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INVESTMENT OPPORTUNITIES BY SECTOR THE MINING SECTOR: Huge investment opportunities exist in mineral exploration, extraction, processing and value addition. Zimbabwe is richly endowed with vast mineral deposits (over 40 different types). These include platinum, gold, coal, chrome, iron ore, asbestos, diamonds, nickel, copper, phosphates, black granite, coal-bed methane gas and other industrial minerals, to name but a few major ones. According to the US-Geological Survey, Zimbabwe, along with S. Africa, holds about 90% of the world’s chromite deposits. In addition, the country is home to the world’s second largest platinum deposits and has discovered alluvial diamonds estimated at 35% (by quantity) of total world reserves. The cost of mining platinum in Zimbabwe is significantly lower than the world average in view of the fact that the platinum deposits in Zimbabwe are relatively shallow. Zimbabwe is renowned for her world-class low-ash coal deposits, which is highly sought after on the global market place. Current coal production is only 20% of full capacity. Zimbabwe is also not yet fully explored in the area of diamonds. Current production is 400 000 carats per annum and there is potential for increasing this level to 2 million carats per annum. Zimbabwe remains highly prospective for coal, diamonds, gold, platinum and chrome. There are huge opportunities to invest in additional mining equipment, coking coal facilities, mining infrastructure and in the value-addition of mineral products. The table below illustrates the huge potential in the Zimbabwean Mining Sector : ESTIMATED MINERAL RESOURCES IN ZIMBABWE MINERAL




Gold Platinum Chromite Nickel Coal Diamonds Iron Ore Coal Bed Methane Gas

13 million 28 billion 930 million 4.5 million 26 billion 165 million 30 billion Zimbabwe has the largest known reserve in Southern Africa

20 24 million 700 000 9 000 48 million Still in its infancy 300 000 Yet to be exploited

THE MANUFACTURING SECTOR Zimbabwe boasts of a fairly robust Manufacturing Sector, only second to South Africa in the Southern African Region. It is highly diversified with a product range of over 6 000 different types. The manufacturing sector has traditionally been the biggest contributor to GDP between 1980 and 1990 at 22% followed by Agriculture at 14%. Over the past few years the Mining Sector has gradually gained prominence over the Manufacturing Sector owing to a number of factors both exogenous and from within. It is estimated that agriculture accounts for about 63% of the manufacturing sector’s inputs and in turn, up to 40% of the manufacturing sector’s output is used as inputs in the agriculture and mining Sectors. This goes to illustrate the very strong backward and forward linkages between the main productive sectors of the economy. The major activities in the manufacturing sector include food processing, beverages, textiles and ginning, clothing and footwear, fertilizers, pharmaceuticals, motor assembly, packaging, paper printing and publishing, chemicals and petroleum products, and non-metallic mineral products. The manufacturing sector offers huge opportunities for agro-processing being an agricultural based economy. Foreign investors are invited to a variety of areas including cigarette manufacturing, processing of cotton into lint, cotton spinning and weaving, garment manufacturing, sugar milling, fertilizer manufacturing, chemical manufacturing, timber processing, machinery and equipment, to name but just a few of the many areas open to foreign investors. The manufacturing

sector requires new technologies and a lot of credit lines to be able to retool and keep pace with the unfolding technological developments in the global village and so remain competitive. There are companies looking for joint venture partnerships with foreign investors. Foreign investors can also partner with the Industrial Development Corporation of Zimbabwe (IDC). AGRICULTURE: Historically, agriculture has been the engine of the economy and at one point Zimbabwe was “breadbasket of the Southern African Region” on account of her highly developed and productive agricultural sector. Over 70% of the population derives its livelihood from agricultural activities. The sector has very strong backward and forward linkages with the rest of the economy and the performance of the Agriculture Sector is therefore a barometer of the performance of the economy. The main contributors in the sector include tobacco, cotton, oil seeds, maize, sugar, coffee, tea, horticulture and livestock. Tobacco is the main export crop. Horticulture includes cut-flowers, vegetables and citrus fruits and the EU has been the major export market for the country’s horticultural produce. Investment opportunities exist in the areas of contract farming in partnership with local farmers, infrastructure development (eg irrigation schemes) and mechanization and agro-processing.

