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FM AMEMBASSY HARARE
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RUCPCIM/CIMS NTDB WASHDC
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INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2417
RUEHAR/AMEMBASSY ACCRA 3248
RUEHDS/AMEMBASSY ADDIS ABABA 3359
RUEHRL/AMEMBASSY BERLIN 1782
RUEHBY/AMEMBASSY CANBERRA 2616
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RUEHGV/USMISSION GENEVA 2517
RUZEHAA/CDR USEUCOM INTEL VAIHINGEN GE
RUEAIIA/CIA WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEFDIA/DIA WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEKJCS/JOINT STAFF WASHDC
RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 11 HARARE 000020 
 
AF/S FOR B. WALCH 
EEB/IFD/OIA FOR D. AHN 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
COMMERCE FOR R. TELCHIN 
TREASURY FOR D. PETERS AND T. RAND 
NSC FOR SENIOR AFRICA DIRECTOR M. GAVIN 
STATE PASS TO USAID FOR L. DOBBINS AND J. HARMON 
STATE PASS TO USTR 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC ZI
SUBJECT: 2010 INVESTMENT CLIMATE STATEMENT - ZIMBABWE 
 
REF: 09 STATE 124006 
 
¶1. Zimbabwe's gross domestic product (GDP) declined by roughly 50 
percent over the past decade, possibly the largest peacetime 
contraction ever recorded.  The International Monetary Fund (IMF) 
estimates that GDP shrank by 14 percent in 2008 alone.  In July 2008 
inflation reached the officially estimated level of 231 million 
percent.  (In subsequent months, the rate accelerated dramatically 
but authorities gave up reporting official figures.)  The 
hyperinflation ended overnight when the GOZ officially dollarized 
the economy at the beginning of 2009.  As a result, Zimbabwe's 
consumer price index fell by 6 percent between January and November 
¶2009. 
 
¶2.  Zimbabwe generally ranks poorly in global comparisons of 
competitiveness and corruption. 
 
Index                       Year  Zimbabwe's Ranking 
-----                       ----  ------------------ 
TI Corruption Perceptions   2009  146 of 180 
Heritage Economic Freedom   2009  178 of 179 
World Bank Doing Business   2010  159 of 183 
 
In addition, Zimbabwe ranked second-to-last out of 133 countries in 
the World Economic Forum's Global Competitiveness Index for 2009-10. 
 And the Vancouver-based Fraser Institute's 2008-09 Annual Survey of 
Mining Companies ranked Zimbabwe 65th out of 71 regions surveyed on 
the attractiveness of government mining policies. 
 
------------------------------ 
Openness to Foreign Investment 
------------------------------ 
 
¶3. Government policy papers recognize the need for foreign direct 
investment to improve the country's competitiveness.  This includes 
encouraging public-private partnerships in order to enhance 
technological development.  Official statements also emphasize the 
need to improve the investment climate by restoring the rule of law 
and sanctity of contracts.  Despite extremely difficult economic 
conditions over the past decade, a few U.S. multinationals 
maintained subsidiaries in Zimbabwe, largely holdovers from better 
years a decade and more ago.  Many others sell their products 
through certified dealers. 
 
 
¶4. The government's priority sectors for foreign investment are 
manufacturing, mining, and infrastructure development for tourism. 
In these sectors foreign investors were permitted to own up to 100 
percent of an enterprise, although joint ventures with local 
investors were encouraged.  In 2008, however, the government 
introduced a new law, the Indigenization Act, which requires that 
"indigenous Zimbabweans" own at least 51 percent of all enterprises. 
 It remains unclear exactly how or when the government intends to 
enforce this requirement.  The government also intends to introduce 
Qenforce this requirement.  The government also intends to introduce 
amendments to the Mines and Minerals Act to spell out indigenization 
requirements in the mining industry (see below). 
 
