The 2019 exit of Precision Cannabis Therapeutics Zimbabwe (PCTZ), the country’s first medical cannabis licensee, owing to an investment policy that compelled foreign firms to cede a 40% stake to a government agency, demonstrates the ever-present complexity of doing business in Zimbabwe. 

In the country’s 2018 rollout of the medicinal cannabis sector, private companies were legally required to form joint ventures with security forces on a 60%/40% basis, and to grow the cannabis on designated security services land, apparently because the government was terrified of the potential risks of the product finding its way onto the local and international black markets.


Nathan Emery, PCTZ’s former chief operating officer, says after two years of hard work, his company was hounded out by the appointed government partner not wanting to pay for its 40% shareholding. 

“I could no longer allow my shareholders to be subject to such fly-by-night policies. Yes, we received a refund of $10,000. I know this ‘policy’ has since been rescinded, but it is too late to rebuild any trust in my book, with the history Zimbabwe has presented to those who do not ‘play ball’,” he tells fDi

Picking up the pieces

The 60/40 rule and the requirement for licensees to farm on government land only prompted angst and investor flight. Now, the Zimbabwe Investment and Development Agency (Zida), the country’s reconstituted investment promotion agency, is picking up the pieces. Zida has pronounced a cocktail of incentives to woo investments into the budding cannabis sector, including allowing investors to own 100% of their licences and to grow cannabis on land of their choice.

“Monetary and fiscal incentives include 100% foreign currency retention for two years (unprocessed cannabis), three years (semi-processed) and four years (fully processed), repatriation of income and dividends and zero-rated corporate income tax for five years,” Zida’s chief investments officer, Tinotenda Kambasha tells fDi

Another crucial development has been the finalisation of the Investment Stability Agreement, a law that assures investors of property rights, protection against expropriation and change in law. Some 20% of the medical cannabis levy is also being ring-fenced to create a Green Industry Fund to finance research development and beneficiation. 


Mr Kambasha says that, to date, the cannabis sector has attracted 55 investors from Canada, Netherlands, the US, Germany, the UK, China and some local companies. No exports have been made yet, but several licensees are already on the ground with some looking to harvest in the second half of the year. The country has been allocated a quota (3 tonnes) to export in 2021 by the International Narcotics Control Board.   

Global opportunity 

Zida anticipates the global cannabis market size to grow to $65bn by 2025 — US-based Global Market Research estimated its global value at $20.6bn in 2020 — and wants Zimbabwe to exploit the exponential growth by quickly attracting players into the exciting sector. 

“It is important that we get investment in this sector. With the anticipation that at least 30% of these licensed investors start operations, we hope to produce 3000 litres of cannabinoid oil in Q3 2021. We hope to grow revenue in the industry to $6bn in the next five years,” claims Raban Masuka, Zida’s chief innovation officer. 

Peter Rhodes, chairman of the Cannabis Industries Association of Zimbabwe, a body representing medicinal cannabis and industrial hemp companies, hails the new incentives by the government as unprecedented.

“While the government has provided investment incentives for large projects before, we don’t believe they’ve done something like this for an entire industry. Apart from financial returns on their investments, investors are attracted to stability and security, and the incentives announced by the government are a big step to achieving these,” he tells fDi

Mr Rhodes says that the move by Zimbabwe to permit international arbitration to settle any disputes that may arise from the enforcement of the investment stability agreement is a major sign of positive intent.  

However, he believes that many significant improvements to Zimbabwe’s investment climate over the past few years — such as the withdrawal of the indigenous ownership requirements, the compensation to white farmers for redistributed land and many other initiatives — have not drawn more positive investment attention to the country.

Broader reforms needed

Mr Emery says that if Zimbabwe believes it can offer incentives to business without massive political, social and economic reforms, it will get what it pays for: a bunch of unscrupulous investors tied to the ruling party, Zanu-PF, and allowed to do what they want regarding standards, certifications and progress.

Mr Rhodes adds that with a good climate, highly skilled but inexpensive agricultural labour, and rich soils, Zimbabwe is positioned to be a bottom-quartile cost producer of a compliant product. But the demand for medicinal cannabis in the markets that Zimbabwe can supply is unfortunately still quite small, as there are many countries competing for access to these markets. 

Despite the boundless enthusiasm that accompanied medicinal cannabis globally in 2017/2018, and projections of significant reforms and demand growth, legalisation has been slower than expected. Instead, there has been strict regulation and little growth in many countries that have legalised its use. 

Mr Rhodes says the biggest challenge to Zimbabwean cannabis companies is to secure reliable and sustainable off-takers for their product. Local cultivators cannot access the US market owing to its Federal prohibition, and the Canadian market has understandably implemented mechanisms to protect its own industry.  

“Zimbabwean licence holders will, however, need to compete against well-capitalised international groups that are able to withstand long periods of losses. Ultimately, market forces will prevail and lowest cost-compliant producers will secure market share,” he says. 

A licence fee for medical cannabis costs $57,250, including value-added tax for five years. Authorities think the licensing regime is the cheapest in the region.

Investor optimism — a mark of the first days of the post-Robert Mugabe era — has completely vanished. According to the UN Conference on Trade and Development 2020 World Investment Report, foreign direct investment (FDI) inflows to Zimbabwe amounted to $349m in 2017, then reached to $745m in 2018, only to fall drastically to $280m in 2019. Over the past decade, the country has attracted less than $600m per year on average in FDI. 

Plagued by this decline, and a long dependence on gold and tobacco as the biggest foreign currency earners, Zimbabwe is looking to diversify its export earnings. Authorities think that cannabis could be the new gold — or better yet, leapfrog tobacco as the country’s best cash crop.  

This article first appeared in the August/September print edition of fDi Intelligence. View a digital edition of the magazine here.