On 12 December 2025, the Minister of Industry and Commerce promulgated the Indigenisation and Economic Empowerment (Foreign Participation in Reserved Sectors) Regulations, 2025, published as Statutory Instrument 215 of 2025. These regulations were enacted in terms of section 21 of the Indigenisation and Economic Empowerment Act [Chapter 14:33] (“the Act”). Their principal purpose is to establish the legal framework under which foreign nationals may, under limited and regulated circumstances, participate in sectors of the economy designated as “reserved sectors.”
Reserved sectors are identified under section 3A of the Act as economic activities that are ordinarily restricted to Zimbabwean citizens. These include, among others, passenger transportation services, retail and wholesale trade, estate agency services, tobacco grading and packaging, grain milling, and artisanal mining. Although these sectors are generally closed to foreign participation, section 3A(10) of the Act empowers the Minister to permit such participation through regulations where this is necessary to advance the broader objectives of indigenisation and economic empowerment. Statutory Instrument 215 of 2025 operationalises this statutory mandate. The following discussion outlines the principal provisions of the regulations, beginning with the qualification and application requirements, followed by the beneficial ownership framework, the regularisation mechanism for existing operators, and the offences created under the instrument.
Qualification and Application Requirements (Section 4)
Section 4 sets out the substantive criteria that a foreign national must meet to qualify for participation in a reserved sector. A foreign applicant must be an individual or corporate entity registered or incorporated in Zimbabwe, and they must satisfy the minimum investment and employment thresholds prescribed in the Schedule to the regulations. For example, participation in the retail and wholesale trade sector requires a minimum of 200 full-time employees and an investment of not less than US$20 000 000.
In addition, an applicant must be registered with the Zimbabwe Revenue Authority for tax purposes, must maintain a bank account in compliance with the Bank Use Promotion Act [Chapter 24:24], and must submit a credible and comprehensive business plan. This plan must demonstrate capacity to achieve the empowerment objectives set out in section 3A(10)(a)–(d) of the Act, namely:
- significant and sustainable employment creation
- skills and technology transfer;
- the development of sustainable value chains; and
- other socially or economically desirable outcomes.
The application must be lodged with the Minister through the designated Unit. It must be accompanied by the applicant’s investment permit (where already operating in Zimbabwe), the business plan, proof of financial capacity such as bank statements or guarantees, and any further documents reasonably required by the Unit. The Minister is required to consider the application within sixty days and may request additional information. The Minister may approve the application and issue a permit or exemption certificate, impose conditions, or reject the application. Failure by the applicant to comply with any condition imposed in terms of section 4(5) results in the application being automatically deemed rejected. The Unit is required to maintain a register of all issued permits, and section 4(8) empowers the Minister to revoke a permit where the applicant fails to honour their empowerment obligations or is found to have acted fraudulently during the application process.
Beneficial Ownership (Section 5)
Section 5 addresses the identification and regulation of beneficial ownership in reserved sector businesses. Where a business previously owned by a Zimbabwean citizen undergoes a transfer of ownership such that a foreign national acquires either full or partial ownership, the change must be reported to the Unit within seven days of its effective date. The business must thereafter apply for a permit within the period specified by the Unit. This mechanism prevents indirect or concealed participation by foreign nationals in contravention of the Act.
To ensure transparency, the Unit is authorised to require any person registered as the owner of a reserved-sector business to submit a sworn declaration confirming whether they are the sole beneficial owner. If they are not, they must disclose the identities and particulars of all beneficial owners. Where the Unit has reasonable grounds to suspect undisclosed foreign ownership or control, it may require the registered owner to make such a declaration and to furnish supporting documentation to verify the ownership structure.
If a person declares that they are not the beneficial owner, the actual beneficial owner is afforded one month to commence the permit application process. Failure or refusal to make the required declaration, or the making of a false declaration, constitutes an offence punishable by a fine not exceeding level eight, imprisonment for a term of three to five years, or both. Moreover, if the beneficial owner does not initiate the permit application process within the stipulated period, the Unit must cancel the business’s right to operate in the reserved sector.
Regularisation of Existing Operators (Section 6)
The regulations also make provision for foreign businesses that were already operating in reserved sectors prior to the date of gazetting. Such businesses are granted thirty days within which to submit their regularisation plans to the Unit. More significantly, section 6(2) requires all foreign nationals operating in reserved sectors to divest at least seventy-five per cent of their equity to Zimbabwean citizens within three years. The divestment must occur in annual instalments of no less than twenty-five per cent per year, with the result that by the end of the three-year period the foreign operator may retain no more than a twenty-five per cent equity stake. Businesses that fail to regularise their operations or meet the divestment obligations are liable to suspension or revocation of their business licences.
Offences and Penalties (Section 7)
Section 7 creates a comprehensive penalty regime for violations of the regulations. Operating in a reserved sector without a permit, or assisting another person to do so, constitutes an offence punishable by a fine not exceeding level eight, imprisonment for three to five years, or both. Contravention of any provision of the regulations likewise attracts the same penalty. In addition, any person who continues the unlawful conduct after being fined is subject to a further sanction: they are barred from participating in any reserved sector and prohibited from conducting business with any government entity for a period of five years.
Conclusion
Statutory Instrument 215 of 2025 represents a significant regulatory development in the administration of the Indigenisation and Economic Empowerment Act [Chapter 14:33]. While it allows for controlled and conditional participation by foreign nationals in sectors ordinarily reserved for citizens, it simultaneously reinforces the central objectives of indigenisation, namely, the localisation of ownership, the promotion of employment and skills transfer, and the enhancement of domestic economic empowerment.
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Read the original publication at Muvingi Mugadza
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