¶5. The government reserves several sectors for local investors. 
Under current laws, foreign investors wishing to participate in 
these sectors may only do so by entering into joint venture 
arrangements with local partners.  The foreign investors may not own 
more than 35 percent of the operation.  These rules apply to the 
 
HARARE 00000020  002 OF 011 
 
 
following industries: 
 
Agriculture 
-- Primary production of food and cash crops 
-- Primary horticulture 
-- Game, wildlife ranching, and livestock 
-- Forestry 
-- Fishing and fish farming 
-- Poultry farming 
-- Grain milling 
-- Sugar refining 
 
Transportation 
-- Road haulage 
-- Passenger bus, taxis, and car hire services 
-- Tourist transportation 
-- Rail operations 
 
Retail and wholesale trade, including distribution 
-- Barber shops, hairdressing, and beauty salons 
-- Commercial photography 
-- Employment agencies 
-- Estate agencies 
-- Valet services 
-- Manufacturing, marketing, and distribution of armaments 
-- Water provision for domestic and industrial purposes 
-- Bakery and confectionary 
-- Tobacco packaging and grading post auction 
-- Cigarette manufacturing 
 
¶6. Foreign investors wishing to start a new project in Zimbabwe must 
first register with and be approved by the Zimbabwe Investment 
Authority, which then issues investment certificates.  This is the 
first port of call for anyone wishing to invest in Zimbabwe. 
 
¶7. All private firms are required to incorporate and register with 
the Registrar of Companies within the framework of their investment 
certificate or exchange control approval.  Foreign investment in 
existing companies requires approval from the Reserve Bank of 
Zimbabwe (RBZ), as the central bank is known.  Applications are 
submitted to the RBZ's Exchange Control Department through the 
investor's commercial bank or merchant bank or other authorized 
dealer.  Foreign investors with valid investment certificates may 
acquire real estate. 
 
¶8. In the mid-1990s, the government identified privatization of 
state-owned enterprises as a priority, but only two have been 
successfully privatized since then.  Lack of political will, the 
enterprises' operational inefficiencies, and weak balance sheets 
make it unlikely that privatization will go forward in the near 
term. 
 
 
¶9. As Zimbabwe's relations with the U.S. and European nations 
deteriorated in recent years, the government began to encourage 
economic ties with Asian countries, particularly China, as a means 
of arresting further economic decline and combating what it casts as 
neo-colonialism.  Under this "Look East" policy, selected Asian 
investors have been offered access to reserved sectors, sometimes at 
the expense of local or established foreign investors.  Despite the 
official emphasis placed on these ties and a few high profile 
project announcements, Asian investment is still a small fraction of 
 
HARARE 00000020  003 OF 011 
 
 
existing investment from South Africa and the U.K. 
 
-------------------------------- 
Conversion and Transfer Policies 
-------------------------------- 
 
¶10.  For the past several years, Zimbabwe's exchange rate policies 
made it difficult for firms to obtain foreign currency, and this in 
turn caused crippling shortages of fuel, electric power, and other 
imported goods and components.  Other consequences included defaults 
on public and private sector debt and a sharp decline in industrial, 
agricultural, and mining operations.  In 2009 the government lifted 
exchange controls (with most transactions now conducted in U.S. 
dollars), but the country's continued poor export performance and 
the lack of access to multilateral concessional lending mean that 
external financing is still hard to come by.  In view of this, the 
RBZ has not been able to pay back money expropriated prior to 2009 
from the foreign currency accounts of private companies and 
non-governmental organizations. The Foreign Exchange Control Act 
that regulated currency conversions and transfers has been 
extensively reviewed in line with recommendations from both the 
Southern African Development Community (SADC) and the International 
Monetary Fund (IMF).  The review is designed to ensure transparency, 
certainty, and conformity with Zimbabwe's new multi-currency 
monetary regime. 
 
 
¶11. Exporters now retain 100 percent of their foreign currency 
account balance for their own use.  This has removed the anti-export 
bias associated with the previous system of surrendering a certain 
proportion to the RBZ at the highly over-valued official exchange 
rate. 
 
------------------------------ 
Expropriation and Compensation 
------------------------------ 
 
¶12.  Despite provisions in Zimbabwe's constitution that prohibit the 
acquisition of private property without compensation, in 2000 the 
government sanctioned uncompensated seizures of privately owned 
agricultural land.  Many of the farms seized were subsequently 
transferred to government officials and other regime supporters. 
The government in April 2000 amended the constitution to authorize 
the compulsory acquisition of privately owned commercial farms with 
compensation limited to the improvements made on the land.  In 
September 2005, the government amended the constitution again to 
transfer ownership of all expropriated land to the government. 
Since the passage of this amendment, top government officials, 
ZANU-PF party supporters, and members of the security forces have 
continued to disrupt production on commercial farms, including those 
owned by foreign investors and covered by Bilateral Investment 
Qowned by foreign investors and covered by Bilateral Investment 
Promotion and Protection Agreements (BIPPAs). 
 
