Unpacking SI 215 Of 2025: Foreign Participation In Reserved Sectors

Introduction

Statutory Instrument 215 of 2025 (SI 215), promulgated on 11 December 2025, introduces regulatory measures requiring the restructuring of ownership in certain business entities that are wholly or partially foreign-owned. Contrary to some public perception, the SI does not seek to exclude foreign nationals from participating in Zimbabwe's economy. Rather, it is designed to enhance local participation in specified sectors where foreign ownership has become highly concentrated, thereby restoring balance between foreign investment and domestic economic empowerment.

Importantly, SI 215 is sector-specific. Its application is confined to businesses operating within the reserved sectors listed in the Schedule and does not extend to all foreign-owned or foreign-controlled enterprises in Zimbabwe. The SI must therefore be read within the broader policy framework of the Indigenisation and Economic Empowerment Act, which seeks to promote inclusive and sustainable economic participation.

What Investors Must Know

Issuance of Permits

Foreign nationals with existing or prospective interests in the reserved sectors are required to regularize their participation through the Ministry of Industry and Commerce, acting via the National Indigenisation and Economic Empowerment Unit ("the Unit"). Participation in any reserved sector is conditional upon the issuance of a permit by the Unit.

To qualify for such a permit, an applicant must, among other requirements:

• be an individual or legal entity registered or incorporated in Zimbabwe in which a foreign national holds a minority or majority stake;
• meet the prescribed minimum investment thresholds set out in the Schedule;
• be registered for tax purposes with the Zimbabwe Revenue Authority;
• maintain a local bank account in compliance with the Bank Use Promotion Act; and
• submit a credible business plan demonstrating how the enterprise will advance the objectives outlined in section 3A(10)(a)–(d) of the enabling Act.

Foreign-owned businesses that were already operating in reserved sectors prior to the promulgation of SI 215 were granted a 30-day window within which to submit their regularization plans to the Unit. This transitional period underscores the urgency with which affected investors must now act to ensure compliance.

Beneficial Ownership and Equity Restructuring

SI 215 places significant emphasis on transparency and progressive localization of ownership. Any change in equity or beneficial ownership involving foreign nationals in locally owned businesses must be disclosed to the Unit, accompanied by a concurrent or subsequent permit application.

Furthermore, foreign participation in reserved sectors is capped at a maximum of 25% equity within three years of the SI's promulgation. Compliance with this requirement must be achieved progressively, through the annual relinquishment of not less than 25% of equity to local nationals, until the prescribed ownership ratio is attained. This phased approach is intended to allow businesses sufficient time to restructure without disrupting operations, while steadily advancing the policy objective of increased local ownership.

Penalties for Non-Compliance

The SI prescribes stringent penalties for non-compliance. Businesses that fail to adhere to the permit requirements or equity restructuring obligations risk suspension or revocation of their operating licenses. Any person who operates in a reserved sector without a permit, or who facilitates such unlawful participation, commits an offence and is liable to a fine not exceeding level eight, imprisonment for a period of three to five years, or both persistent or serious contraventions may result in a complete prohibition from participating in any reserved sector, as well as exclusion from doing business with any government entity—an outcome with far-reaching commercial consequences.

Conclusion

Viewed holistically, SI 215 should not be characterized as investor-repellent. Instead, it reflects a policy recalibration aimed at fostering a more balanced and inclusive economic landscape, where local participation is strengthened alongside sustained foreign investment. For businesses and investors operating in affected sectors, compliance is no longer optional. With the regularization timelines tightly defined, proactive engagement with the regulatory framework is essential. Businesses are not required to cease operations; however, timely and strategic action is critical to ensuring continuity, mitigating regulatory risk, and avoiding the significant penalties associated with non-compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.