INFRASTRUCTURE DEVELOPMENT: The government has prioritized the rehabilitation, upgrading and development of infrastructure premised on the fact that infrastructure is an important enabler for overall economic development. There are immense investment opportunities in this area, including power generation and transmission, telecommunications infrastructure development, upgrading of the national rail and road networks, dam/bridge construction, water sanitation and reticulation, the provision of medium residential accommodation/urban housing development, construction of industrial parks/factory shells and office accommodation, among many others. Energy has been identified as the key sector. Against the background of the SADC Regional power deficit, it is very critical that Zimbabwe upgrades her own electricity generation and transmission capacity. (Demand for power currently stands at 2 200 MW and current production is 1 200 MW, against an installed capacity of 1 950 MW). Raising the overall level of capacity utilization in the productive sectors (in

particular Industry, Mining & Agriculture) requires and entails increased energy consumption. The large coal deposits in Zimbabwe offer great scope for the expansion of thermal power generation to supply not only the domestic market in Zimbabwe but the whole of the Southern African Region. It also remains critical that the rural area communities should also have increased access to electricity in order to empower them in undertaking agricultural production and other industrial ventures. The Zimbabwe rail network is the hub of the SADC Regions’ transport system and it urgently needs to be rehabilitated and upgraded in order for it not to undermine the smooth flow of regional traffic. Telecommunications is yet another important component of infrastructure development, with a view to enhancing the business links and global competitiveness. There is need to enhance the existing local capacity for the production of telecommunication equipment and thereby substitute for imports. Zimbabwe stands ready to enter into joint venture investment programmes with international partners. The Private Sector and international investors are therefore invited to participate in the provision of infrastructure under the existing Public Private PARTNERSHIPS (PPP) Programme, wherein they will be entitled to certain special dispensations and privileges (according to their contribution). The government has established a PPP policy framework to protect the interests of both the investors and consumers alike. THE BANKING SECTOR: Fueling enterprise development and innovation invariably requires a very stable, modern, adequately capitalized, transparent and reliable banking sector. Historically, Zimbabwe has enjoyed a fairly advanced banking industry with respect to the quality and depth of products on offer. Currently, there are 26 banking institutions in Zimbabwe, 15 of them being commercial banks (including such major international brands as Standard Chartered Bank & Barclays), 5 merchant banks, 4 building societies, a savings bank and a micro-finance bank. After going through a rough patch over the past few years, confidence has been growing in the Zimbabwean banking sector as illustrated by the increasing levels of deposits (which stood at US$2.3 billion in September 2010). This, coupled with the foreign short term capital inflows, has strengthened the intermediation capacity of the Zimbabwean financial sector. The loan-to-deposit ratio also grew from 52.4% in January 2010 to 62.4% in September 2010. However, there is need to enhance the level of capitalization in the

Zimbabwean banking sector. This provides an opportunity for strong international players equipped with modern systems and first world (banking) products. As the Zimbabwean economy continues to grow, demand for medium to long term financing far exceeds the existing capacity. Agri-financing is also a major opportunity given the prevailing global food crisis. Markets all over the world are focusing on financing food security and Zimbabwe is no exception.

THE BUSINESS CLIMATE AND INVESTMENT INCENTIVES OFFERED BY THE GOVERNMENT Over the years, the government has enacted laws and regulations that provide investors with a conducive business environment Exchange controls have been relaxed to allow for the repatriation of foreign funds invested (upon disinvestment) and profits earned in the country without any restrictions. Foreign investors may bring into the country any amount of foreign currency and equity in the form of cash or equipment. (However, they are not allowed to capitalize, as part of equity, raw materials and technical/licensing fees or other services). The government guarantees the repatriation of 100% of the original capital invested in the case of dis-investment, if foreign currency is available (for that purpose) in the business concerned. Up to 100% of dividends from the net-after –tax profit may also be remitted. [However, investors who become permanent residents may not remit their dividends without prior approval from the Reserve Bank of Zimbabwe (the Central Bank)]. Foreign companies operating in Zimbabwe are free to borrow off-shore provided such loans, after obtaining the approval of the External Loans Coordinating Committee (ELCC), are transacted through authorized dealers (i.e, commercial banks). TAX INCENTIVES: Zimbabwe offers very attractive tax incentives to foreign investors, which include tax holidays, reduced tax rates and accelerated depreciation. The tax incentives also vary depending on the sector, type of activity and the geographic location of the investment within the country. There is a 5-year tax holiday across the board for investors in the Manufacturing & Tourism Sectors, Export Processing Zones (EPZs), Growth Point Areas and in such special