¶13.  In November 2006, the government issued the first batch of 
99-year leases for land re-allocated to 125 farmers.  These leases, 
however, are not readily transferable.  The government retains the 
right to withdraw the lease at any time. 
 
¶14.  The government's program to seize commercial farms without 
either the intention or the funds to compensate the titleholders, 
who have no recourse to the courts, has raised serious questions 
about respect for property rights and the rule of law in Zimbabwe. 
 
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Accordingly, Zimbabwe was ranked 119 out of 183 countries considered 
with respect to the country's ability to protect investment under 
the World Bank Group's "Doing Business 2010" Report. 
 
¶15.  President Mugabe and other politicians have in the past 
threatened to target the mining and manufacturing sectors for 
similar forced indigenization.  In 2008 the government amended the 
Mines and Minerals Act, outlining indigenization requirements for 
minerals.  For strategic energy minerals (coal, methane, uranium), 
the legislation would require mining companies engaged in their 
extraction or exploitation to transfer ownership to the state of 51 
percent of the shares; 25 percent would be without compensation. 
For precious metals and precious stones, 25 percent of the shares 
must be transferred to the state without compensation and a further 
26 percent are required to be owned by the state or by indigenous 
Zimbabweans. 
 
¶16.  In March 2008, the government enacted the Indigenization and 
Economic Empowerment Bill that mandates, over time, 51 percent 
indigenous ownership of businesses. 
 
------------------ 
Dispute Settlement 
------------------ 
 
 
¶17.  Zimbabwe has acceded to the 1965 convention on the settlement 
of investment disputes between states and nationals of other states 
and to the 1958 New York convention on the recognition and 
enforcement of foreign arbitral awards. 
 
¶18.  In the event of an investment dispute, the Government of 
Zimbabwe agrees, in theory, to submit the matter for settlement by 
arbitration according to the rules and procedures promulgated by the 
United Nations Commission on International Trade Law (UNCITRAL) once 
the investor has exhausted the administrative and judicial remedies 
available locally.  On the other hand, Constitutional Amendment 17, 
enacted in 2005, removed the right of landowners whose land has been 
acquired by the government to challenge the acquisition in court. 
 
¶19.  A group of Dutch farmers whose farms were seized under the land 
reform program took their case to the International Centre for the 
Settlement of Investment Disputes (ICSID) in April 2005, demanding 
that Zimbabwe honor its BIPPA with the Netherlands.  The case was 
heard by a tribunal in Paris in November 2007, and the tribunal 
issued a verdict favorable to the farmers.  Zimbabwe's government 
acknowledged that the farmers had been deprived of their land 
without payment of compensation but disputed the amount the farmers 
claimed in damages. 
 
¶20.  In a related case, a three-judge panel of the SADC Tribunal in 
Windhoek, Namibia, ruled in 2008 that Zimbabwe's violent land reform 
exercise discriminated against a group of white farmers who filed an 
Qexercise discriminated against a group of white farmers who filed an 
application challenging the seizure of their farms.  The Tribunal 
ruled that the government was in breach of the SADC treaty with 
regard to discrimination.  The government has refused to recognize 
the ruling.  In September 2009 the government said Zimbabwe had 
withdrawn from the jurisdiction of the SADC Tribunal.  This appeared 
to be a bid to stop the effect of judgments against it by the 
Windhoek-based court.  The government argued that the protocol 
establishing the Tribunal had not been ratified by the required 
two-thirds majority of the total membership of SADC. 
 
HARARE 00000020  005 OF 011 
 
 
 
¶21.  Government efforts to influence and intimidate the judiciary 
since the late 1990s have raised serious concerns about investors 
receiving a fair hearing in local courts.  In addition, the 
government and ruling elite have ignored numerous adverse judgments, 
and senior officials have reiterated publicly that court orders that 
are not politically acceptable to ZANU-PF will not be honored. 
Administration of justice in those commercial cases that lack 
political overtones is still generally impartial.  As government 
revenue has declined, however, court resources have dwindled and 
dockets have become backlogged. 
 
