Zimbabwe risk report
Across all sectors, corruption is a very high risk for companies operating in Zimbabwe. Investors face both high-level corruption in the form of nepotism, patronage and abuse of power, as well as petty bribery and extortion. The Prevention of Corruption Act prohibits active and passive bribery, gifts and facilitation payments in the public and private sectors, but such practices are common. Companies can be held criminally liable. The maximum punishment for corruption offenses is 20 years' imprisonment, fines, or both, but the government enforces the law selectively, targeting mostly political opponents.
Judicial system Moderate risk
There is a moderate risk of corruption in the judicial sector. In commercial cases, the judiciary is generally impartial (ICS 2015), yet companies report that informal payments to influence courts' decisions are sometimes exchanged (GCR 2015-2016). The executive tends to influence judges and magistrates and often interferes in politically contentious issues (HRR 2014). In some instances, government officials provide home and lands to judges (HRR 2014). A majority of Zimbabweans perceive judges and magistrates to be involved in corruption and 21 percent of civilian survey respondents have paid a bribe or gave a gift to get assistance from courts (Afrobarometer, May 2015). Almost no Zimbabweans who experience bribery report the incident to the authorities because they fear adverse consequences, do not expect anything to be done about it, or believe the authorities themselves are corrupt (Afrobarometer, May 2015).
Companies find that the legal framework lacks efficiency when challenging regulations (GCR 2015-2016). Due to a lack of funding and other resources, the settlement of disputes can take years (ICS 2015). Enforcing a contract takes less time but is almost twice as costly than elsewhere in Sub-Saharan Africa (DB 2016). Zimbabwe is a member to the International Centre for Settlement of Disputes and has accessed the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Police Very high risk
Police corruption is a very high risk for businesses operating in Zimbabwe. The police suffer from poor working conditions, a lack of training and resources, and low salaries, so corruption is common — especially at lower levels (HRR 2014). Roadblocks are often used to extort goods or bribes (U4, Jan. 2015). The majority of Zimbabweans perceive the police as the most corrupt institution in the country (Afrobarometer, May 2015). One in four survey respondents who had contact with the police paid a bribe to obtain a service or to avoid problems (Afrobarometer, May 2015).
The police are politicized (U4, Jan. 2015) and suffers from a culture of impunity (HRR 2014). Business executives generally demonstrate a low degree of trust in the reliability of the police (GCR 2015-2016).
Public services Very high risk
Corruption is a high risk for businesses acquiring public licenses, permits or utilities — petty corruption is particularly common (ICS 2015). Corruption is driven by a bloated public service, inefficient bureaucracy and an opaque regulatory environment (U4, Jan 2015). Irregular payments in relation to public utilities frequently occur (GCR 2015-2016).
Twenty-five percent of surveyed Zimbabweans who tried to obtain an identity-related document (such as a driver’s license, a passport, or a permit) say they paid a bribe ”once or twice” or “often” to obtain the document (Afrobarometer, May 2015). Ten percent paid a bribe to acquire water, sanitation or an electrical connection (Afrobarometer, May 2015). Starting a business is very cumbersome: It takes 90 days and is twice a costly as the Sub-Saharan Africa regional average (DB 2016).
Land administration Very high risk
Corruption is rife in the land administration, and property rights are poorly protected. The land management system is fragmented, and the multiplicity of statutory, customary and religious stakeholders creates ample opportunity for corruption (TI, June 2014). This is further exacerbated by the politicization of land, a weak legal framework and excessive discretionary powers given to some administrators (TI, June 2014).
Additionally, there is a history of uncompensated seizures of privately owned agricultural land that is transferred to civil servants and other regime supporters (BTI 2016). As a consequence, such supporters and members of the security forces occasionally disrupt production on commercial farms, including those owned by foreign investors and covered by bilateral investment agreements (ICS 2015). In a related ongoing trial, the minister of state for Mashonaland Central province, Martin Dinha, has been charged with extorting USD 60,000 from a farmer to protect the farmer from eviction (BBC News, Sep. 2015).
Unlike agricultural land, residential and commercial properties in cities are generally well enforced (ICS 2015) and registering property takes less time than on regional average (DB 2016). Investors should note that dealing with construction permits in Zimbabwe is more cumbersome than in most other countries (DB 2016).
Tax administration Very high risk
In Zimbabwe, there is a high risk of encountering corruption in the tax administration. Bribes in connection with annual tax payments often occur (GCR 2015-2016). More than 40 percent of Zimbabweans believe tax officials are corrupt (Afrobarometer, Oct. 2015), and most find it hard to know how the government uses tax revenues, indicating a lack of transparency in the tax system (Afrobarometer, Mar. 2014). Preparing, filing and paying taxes takes 242 hours per year (DB 2016).
Customs administration Very high risk
There is a very high risk of corruption when interacting with Zimbabwe's customs authorities: Irregular payments are common in the sector (GETR 2014). There are reports of transporters experiencing artificial delays and bribe demands when obtaining necessary documentation (Daily News, Apr. 2015). Companies should note that import procedures are burdensome (GETR 2014) and that the government's approval criteria heavily favor export-oriented projects (ICS 2015).
