the Ministry of Industry and Commerce.
Applicants must be registered for tax purposes with the Zimbabwe Revenue Authority, maintain a bank account in Zimbabwe and submit a sound business plan demonstrating contributions to employment creation, skills and technology transfer and sustainable value chains.
The new regulations also introduce strict beneficial ownership disclosure requirements to prevent the use of fronting arrangements.
Authorities are empowered to demand sworn declarations to establish true ownership and control of businesses operating in reserved sectors, with severe penalties prescribed for false declarations, including fines or imprisonment of up to five years
Importantly, SI 215 provides for a regularisation period for foreign-owned businesses already operating in reserved sectors prior to its gazetting.
Such entities are required to submit regularisation plans within 30 days and are expected to comply with a structured divestment framework.
The regulations stipulate that foreign nationals must divest a minimum of 75 percent of equity to Zimbabwean citizens over a three-year period, in annual tranches of at least 25 percent, leaving foreigners with a maximum of 25 percent shareholding at the end of the period.
Several sectors are designated as exclusively reserved for Zimbabweans, including barber shops, hairdressing and beauty salons, employment agencies, bakeries, advertising agencies, estate agencies (except for international brands), artisanal mining, borehole drilling, pharmaceutical retailing, valet services and the provision of local arts and crafts.
Other sectors allow limited foreign participation subject to strict thresholds.
These include retail and wholesale trade, grain milling, haulage and logistics, shipping and forwarding, and transportation services, where minimum investment values and employment levels are prescribed to qualify for exemption.
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