--------------------------------------- 
Performance Requirements and Incentives 
--------------------------------------- 
 
¶22.  Several tax breaks are available for new investment by foreign 
and domestic companies.  Capital expenditures on new factories, 
machinery, and improvements are fully deductible and the government 
waives import tax and surtax on capital equipment.  Other incentives 
for investors include: 
 
-- Investment allowance of 15 percent in the year of purchase of 
industrial and commercial buildings, staff housing and articles, 
implements, and machinery; 
 
-- Twenty-five percent special initial allowance on the cost of 
industrial buildings and commercial buildings and machinery in 
growth point areas is granted as a rebate for the first four years; 
 
-- Special mining lease provisions entitling the holder to specific 
incentive packages to be negotiated with the Ministry of Mines; 
 
-- Refund of value added tax (15 percent) for capital goods 
purchased in Zimbabwe and intended for use in priority projects or 
investment in growth points. 
 
¶23. There are no general performance requirements outside of Export 
Processing Zones.  Government policy, however, encourages investment 
in enterprises that contribute to rural development, job creation, 
exports, use of local materials, and transfer of appropriate 
technologies. 
 
¶24.  There are no discriminatory import or export policies affecting 
foreign firms, although the government's approval criteria are 
heavily skewed toward export-oriented projects.  Import duties and 
related taxes range as high as 110 percent.  Export Processing Zone 
designated companies must export at least 80 percent of output. 
 
¶25.  Government participation is required in new investments in 
strategic industries such as energy, public water provision, 
railways, and armaments.  The terms of government participation are 
determined on a case-by-case basis during license approval.  The few 
foreign investors (for example from China and Iran) in reserved 
strategic industries have either purchased existing companies or 
Qstrategic industries have either purchased existing companies or 
have supplied equipment and spares on credit. 
 
¶26.  Foreign investors are expected to make maximum use of 
Zimbabwean management and technical personnel, and any investment 
proposal that involves the employment of foreigners must present a 
strong case for doing so in order to obtain work and residence 
permits.  Normally, the maximum contract period for a foreigner is 
 
HARARE 00000020  006 OF 011 
 
 
three years, but this will be extended to five years for individuals 
with highly specialized skills.  Foreigners who have prior 
permission from the RBZ may remit one-third of their salaries. 
 
-------------------------------------------- 
Right to Private Ownership and Establishment 
-------------------------------------------- 
 
¶27.  Although Zimbabwean law guarantees the right to private 
ownership, this right is increasingly not respected in practice.  As 
noted above, the government has in recent years seized thousands of 
private farms and conservancies, including ones belonging to 
Americans and other foreign investors, without due process or 
compensation.  Most of these property owners held Zimbabwe 
Investment Authority investment certificates and purchased their 
land after independence in 1980.  Despite repeated U.S. protests, 
the government has not addressed the expropriation of property 
belonging to U.S. citizens. 
 
----------------------------- 
Protection of Property Rights 
----------------------------- 
 
¶28.  Prior to 2009, the government's demonstrated desire to expand 
its control of the economy put many investments, particularly in 
real property, at risk.  The government's 2005 Operation Restore 
Order resulted in more than 700,000 persons losing their homes, 
their means of livelihood, or both, according to UN estimates.  Many 
of these properties had proper titles and licenses.  Although 
Operation Restore Order officially ended in 2005, the government 
continued to evict smaller numbers of people from their homes and 
businesses, primarily in and around Harare, in 2006 and 2007.  In 
addition to the thousands of agricultural properties seized under 
land reform during the past ten years, in late 2005, the government 
for the first time authorized the seizure of non-agricultural land 
for the purpose of residential construction in a Harare suburb. 
 
¶29.  Since independence, Zimbabwe has applied international patent 
and trademark conventions.  It is a member of the World Intellectual 
Property Organization.  Generally, the government seeks to honor 
intellectual property ownership and rights, although there are 
serious doubts about its ability to enforce these obligations due to 
a lack of expertise and manpower.  Pirating of videos and computer 
software is common. 
 
