Zimbabwe has the second largest (by percentage) informal economy in the world, with 60.6%. Agriculture and mining largely contribute to exports. After continuous negative growth between 1997 and 2008, the economy of Zimbabwe has seen rapid but volatile growth, averaging 11% on an end-to-end basis.

Zimbabwe is ranked 140 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Zimbabwe improved to 140 in 2019 from 155 in 2018. In this article, we shall address the steps to be taken by a foreign investor in order to set up a new company in Zimbabwe.

1. Develop your idea into a concrete product or service

Every business whether big or small starts with an idea. This is usually where most companies are destined to fail or win. You have to realize that it’s not every idea that can succeed as a business. Some ideas may be interesting to you but to no-one else. If your idea is to succeed as a business it has to go beyond just you. It must address a sizable number of people who are willing to pay money for it. Your idea must be influenced by various factors such as solving a problem, providing a better way of doing things, making life better for users, giving people a status symbol etc. There might be plenty of ideas around but you need to narrow them and come up with one which can be turned into a business. This idea should enable you to make a profit at one point.

2. Identify a property within Zimbabwe

A new company will require an address within Zimbabwe for incorporation purposes. Accordingly, it is important to identify a property to purchase or rent which may be utilised as the Company’s registered address. You cannot operate from an incompatible position and expect to attract uptown customers.

3. Identify a Zimbabwean resident to appoint as a director.

Companies in Zimbabwe may be 100% owned by foreign shareholders. There is, however, a requirement that at least one of the directors of a company must be a Zimbabwean resident. It is possible to request that one of the lawyers at your chosen commercial law firm in Zimbabwe act as a director.

4. Incorporate a company

As set out above, a company may be 100% foreign owned. Registration is done at the Department of Deeds, Companies and Intellectual Property, which is located at Century House East, Nelson Mandela Avenue, Harare.

5. Apply for an Investment Licence

All new foreign investments in Zimbabwe require an investment licence. An investment licence may be obtained from the Zimbabwe Investment Authority which is located at 109 Rotten Row, Harare, Zimbabwe.

6. Obtain a tax advice letter from Zimbabwe Revenue Authority (ZIMRA)

In order to register as a taxpayer at ZIMRA, one requires a bank account. However, in order to obtain a bank account, one requires an advice letter from ZIMRA. The letter may be obtained by attending at ZIMRA with original company registration documentation and the letter will be issued.  The ZIMRA offices are located at Kurima House, Corner George Silundika and 3rd Street, Harare.

7. Open a bank account

As stated above, in order to register as a taxpayer at ZIMRA, a company requires a local bank account. An account may be opened by approaching any local bank. A bank account is necessary for a to ensure transparency and accountability.

8. Register company at ZIMRA

The next stage would be to register the company as a taxpayer at ZIMRA and obtain a Business Partner number (BP Number). A BP Number is a company’s identification number for tax purposes. Registration as a taxpayer may be done online.

9. Register employees for tax

Once the company begins to employ personnel, it will be required to register as an employer at ZIMRA and register the employees for tax which is Pay As You Earn (PAYE). In the event that the company wishes to employ foreign personnel, then the company may approach the Department of Immigration Control for facilitation and processing of residence and work permits (new and renewals) and visas.

10. Register for NSSA

Every business that has employees is required to register with the NSSA. The employer is required to apply for registration as an employer and submit the payroll schedule of all the employees in order for them to be registered and issued with a social security number for life. Although the NSSA has an office in every region, returns are prepared and submitted where the payroll is administered.

11. Register for VAT

Every company which has revenue of US$60,000 per annum or more is required to register as a VAT vendor in Zimbabwe. In the event that a company would like to register as a VAT vendor before this threshold has been met is if the company can present ZIMRA with a signed and confirmed contract in the sum of US$60,000 per annum or more. Alternatively, a company may register for VAT after 6 months if the company can show that its revenue was US$30,000 or more in the 6 months and it will definitely make US$60,000 or more in the year.

12. Organize and acquire funding.

It cannot be disputed that every business needs capital in order to be operational. Securing funding for starting a business is a big problem for many start-ups especially in Zimbabwe. Certain considerations must be taken into account before approaching any venture capitalists, business angels or putting a hand in your pockets. You need to be clear about how much is needed and where are you going to get that money.

Ask yourself questions like:

How much do l need to start my business?

How much can l raise from personal savings?

Are there any friends or family members who are willing to invest in my idea?

Who else can l approach to help in funding my business idea?

Whether you have capital with you or not, you now need to document your financial information. Have a budget to work around, which shows your expected revenues against expected expenses. This tool will be helpful in seeking funds from investors or financial institutions. You should always bear in mind that a business must not necessarily be started with a huge capital.

13. Choose a suitable location

Great care should be placed when choosing where to locate your business because once a mistake is made, it will be difficult to reverse it. Business location should conform to the type of business, its operations and target market. It should be noted that, your chosen location also affect the brand image you will possess later. A wrong choice of location would mean a need to work harder to get people to your place.

Therefore, you should choose a location that fairly represent your perceived identity. Choose a building that fits well with your target audience. Situations do differ, there is no one size fits all here, all you need is to assess different factors that apply to your type of business, not forgetting your ability to afford the accommodation cost of the desired location.

14. Establish a distinct brand identity

Your brand identity is how you want to be perceived by your customers. You need to design a visual brand identity for your business, which can be a name, color, logo, design or a combination of them e.g Coca Cola with its red ribbon. This will be a representation of your business which clients and customers should easily identify. It has been found by researchers that after a visit to a website, the color choices, size of text and the mood of the design automatically tells a customer exactly how to feel about your brand. A visual representation that does not match company values will be confusing and misleading to your audience. Therefore, customers will not commit funds to something untrustworthy. Visual brand identity is not about photos and graphics alone, but its summing up everything customers see and perceive when they look at your business.

Conclusion

We hope this guide has helped you get a better understanding of what it takes to start a business in Zimbabwe. While it may seem like there are many steps involved, they all boil down to one thing: making sure your company is legally compliant. If you want to be successful, then you need to make sure that every piece of paperwork is filed correctly and on time–and if there’s anything we’ve learned from our years as entrepreneurs ourselves, it’s that nothing gets done unless someone makes it happen.