• The RBZ kept its benchmark interest rate unchanged at 35% (Africa's highest) to anchor inflation, which achieved single-digit levels in ZiG terms
• Banks will eliminate or cut transactional fees to shift incentives toward productive lending rather than fee-based revenue, alongside rollout of redesigned ZiG banknotes
• The RBZ dropped the fixed timeline for full ZiG mono-currency adoption, aiming to reduce policy uncertainty, enhance investor confidence in local industry

Harare- The Reserve Bank of Zimbabwe (RBZ) unveiled its latest Monetary Policy Statement (MPS) in a climate of cautious optimism and deeply contested economic realities. Industry advocacy organisation Buy Zimbabwe has welcomed the statement, hailing it as a positive step for local producers, while economic analysts have offered a more nuanced and at times sharply critical assessment.

The MPS touches on several fundamental issues: currency strategy, the dismantling of banking charges, inflation control, and the thorniest issue of all, the continued maintenance of a 35% Bank Policy Rate, the highest in Africa.

Abandoning the 2030 Mono-Currency Deadline

Among the most discussed announcements is the RBZ's decision to move away from its previously stated 2030 timeline for adopting a mono-currency regime. This is a significant policy pivot. For years, businesses and investors operated under the assumption that Zimbabwe was marching toward a single-currency economy anchored by the ZiG (Zimbabwe Gold). The admission that this target is no longer fixed introduces both relief and anxiety relief because it reduces the pressure of an artificial deadline, and anxiety because it signals continued monetary uncertainty.

Buy Zimbabwe has interpreted this positively, arguing the move will address policy uncertainty and boost investor confidence in local industry. However, abandoning the 2030 target is yet another instance of Zimbabwe stepping back from a stated monetary commitment, a pattern that has historically eroded public trust in policy frameworks.

Reduction and Scrapping of Banking Charges

One of the more broadly welcomed provisions is the scrapping and reduction of banking charges. Banks will no longer rely on transactional charges and will therefore have stronger incentives to lend productively. Historically, Zimbabwean banks have generated significant revenue from transaction fees rather than productive lending, distorting the banking model. Removing that comfort zone should, in theory, push banks toward deeper credit intermediation. Whether this translates into meaningful affordable credit depends heavily on what happens to the interest rate environment.

Redesigned ZiG Notes

The Governor also announced the rollout of newly redesigned ZiG banknotes. While welcomed as a public convenience measure, the real challenge is not the design of the notes but public confidence in the currency itself. Only approximately 30% of Zimbabweans currently transact in ZiG, with the majority continuing to rely on US dollars, a legacy of Zimbabwe's painful history of currency collapses, from the hyperinflation of 2008 through to the bond notes and RTGS dollar era.

The 35% Interest Rate: A Critical Examination

The most contested element of Zimbabwe's monetary policy framework  conspicuously absent from Buy Zimbabwe's otherwise warm endorsement is the Bank Policy Rate, maintained at 35% per annum. Since the RBZ raised the rate from 20% to 35% in September 2024, in response to a shock devaluation that wiped out 43% of the ZiG's value, the rate has not moved.

To put this in perspective, Zimbabwe's 35% rate is the highest central bank policy rate in Africa. Most SADC countries maintain average rates of approximately 6.75%. Nigeria, facing its own monetary pressures, sits at 27%. Botswana and South Africa maintain rates around 7-7.5%. Zimbabwe's rate is not just elevated, it is extraordinary, and its consequences for businesses are deeply practical.

Governor Mushayavanhu has defended the 35% rate, arguing it has driven a progressive disinflation trajectory and delivered single-digit inflation from January 2026. The IMF has broadly endorsed this hawkish stance, noting that halting monetary financing and increasing statutory reserve requirements were instrumental in slowing ZiG monetary base growth and stabilising exchange rates. By mid-2025, monthly ZiG inflation had fallen to 0.3%, and the World Bank projected Zimbabwe's GDP growth at 6.6% for 2025 underpinned by a strong agricultural season, record gold prices, and sustained remittance inflows of US$2.45 billion.

The RBZ has also cautioned that reducing rates prematurely risks reversing hard-won disinflation gains. As the Governor stated, any renewed inflation pressures could necessitate even more aggressive tightening, with higher economic and social costs. This is a reasonable caution from a country that lived through some of the worst hyperinflation in recorded history.

Yet the cost of this tight stance is being felt viscerally across Zimbabwe's productive sector and it is here that the MPS demands sharpest scrutiny.

CAFCA Limited, Zimbabwe's only listed cable manufacturer and a company with over 77 years of operational history, offers a sobering illustration of what tight monetary policy means at factory level. The company explicitly warned of persistent foreign exchange and liquidity shortages as a threat to continued operations.