¶30.  The judiciary generally upholds the sanctity of contracts 
between private companies.  In the case of contracts involving the 
government or politically influential individuals, however, 
judgments sometimes appear biased. 
 
------------------------------------- 
Transparency of the Regulatory System 
------------------------------------- 
Q------------------------------------- 
 
¶31.  The government's officially stated policy is to encourage 
competition within the private sector.  But bureaucratic functions 
in this economy lack transparency, and corruption within the 
regulatory system is increasingly worrisome. 
 
¶32.  The adoption of the multi-currency system in 2009 stabilized 
prices and removed the need for price controls.  Consequently, the 
government no longer controls prices of goods and services. 
 
HARARE 00000020  007 OF 011 
 
 
Nevertheless, the National Incomes and Prices Commission still 
exists to monitor price developments at home relative to those in 
the region. 
 
--------------------------------------------- ----- 
Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ----- 
 
¶33.  Zimbabwe's stock market has 79 publicly-listed companies.  In 
September 1996, the government opened the stock and money markets to 
limited foreign portfolio investment.  Since then, a maximum of 40 
percent of any locally-listed company can be foreign-owned with any 
single investor allowed to acquire up to 10 percent of the 
outstanding shares.  Investment on the Zimbabwe Stock Exchange (ZSE) 
surged in real terms in 2007 and most of 2008 as risk-seeking 
foreign investors were drawn to Zimbabwe by a combination of 
undervalued assets and the expectation of political change in the 
short-to-medium term.  Furthermore, foreign investors recognized 
that most companies registered on the ZSE were already compliant 
with the new Indigenization Act.  The introduction of stringent 
trading conditions on November 17, 2008, which required all trades 
to be backed by a letter from a bank confirming the availability of 
funds, burst the speculative bubble.  Between November 20, 2008, and 
February 19, 2009, there was no trading activity on the exchange. 
Following dollarization of the economy in March 2009 and the 
re-opening of the ZSE, trading has been characterized by thin 
volumes.  Moreover, the public stock of many smaller companies is 
closely held.  Yet market capitalization grew substantially from 
about US$1 billion in February to around US$4.1 billion by the end 
of December 2009. 
 
¶34.  Although the government introduced a 5 percent withholding tax 
on the sale of marketable securities in 2005, this was reduced to 
just 1.48 percent in November 2009, while the tax on buying amounts 
to 1.73 percent.  At a total of 3.21 percent, the new rates are now 
comparable with the average of 3.5 percent for the region.  As a way 
of raising funds for the state, the government mandated that 
insurance companies and pension funds invest between 25 and 35 
percent of their portfolios in prescribed government bonds. 
 
¶35. Zimbabwe's severe economic problems drove foreign direct 
investment (FDI) inflows from US$103 million in 2005 to US$40 
million in 2006, according to the World Investment Report compiled 
by the United Nations Conference on Trade and Development (UNCTAD). 
In 2008 net FDI declined from US$66 million the year before to US$44 
million. 
 
¶36.  Once relatively robust by regional standards, Zimbabwe's 
financial sector has contracted greatly in recent years as business 
Qfinancial sector has contracted greatly in recent years as business 
evaporated.  Three major international commercial banks and a number 
of regional and domestic banks operate with a total of over 200 
branches.  Following the well-publicized failure of a number of 
financial institutions in 2003, primarily due to fraud and inept 
management, RB regulations have been tightened.  Nonetheless, 
financial institutions have an uncertain future due to liquidity 
constraints arising from low foreign currency inflows and lack of a 
local money market.  Given that the economy has dollarized and that 
the RBZ is highly under-capitalized, the banking system has no 
lender of last resort.  On average, banks lend less than 50 percent 
of their deposits to guard against liquidity risk. 
 
------------------ 
 
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Political Violence 
------------------ 
 
¶37.  The Movement for Democratic Change, a political party that 
opposed ZANU-PF and President Mugabe until entering into a coalition 
in February 2009, and civil society groups operate in an environment 
of intimidation and repression.  Human rights organizations reported 
that physical and psychological torture perpetrated by security 
agents and supporters of ZANU-PF increased after the 2008 elections. 
 Individuals and companies out of favor with ZANU-PF, or regarded by 
ZANU-PF and its supporters as aligned with the MDC, routinely suffer 
harassment and bureaucratic obstacles in their business dealings. 
On occasion, domestic businesspeople out of favor with the 
government have been incarcerated for allegedly engaging in illegal 
business practices. 
 
