Published: 18 hours ago

Zimbabwe's top bankers have mounted a rare and coordinated pushback against the central bank's tight monetary policy, warning that while it has restored stability, it is now choking credit growth and straining the wider economy.

The Reserve Bank of Zimbabwe (RBZ) has maintained a hawkish stance since 2024, a move credited with stabilising the exchange rate and taming inflation after years of volatility. The policy helped dismantle a thriving parallel market once dominated by cash dealers trading billions of dollars outside formal systems.

However, banking executives say the prolonged tightening has come at a steep cost.

Financial results for the year ended December 31, 2025, show that while profitability has rebounded across the sector, underlying pressures remain. Institutions such as NMB Bank Zimbabwe, FBC Bank Zimbabwe and CBZ Bank Zimbabwe all reported strong recoveries from prior-year losses.

But analysts say the gains mask deeper structural weaknesses.

"The results point to a banking sector that has regained profitability but remains structurally constrained by tight monetary conditions," said Tapiwa Sibanda, head of strategy at Trade Winds.

Senior executives warn that the liquidity squeeze is now spilling into the real economy. Pearson Gowero said key sectors such as retail and manufacturing are operating below capacity, with some firms entering corporate rescue due to funding challenges.

Similarly, James Prince Mutizwa highlighted the difficulty banks face in accessing affordable funding in both local and international markets under current conditions.

At the centre of the dispute is the RBZ's high interest rate regime, with the policy rate hovering around 35%. While inflation has dropped to low single digits, borrowing costs remain elevated - creating what bankers describe as a mismatch between economic conditions and lending rates.

This tension is most visible in the underutilisation of the RBZ's ZiG1.2 billion Targeted Finance Facility (TFF), designed to support the private sector.

More than a year after its launch, only a small fraction of the facility has been drawn down.

According to RBZ governor John Mushayavanhu, just ZiG56.9 million had been accessed as of mid-April 2026, leaving over ZiG1 billion idle.

"It is disappointing that uptake remains low," Mushayavanhu said, urging banks to tap into the facility to support productive sectors.

But bankers argue the problem is not access to funds - it is cost.

The facility is priced at around 30% per annum, meaning banks would have to lend at 35% to 40% after adding margins. In a low-inflation environment, executives say such rates are unsustainable.

"If prices are not increasing, what kind of business gives you 40% per year as a margin?" one senior banker said.

They argue that borrowing at such levels only makes sense for speculative purposes, such as betting on currency depreciation - a dynamic the central bank is trying to avoid.

The Bankers Association of Zimbabwe defended the cautious uptake, with chief executive Fanwell Mutogo saying lending remains demand-driven and dependent on viable applications from businesses.

He described the TFF as a supplementary facility rather than a primary funding source, emphasising that banks cannot deploy capital where it is unlikely to generate sustainable returns.

The standoff underscores a growing policy dilemma.

While the RBZ insists liquidity is sufficient, bankers say high borrowing costs are preventing that liquidity from reaching businesses. The result is a financial system with idle lending capacity, weak credit growth and increasing stress in productive sectors.

As pressure builds, the challenge for policymakers will be finding a balance between maintaining hard-won stability and unlocking affordable credit to drive economic recovery.
- The Independent

You might also want to read this

• Zimbabwe FIU fines banks over weak AML Controls
• Banks to report on rural financial literacy outreach
• Zimbabwe banks show strong capital buffers
• Zimbabwean consumers failing to secure loans from banks
• Zimbabwe banks process R6bn via regional payment systems
• Residents slam poor banks service delivery
• Zimbabwe banks paying more than the black market rates
• Zimbabwe commercial bank deposits surge 25% to $8 billion
• Zimbabwe banks opt for investment securities
• Banks increase withdrawals to $100