HARARE, The Government of Zimbabwe has introduced stringent regulatory measures aimed at eliminating the practice of business “fronting” following the enactment of Statutory Instrument 215 of 2025, a policy framework designed to strengthen genuine local participation in the economy.
The new regulations, which fall under the country’s National Development Strategy 2, seek to address cases where local citizens act as nominal business owners while the actual control and financial benefits remain with foreign nationals.
Authorities say the measures coincide with the January 31, 2026 deadline requiring existing foreign owned businesses operating in reserved sectors to submit regularisation plans outlining how they will comply with the new indigenisation requirements.
Under the new framework, the Ministry of Industry and Commerce has introduced strict compliance procedures aimed at ensuring that local ownership is authentic and verifiable.
One of the key measures involves mandatory beneficial ownership disclosure. Business owners are now required to submit sworn declarations confirming whether they are the sole beneficial owners of their enterprises. Where this is not the case, applicants must disclose the identities and ownership structures of all individuals who ultimately control or benefit from the business.
Applicants seeking operating permits in reserved sectors must also provide proof of financial capacity, including documentation outlining the source of their funds. Authorities say this requirement is intended to prevent individuals from acting as proxies for external investors seeking to circumvent local ownership regulations.
To enhance enforcement, government has also established a dedicated compliance command centre responsible for reviewing submitted regularisation plans and coordinating inspections. Officials indicated that after reviewing documentation, authorities will conduct physical inspections of businesses to verify compliance with ownership and operational requirements.
The regulations also introduce severe penalties for those found guilty of fronting or submitting false declarations. Offenders face criminal sanctions that include fines of up to level eight and possible imprisonment ranging from three to five years. In addition, individuals or entities convicted of violating the regulations will face administrative bans preventing them from operating in any reserved sector for a period of five years and from conducting business with government institutions.
For foreign owned businesses that were already operating in these sectors prior to the new regulations, government has introduced a phased compliance framework often referred to as a “glide path.” Instead of immediate closure, companies are required to gradually divest 75 percent of their equity to Zimbabwean citizens over a three year period. The plan requires businesses to divest at least 25 percent in 2026, a further 25 percent in 2027, and the remaining 25 percent by 2028, leaving foreign investors with a maximum stake of 25 percent by the end of the transition.
The regulations primarily target seventeen sectors considered to have low entry barriers and strong potential for local entrepreneurship. These include services such as hairdressing, beauty salons and barber shops, employment and advertising agencies, transport services including taxis, buses and car hire businesses, as well as small scale commercial activities like bakeries, tobacco grading and artisanal mining.
However, government has provided exceptions for foreign investors willing to undertake large scale investments. In certain sectors such as retail or grain milling, foreign participation will still be permitted if investors commit significant capital, for example investments of at least US$20 million and the creation of a minimum of 200 local jobs.
Economic analysts say the measures represent a renewed effort by government to protect local entrepreneurs, promote inclusive economic participation and strengthen domestic ownership within key sectors of the economy, while still maintaining space for strategic foreign investment in capital intensive industries.