¶38. Despite widespread dissatisfaction with government policy, there 
have been no large-scale demonstrations.  Sporadic cases of looting 
by soldiers and small-scale demonstrations have occurred in recent 
years.  The disappearance of ammunition and weapons from a 
government armory in October 2009 resulted in a number of soldiers 
and MDC supporters being arrested and charged with theft. 
 
 
---------- 
Corruption 
---------- 
 
¶39.  There is widespread corruption in government. Implementation of 
the government's ongoing redistribution of expropriated commercial 
farms has substantially favored the ruling party elite and lacks 
transparency. 
 
¶40.  In 2005 the government enacted an Anti-Corruption Act that 
established a government-appointed Anti-Corruption Commission to 
investigate corruption; however, it includes no members from civil 
society or the private sector.  The Ministry of State Enterprises, 
Anti-Monopolies, and Anti-Corruption was also established to oversee 
and coordinate the government's efforts to combat corruption; 
however, government officials and police lack sufficient political 
backing at senior levels of the government to effectively 
investigate cases.  The government prosecutes individuals 
selectively, focusing on those who have fallen out of favor with 
ZANU-PF and ignoring transgressions by members of the favored 
elite. 
 
 
¶41.  The inclusive government intends to enhance the institutional 
capacity of the Anti-Corruption Commission, whose members are yet to 
be interviewed and selected.  In addition, the government intends to 
improve accountability in the use of state resources. 
 
------------------------------- 
Bilateral Investment Agreements 
------------------------------- 
 
¶42.  The U.S. has no bilateral investment or trade treaty with 
Zimbabwe.  Zimbabwe has BIPPAs with 17 countries; only four of these 
QZimbabwe.  Zimbabwe has BIPPAs with 17 countries; only four of these 
treaties (with the Netherlands, Denmark, Germany, and Switzerland) 
have been ratified.  In spite of these agreements, the government 
has not protected investments undertaken by nationals from these 
countries, particularly with regard to land.  In recent months, a 
 
HARARE 00000020  009 OF 011 
 
 
farm belonging to a German national was seized by an army officer 
and the government did not intervene, despite the assurance that 
Zimbabwe would honor all obligations and commitments to 
international investors. 
 
-------------------------------------------- 
OPIC and Other Investment Insurance Programs 
-------------------------------------------- 
 
¶43.  The U.S. Government and Zimbabwe concluded an OPIC agreement in 
April 1999.  Zimbabwe acceded to the World Bank's Multilateral 
Investment Guarantee Agency (MIGA) in September 1989.  Support from 
the Export-Import Bank of the U.S. is not available to Zimbabwe. 
Many other major donor countries have also suspended their trade 
finance and export promotion programs, as well as investment 
insurance, due largely to Zimbabwe's mounting multilateral and 
bilateral arrears and deteriorating investment climate. 
 
----- 
Labor 
----- 
 
¶44.  Zimbabwe's interconnected economic and political crises have 
prompted many of the country's most skilled and well educated 
citizens to emigrate, leading to widespread labor shortages for 
managerial and technical jobs.  At the same time, the severe 
contraction of the economy in recent years has caused formal sector 
employment to drop significantly.  The best available surveys place 
formal sector unemployment as high as 80 percent.  Independent 
analysts estimate that only about 700,000 people, or roughly 7 
percent of Zimbabwe's population, are employed in the formal sector. 
 As noted above, foreign investors are encouraged to hire local 
nationals. 
 
¶45.  The country's HIV/AIDS epidemic is also taking a heavy toll on 
the workforce.  The government estimated in 2009 that 13.7 percent 
of adults were infected with HIV. 
 
¶46.  The government is a signatory to International Labor 
Organization (ILO) conventions protecting worker rights, although 
the world body has designated Zimbabwe as a "notorious country" for 
its continued attempts to limit workers' right to organize and hold 
labor union meetings.  The 1985 Labor Relations Act set strict 
standards for occupational health and safety, but enforcement is 
fairly lax and inconsistent across the industrial sectors.  In 
November 2008 the ILO appointed a commission of inquiry to 
investigate complaints that worker rights were violated under ILO 
Conventions 26 and 87.  The ILO has not yet released the results of 
the inquiry. 
 