arrangements as BOT (Build Operate & Transfer) and Industrial Park Development. Whereas the normal corporate tax rate in Zimbabwe is 30%, investors in the Tourism Sector, EPZs and the Industrial Park developers only pay 25% after the five year tax holiday; while investors in the Manufacturing Sector only pay 20% if they export 50% or more of their total output. Investors under the BOT arrangements pay 15% for the second 5 years of investment, 20% in the third 5 years and the normal rate (30%) thereafter. Manufacturing companies in Growth Point Areas only pay 10% tax. Mining companies pay a flat rate of 15% tax and all capital expenditure (exploration development & operational) incurred wholly and exclusively for mining operations will be allowed as a deduction at the rate of 100%. Mining companies also continue to enjoy an indefinite carry-forward of their tax losses. Whereas all investors are levied a withholding tax on dividends (for both residents and non-residents) at the rate of 10%, mining companies listed on the Zimbabwe Stock exchange are levied only 5%. Furthermore, there is an exemption from customs duty, import tax and surtax, and a refund of Value Added Tax (VAT) on all capital goods during the exploration phase of the mining projects and for a period of up to 5 years (maximum) from the date on which the mining title is granted, during the development phase of the mining projects. Mining companies have the right to market their minerals directly, in accordance with the provisions of Minerals Marketing Corporation Of Zimbabwe Act and subject to adequate monitoring arrangements and reporting obligations by the mining companies. After the first 5-year tax holiday, investors in the Tourism Sector pay 15% only in the second 5 years and 20% only in the third 5 years. Thereafter they pay the normal rate of 30% corporate tax. Investors in this sector also enjoy a refund of import duty on all capital goods imported for use in the Tourist Development Zones. CUSTOMS DUTIES CURRENTLY APPLICABLE IN ZIMBABWE PRODUCT CATEGOERYऀ ऀ PREVIOUS RATESऀ ऀ ऀ CURRENT RATES

Raw Materialsऀ ऀ ऀ Intermediate Goodsऀ ऀ

0-25%ऀ ऀ ऀ ऀ ऀ 0-15% 10-25%ऀ ऀ ऀ ऀ ऀ 10-15%

FINISHED GOODS Clothing & Textilesऀ ऀ 40-60% +US$10/kgऀ ऀ 40% +US$5/kg Footwearऀ ऀ ऀ 40-60% +US$5/pairऀ 40% +US$5/pair Electrical Goodsऀ ऀ ऀ 60%ऀ ऀ ऀ ऀ ऀ 40% Alcohol/alcoholic Beveragesऀ 60%ऀ ऀ ऀ ऀ ऀ 40% Cigarettes & Tobaccoऀ ऀ 60% + US$5/1000ऀ ऀ ऀ 40% +US$5/1000 Motor Vehiclesऀ ऀ ऀ 40-80%ऀ ऀ ऀ ऀ ऀ 25-60% Handbags & Other Articles of Leather/Plasticऀ 60% + US$5/kgऀ ऀ ऀ 40% + US$5/kg Fruits & Vegetablesऀ ऀ 40%ऀ ऀ ऀ ऀ ऀ 25%