Exporting goods takes an average of 72 hours, while importing takes approximately 60 hours (DB 2016).
Public procurement Very high risk
There is a very high risk of encountering corruption in Zimbabwe's public procurement sector. Irregular payments or bribes in connection with the awarding of public contracts or licenses are common, favoritism in the decisions of government officials are common, and public funds are often diverted (GCR 2015-2016).
President Mugabe oversees a conglomerate of businesses, and the ruling party owns two companies that hold a range of businesses from which party elites take a share in profits (U4, Jan. 2015). Among state-owned enterprises, corruption is rife and senior executives award themselves exorbitant salaries (ICS 2015). The Procurement Act makes collusion among government contractors and companies illegal; however, the president can limit the Act at his discretion (CatC 2012). Companies are strongly recommended to use a specialized due diligence tool on public procurement to mitigate corruption risks associated with public procurement in Zimbabwe.
Natural resources Very high risk
Corruption is a very high risk for companies operating in Zimbabwe's natural resource sector. Senior officials who manage natural resources are frequently involved in corruption, and revenues from the industry are often not reported (U4, Jan. 2015). The mining sector is especially affected by high-level corruption and patronage (BTI 2016).
Corruption and a lack of oversight allowed for an illicit diamond trade, which public officials in the Ministry of Mines are allegedly fully aware of (U4, Jan. 2015). According to President Mugabe, the illicit trade has cost the economy USD 13 billion, leading him to create a new state monopoly in 2016 and ordering all diamond-mining companies to end operations and vacate their premises in the Marange and Chimanimani areas (Bloomberg, Mar. 2016).
The Zimbabwean law pertaining corruption is strong, but the government primarily prosecutes individuals who have fallen out of favor with the ruling party (ICS 2015). The Prevention of Corruption Act (PCA) criminalizes active and passive bribery, extortion, money laundering in the public and private sectors. Gifts and facilitation payments are illegal, as is the bribery of foreign officials. Corporate criminal liability for corruption offenses is provided for by the Criminal Law and Criminal Procedure and Evidence Act (U4, Jan. 2015). Under the PCA, the maximum punishment for agents found guilty is a fine not exceeding three times the value of the gift or bribe in question, USD 100,000, or imprisonment for up to 20 years.
The Constitution offers a guide for appropriate conduct for public officers and the civil service (U4, Jan. 2015). The Zimbabwean Anti-Corruption Commission has the mandate to investigate corruption offences, but its performance has been poor (BTI 2016). Zimbabwe is not a party to the OECD Convention on Combating Bribery but has ratified the United Nations Convention against Corruption.
The constitution provides for the freedom of expression and access to information, but these are subject to limitations and restrictions. Journalists and media companies are required to register with the state, and repressive regulations (e.g., the Access to Information and Protection of Privacy Act, the Official Secrets Act, POSA, and the Criminal Law [Codification and Reform] Act) severely limit their operations (FotP 2015). Aside from legal hurdles, journalists face verbal intimidation and physical attacks by the police or government-related persons (FotP 2015). Nonetheless, reporting on official corruption is increasing (FotP 2015). When asked about the media's effectiveness in revealing government mistakes and corruption, surveyed Zimbabweans are split: 44 percent believe the media is not effective, while 42 percent trust in the media's role in revealing corruption (Afrobarometer, May 2015). The press is considered "not free" (FotP 2015).
Zimbabwe has a repressive legal framework that constrains civil society. The Public Order and Security Act (POSA) stipulates that public meetings or demonstrations require police permission; it also allows for arbitrary curfews and forbids criticism of the president (FitW 2015). POSA and other laws restrict the otherwise active and professional nongovernmental organizations (FitW 2015). Systemic harassment continuously compromises civil society (BTI 2016).
- Bertelsmann Foundation: Bertelsmann Transformation Index 2016.
- World Bank: Doing Business 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Bloomberg: "Diamond Smuggling Cost Zimbabwe Economy $13 Billion, Mugabe Says," 4 March 2016.
- US Department of State: Investment Climate Statement 2015.
- Freedom House: Freedom of the Press 2015.
- Freedom House: Freedom in the World 2015.
- Afrobarometer: AD56: Police corruption in Africa undermines trust, but support for law enforcement remains strong, 2 November 2015.
- Afrobarometer: AD55: Zimbabweans support taxation but perceive tax officials as corrupt, demand accountability, 30 October 2015.
- Afrobarometer: Zimbabweans see corruption on the increase, feel helpless to fight it, 25 May 2015.
- U4, Transparency International & CMI: Zimbabwe: Overview of corruption and anti-corruption, 13 January 2015.
- BBC: "Zimbabwe minister Martin Dinha faces corruption charges," 3 September 2015.
- Daily News: "Delays, corruption rife at Zim borders," 6 April 2015.
- US Department of State: Country Report on Human Rights Practices for 2014.
- World Economic Forum: The Global Enabling Trade Report 2014.
- Transparency International: An Analysis of Transparency and Accountability in Land Sector Governnace in Zimbabwe 2013, 16 June 2014.
- Afrobarometer: Africa's willing taxpayers thwarted by opaque tax systems, corruption, 5 March 2014.
- Freedom House: Countries at the Crossroads - Zimbabwe 2012.