HARARE, July 3 (AGCNewsNet) – The European Union has urged Zimbabwe to implement urgent institutional and economic reforms or risk prolonged stagnation and underutilization of its industrial potential.

EU Ambassador to Zimbabwe, Jobst von Kirchmann, delivered the warning during last week’s Zimbabwe National Chamber of Commerce (ZNCC) Annual Conference, where he criticized the country’s weak regulatory environment and lack of policy predictability.

“Why does the manufacturing sector remain low despite available resources?” Kirchmann asked. “You can have a beautiful plant, but it will only thrive if planted in fertile soil—meaning strong institutions, rule of law, and regulatory clarity.”

He emphasized that Zimbabwe’s vast resources and talent are being stifled by poor governance, corruption, and high operating costs. Manufacturing currently accounts for less than 6% of the country’s exports, with many factories operating at just 50% capacity.

While acknowledging government initiatives under the National Development Strategy 1 (NDS1), Kirchmann said the efforts fall short without tangible reforms. “Investors are not looking for zero risk but for predictability—knowing the rules, monetary policy, and access to justice,” he noted.

The EU, he added, is ready to support Zimbabwe’s industrial ambitions, highlighting duty-free export access to the European market and new on-lending facilities via local banks. However, he called these measures “a drop in the ocean,” saying full capital unlocking is essential.

Despite these challenges, Kirchmann praised the professionalism of Zimbabwe’s private sector, noting its perfect repayment record on EU loans.

Reserve Bank of Zimbabwe Deputy Governor Innocent Matshe echoed the call for financial discipline, warning that government resources are stretched and urging businesses to explore offshore funding options. “The era of borrowing until default is over,” he stated.

The EU has committed over €500 million to Zimbabwe’s health sector and over €50 million to education, and continues to promote bilateral trade. Interest is growing, with over 600 companies applying to attend the recent EU-Zimbabwe Business Forum.

Kirchmann concluded by urging Zimbabwe’s government to create the right investment climate. “The opportunities exist,” he said. “But unlocking them is Zimbabwe’s responsibility.”

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