INDIVIDUAL INCOME TAX RATES INCOME BAND : US$ऀ ऀ ऀ ऀ ऀ APPLICABLE TAX RATE Up to 1 650ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ 0% 1 650 – 5 500ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ 20% 5 501 – 11 000ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ 25% 11 001 – 16 500ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ 30% 16 501 – 33 000ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ 35% Over 33 000ऀ ऀ ऀ ऀ ऀ ऀ ऀ ऀ 37.5% ऀ ऀ ऀ ऀ ऀ LICENSING INVESTORS





COMPANY REGISTRATION PROCESS: All companies operating in Zimbabwe have to be registered with the Registrar of Companies, under the Companies’ Act or the Private Business Corporation Act. At the end of this process the investor gets a Certificate of Incorporation. PROJECT APPROVAL & REGISTRATION: All new foreign investment in Zimbabwe require an Investment License issued by the Zimbabwe Investment

Authority (ZIA). In this regard, an investor submits to ZIA his/her project proposal in the form of dully completed Application Form, (i.e.ZIA 1). This form can be down loaded from the ZIA website ( LICENCE FEE STRUCTURE: A non-refundable processing fee of US$500.00 is payable upon submission of the application form/project proposal and US$2 500.00 (also non-refundable) is payable upon collection/issuance of the Investment Licence. INVESTMENT FACILITATION: The Zimbabwe Government has embarked upon institutional reforms aimed at facilitating the processing of foreign investment applications in Zimbabwe, through the establishment of the One-StopShop Investment Centre at the Zimbabwe Investment Authority. This new institution that has brought all the relevant stakeholders from Government and semi-quasi organizations (Immigration Department, Zimbabwe Revenue Authority, Registrar of Companies, Attorney General’s Office, Environmental Management Agency and the Investment After-Care Services Department) under one roof, guarantees to issue the requisite Permits and Investment Licences within 5 days. (Previously it was much more than that). THE LAND TENURE SYSTEM IN ZIMBABWE Land in Zimbabwe is classified according to its designated use and its geographical location. The extent to which one is able to hold title/rights over land in Zimbabwe is therefore determined by this zoning system. INDUSTRIAL & COMMERCIAL LAND: is mainly found in towns and designated Growth Points and Rural Service Centres. Acquisition is through the relevant local authorities, i.e. Town or Rural District Councils. AGRICULTURAL LAND : is state land mainly reserved for the local people in Zimbabwe. Access is through a system of leases issued by the Government of Zimbabwe. Foreign investors can only access this land through “contract farming” arrangements with local farmers. ऀ

WHY INVEST IN ZIMBABWE The country has an immense growth potential given its huge natural resource base, its educated and highly skilled workforce (second to none on the African Continent), as well as its ideal geographical location in the heart of the Southern African Region, which offers investors easy access to a growing regional market. The above information points to the fact that Zimbabwe is indeed one of the fast growing economies not only in Southern Africa, but in the whole African Continent and we invite you to be part of this fiesta of business opportunities! In everything we do in Zimbabwe, we believe in the power of commerce and industry to steer the economy to greater heights.

INVESTMENT INCENTIVES Zimbabwe offers a number of tax and customs incentives in the form of: • Tax holidays • Reduced tax rates and • Accelerated depreciation These incentives vary depending on the specific sectors, type of activity and geographical location of the investment. TOURISM SECTOR • 5 year tax holiday • 15% tax in the second 5 years and • 20% in the third 5 years MANUFACTURING • 5 year tax holiday • 20% thereafter if 50% or more of output is exported EXPORT PROCESING ZONES • 5 year tax holiday • 25% thereafter

BOT and BOOT ARRANGEMENTS • 5 year tax holiday • 15% during the second 5 years and • 20% during the third 5 years INDUSTRIAL PARK DEVELOPMENT • 5 year tax holiday • 25% thereafter GROWTH POINTS • 5 year tax holiday • 10% thereafter MINING COMPANIES • 15% flat tax rate • 100% of all capital expenditure during the exploration phase is allowed as a deduction • Enjoy carry-over of tax losses • 5% withholding tax on dividends (normal rate is 10%) • Refund of Value Added Tax (VAT) on capital goods • All imported capital goods are exempted from customs duty, import tax and surtax. GROWTH POINTS • 5 years tax holiday • 10% thereafter

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