Sanctions are key impediment to US investment in Zim — US diplomat

Source: www.zimbabwesituation.com

Source: Sanctions are key impediment to US investment in Zim — US diplomat – herald Lincoln Towindo Deputy National Editor A MAJOR impediment to US investment in Zimbabwe has been the Zimbabwe Democracy and Economic Recovery Act (ZDERA) of 2001, which has created an environment that led many American investors to adopt more conservative de-risking policies, Washington’s former top envoy to Harare Ambassador Charles Ray has conceded. The diplomat’s views give credence to findings by United Nations Special Rapporteur on the negative impact of unilateral coercive measures on the enjoyment of human rights Professor Alena Douhan, who indicated that “sanctions and various forms of over-compliance with sanctions has had an insidious ripple effect on the economy of Zimbabwe and the enjoyment of fundamental human rights . . .” It also puts paid to the narrative peddled by the West claiming that Zimbabwe’s economic challenges over the past 25 years were not linked to sanctions. In a recent article published by the Foreign Policy Research Institute (FPRI) — a US-based think tank — examining the prospects of the Victoria Falls Stock Exchange (VFEX), Ambassador Ray, who served in Zimbabwe between 2009 and 2012, believes that the recently established bourse, which trades solely in the US dollar and other convertible currencies, had the potential to create “a platform for pragmatic dialogue even when bilateral political relations are tense”. “A key impediment to US investment or other business ventures in Zimbabwe has been the Zimbabwe Democracy and Economic Recovery Act (ZDERA) of 2001, enacted on December 21, 2001 . . . which directs US executive directors at international financial institutions to oppose certain lending and debt relief to the Government of Zimbabwe unless certain specific conditions are met,” said Ambassador Ray. “Although it was not a blanket prohibition on private investment, it created an environment that led many American investors to adopt more conservative de-risking policies toward Zimbabwe.” For years, the United States government has maintained that sanctions imposed on Zimbabwe were targeted measures directed at individuals accused of purportedly undermining democracy and human rights.

However, Amb Ray’s remarks are likely to reignite debate over the broader economic effects of the sanctions regime, which Harare has consistently argued deterred foreign direct investment, constrained lines of credit and isolated Zimbabwe from international capital markets. While serving in Harare during the Inclusive Government era between the late former President Robert Mugabe and the late former Prime Minister Morgan Tsvangirai, Amb Ray echoed Washington’s position that the US coercive measures regime did not have an impact on the broader economy. In his latest analysis, Amb Ray said success of the VFEX could create stable operating conditions, transparent regulation and credible dispute resolution. “If, on the other hand, VFEX becomes a credible, rules-based channel that attracts reputable foreign investment (including US-linked firms), it can create stable operating conditions, transparent regulation and credible dispute resolution, providing a platform for pragmatic dialogue even when bilateral political relations are tense,” he added.

While VFEX offered advantages such as settlement in US dollars and fewer exchange control restrictions, American investors, he said, remained cautious because of Zimbabwe’s perceived political and economic risk profile owing to Harare and Washington’s two decades of estrangement. Ambassador Ray said a Bill (H.R. 5300) introduced in the US House of Representatives in September last year proposing the repeal of ZDERA could, once passed, help engender greater confidence in Zimbabwe by American investors, despite its stringent conditions tied to debt arrears and compensation obligations to white former farmers. Last year, the US formally began legislative processes leading to a repeal of ZDERA, the nearly 25-year-old sanctions law that has sought to isolate Harare and restrict the country’s access to international financial support since 2001.

The ZDERA repeal provision is contained in the Department of State Policy Provisions Act, a broad foreign policy and national security legislative package that is being sponsored by Representative Mr Brian Mast (Republican) of Florida. The Bill seeks to dismantle ZDERA, the law that has empowered Washington to block Zimbabwe from receiving loans, debt relief or financial assistance from institutions such as the International Monetary Fund (IMF) and the World Bank, a position that effectively locked the country out of key development financing for more than two decades. “In September 2025, H.R. 5300, a Bill to guide US foreign policy, was introduced in the House of Representatives. Section 303 of that Bill repealed ZDERA, but left significant conditions in place, including the requirement that Zimbabwe remit all outstanding arrears owed under the Global Compensation Deed, inflation-adjusted to the date of enactment, and compensation shall not be in the form of Zimbabwe-issued securities.” Amb Ray said VFEX could become “a significant contributor to investment and export growth” if Zimbabwe maintains its current policy consistency, continues strengthening investor protections and preserves the exchange’s hard-currency framework.

VFEX was established in 2020 as a subsidiary of the Zimbabwe Stock Exchange following the suspension of trading on the local bourse amid allegations that stock market activities were fuelling exchange rate instability. The exchange operates exclusively in US dollars and was designed to attract offshore capital and provide investors with a more stable and predictable investment platform. The post Sanctions are key impediment to US investment in Zim — US diplomat appeared first on Zimbabwe Situation .

Related topics: sanctions, ZDERA, US investment, Zimbabwe, diplomacy, Charles Ray, bilateral relations, economy

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