The experience of companies like Wildale and other ZSE-listed manufacturers mirrors CAFCA's trajectory. Across Zimbabwe's formal productive sector, the 35% Bank Policy Rate has had a cascading effect on the real economy. Actual commercial lending rates for ZiG-denominated loans have climbed above 45%, while US dollar facilities carry rates of between 10% and 16% still well above regional norms. For capital-intensive industries requiring long-term financing for retooling, infrastructure investment, and working capital management, these rates represent a formidable and often insurmountable barrier.

Art Holdings Limited, manufacturer of Exide batteries and Eversharp pens reported that working capital-induced production disruptions affected output volumes in the period ending December 2025. The company cited logistical delays and squeezed cash flows as the defining operational challenges of the period.

Delta Corporation's finance director acknowledged that while the company maintained longstanding relationships with local banks, the current interest rate regime and risk-averse lending criteria made it difficult to access the full spectrum of financing required to sustain and grow operations.

The SME Association of Zimbabwe confirmed that small businesses have largely retreated from the formal banking system altogether, resorting to informal borrowing, savings cooperatives, and micro-finance institutions. Zimbabwean corporates have very limited funding legroom outside capital markets and banks. This is why most companies are on a cost-containment overdrive as internally generated funds are the only viable option.

This cost-containment mode has a name, stagnation. When companies cannot borrow to invest, they do not grow. When they do not grow, they do not hire. When they do not hire, consumer demand stays suppressed further starving the manufacturers that monetary policy ostensibly exists to support.

Structural Contradictions in the MPS

The MPS presents several internal tensions that merit public examination. Inflation is down, so why not begin easing? The RBZ's own projections show monthly ZiG inflation stabilising below 1% by mid-year, and annual inflation entering single digits from January 2026. If disinflation is demonstrably embedded, the justification for maintaining Africa's highest interest rate becomes increasingly difficult to sustain.

The IMF's standard advice on monetary sequencing is that once disinflation is anchored, central banks should begin a gradual easing cycle to prevent unnecessary output suppression. The RBZ's continued resistance risks over-correcting, containing inflation at the price of growth.

Scrapping transactional charges is a welcome structural reform, but if banks are to replace that revenue with productive lending income, they must actually lend at rates businesses can service. Lending above 45% to ZiG borrowers is not meaningful credit intermediation, it is a debt trap. The MPS needed a credible, time-bound path toward interest rate normalisation to make the banking charge reforms meaningful.

Redesigned banknotes address convenience, not confidence. With only 30% public uptake of ZiG despite its status as legal tender since April 2024, the RBZ faces a deep behavioural challenge rooted in decades of currency failures. Monetary credibility is built through consistent policy outcomes over time, not through new designs.

Exporters, including tobacco farmers and manufacturers continue to complain that mandatory surrender of foreign currency earnings at the official RBZ rate, while the parallel market trades at a significant premium, effectively taxes them at the point of their most critical revenue collection. The Zimbabwe Farmers Union explicitly criticised the increase in the surrender threshold from 25% to 30%, noting it erodes the margins of exporters who need hard currency to import spare parts and capital equipment. This tension between the RBZ's liquidity management priorities and the operational requirements of export-oriented industry remains unresolved.

What the MPS Could Have Done Differently

A more comprehensive policy package in Zimbabwe's current context might have included the following elements. Rather than defending the 35% rate indefinitely, the MPS could have outlined a transparent framework with specific inflation thresholds for when and how rates will begin to reduce. This would give businesses planning certainty and signal that tight policy is a temporary emergency measure, not a permanent feature of Zimbabwe's monetary landscape.

The RBZ could have introduced tiered lending conditions, allowing productive sectors, agriculture, manufacturing, export industries to access capital at subsidised rates through an expanded Targeted Finance Facility (introduced in late 2024), while maintaining tighter conditions for speculative activity.

The one-way convertibility problem flagged by CAFCA and other businesses must be addressed as a policy priority. A currency that cannot be practically converted back into US dollars perpetuates the very dollarisation the central bank wants to reduce, and disadvantages businesses whose input costs are USD-denominated.

Zimbabwe's domestic debt market is thin, with no meaningful bond issuances, and the Zimbabwe Stock Exchange has struggled to facilitate significant capital raises. Building deeper, regulated capital markets would reduce the economy's dependence on expensive short-term bank credit and provide manufacturers with alternative, longer-term financing options.

Therefore, RBZ’s  latest Monetary Policy Statement represents a genuine, if cautious, attempt to consolidate stability in an economy scarred by monetary crisis.

The next chapter of Zimbabwe's monetary story must balance the RBZ's hard-won credibility on inflation with a genuine commitment to making capital affordable enough for local industry to grow. The time has come not just to stabilise Zimbabwe's economy, but to expand it and that requires an honest, sustained conversation about the price of money.

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