¶47.  Collective bargaining takes place through a National Employment 
Council (NEC) in each industry, comprising representatives from 
labor, business, and government.  In addition, the Zimbabwe Congress 
of Trade Unions (ZCTU), the country's umbrella labor organization, 
Qof Trade Unions (ZCTU), the country's umbrella labor organization, 
advocates for workers' rights. 
 
¶48.  A Tripartite Negotiating Forum (TNF) was established in 2001 
for labor, business, and government to tackle macro-social issues. 
These talks have been fitful and unproductive since their inception, 
however.  A continuing impasse for the TNF is disagreement between 
business and labor over indexing wages to the poverty datum line 
(PDL), which calculates the minimum required for a family of five to 
 
HARARE 00000020  010 OF 011 
 
 
pay basic expenses.  Independent economists estimate that roughly 80 
percent of Zimbabwe's population lives below the PDL. 
 
 
¶49.  The government continues to harass labor unions and their 
leaders.  In May 2008 prior to the presidential run-off in June, 
police arrested leaders of the Zimbabwe Congress of Trade Unions 
(ZCTU) for "spreading falsehoods prejudicial to the state."  In 
November 2009, the ZCTU president and four union members were 
arrested for allegedly violating the Public Order and Security Act 
by holding consultative meetings with workers without police 
permission even though trade unions are exempt from seeking police 
authority.  Under Zimbabwe labor law, the government can intervene 
in the ZCTU's internal affairs if it determines that the leadership 
is not acting in the workers' interest.  The government has 
threatened to eliminate the ZCTU and taken steps to marginalize the 
traditional unions and the formal labor dispute resolution 
mechanism.  To undercut the strength of the ZCTU, the government 
created an alternative umbrella organization, the Zimbabwe 
Federation of Trade Unions (ZFTU), after ZANU-PF fared poorly in the 
2000 parliamentary elections.  Outside of the government, however, 
the ZFTU is not regarded as a legitimate labor organization.  The 
ZCTU remains the voice of labor in Zimbabwe and the country's 
official and internationally recognized labor organization. 
 
------------------------------ 
Foreign-Trade Zones/Free Ports 
------------------------------ 
 
¶50.  The government promulgated legislation creating Export 
Processing Zones (EPZs) in 1996.  Zimbabwe now has 183 
EPZ-designated companies.  Benefits include a five-year tax holiday, 
duty-free importation of raw materials, and capital equipment for 
use in the EPZ, and no tax liability from capital gains arising from 
the sale of property forming part of the investment in EPZs.  Since 
January 2004 the government has generally required that foreign 
capital comprise a majority of the investment.  The requirement on 
EPZ-designated companies to export at least 80 percent of output has 
constrained foreign investment in the zones.  The merger between the 
Zimbabwe Investment Centre and the Zimbabwe Export Processing Zones 
Authority, which began in 2006, has been completed and the new 
institution -- the Zimbabwe Investment Authority -- now serves as a 
one-stop shop for both local and foreign investors. 
 
------------------------------------ 
Foreign Direct Investment Statistics 
------------------------------------ 
 
¶51.  Zimbabwe Net Direct Investment Flows 2000-2008 
(US$ million) 
 
2000  2001  2002  2003  2004  2005  2006  2007  2008 
Q2000  2001  2002  2003  2004  2005  2006  2007  2008 
16    0     23    4     9     103   40    66    44 
 
Source: UNCTAD, World Investment Report 2009. 
 
--------- 
Resources 
--------- 
 
¶52.  Zimbabwe Investment Authority 
Investment House 
 
HARARE 00000020  011 OF 011 
 
 
109 Rotten Row 
P.O. Box 5950 
Harare 
Telephone: (263) (4) 757 931/4 
Fax: (263) (4) 773 843 
www.zia.co.zw 
 
Zimbabwe Tourism Authority 
www.zimbabwetourism.co.zw 
 
State Enterprise Restructuring Agency 
www.sera.co.zw 
 
Zimtrade 
www.zimtrade.co.zw 
 
Zimbabwe International Trade Fair 
www.zitf.co.zw