Pride Mzarabani
HARARE — Zimbabwe’s heavy reliance on transitory bank deposits is severely constraining the availability of patient capital for long-term development, with more than 80 percent of the banking sector’s US$5.3 billion deposit base locked in short-term funds, the Ministry of Finance has warned.
Speaking during a pre-budget consultative session between Parliament’s Portfolio Committee on Budget, Finance and Investment Promotion, Treasury officials, parastatals, and economic stakeholders ahead of the 2027 National Budget, Chief Director of Economic Affairs Joseph Mverecha identified this structural asset-liability mismatch as a major hurdle to funding critical infrastructure, deepening domestic capital markets, and sustaining economic expansion.
Mverecha noted that years of hyperinflation and frequent currency transitions had damaged public confidence in domestic savings. As a result, the government is prioritizing policy initiatives to restore trust in the banking system while cultivating conditions for longer-tenor funding instruments.
“Our economy significantly requires patient, long-term capital,” Mverecha said. “Capital is something we are working toward as the economy expands and as we make headway under the Staff-Monitored Programme. Moving beyond the SMP will hopefully enable us to tackle our debt and arrears clearance, ultimately unlocking medium- and long-term external inflows.”
With inflation having eased into a more stable trajectory, Treasury sees an opening to build a viable local debt market capable of financing capital projects. Mverecha revealed that ministry teams are currently designing a comprehensive framework to enable the state to issue medium- and long-term government bonds across primary and secondary markets.
Treasury is also drafting the Financial Sector Development Strategy (2026–2030), aimed at enhancing systemic stability, expanding domestic credit formation, and channeling savings toward key productive pillars such as mining, agriculture, manufacturing, and small enterprises.
Among these financing mechanisms is the recently established Zimbabwe Entrepreneurship Exchange (ZEEX), designed to help micro, small, and medium enterprises access equity and debt capital through private placements and public listings, while accelerating the formalization of the informal sector.
On external financing, Mverecha reaffirmed that clearing arrears with multilateral creditors—including the World Bank, the African Development Bank, and the European Investment Bank—remains imperative to unlocking cheaper concessionary development finance that cannot be matched by domestic retail deposits.
The financing push comes as authorities seek to accelerate the pace of economic expansion toward the Vision 2030 target of achieving upper-middle-income status. While Zimbabwe recorded cumulative real GDP growth of 29.9 percent in the five years following the Covid-19 pandemic, Mverecha cautioned that current baseline growth rates of roughly 5 percent will fall short of the Vision 2030 threshold. Consequently, Treasury is formulating policy levers for the upcoming 2027 budget to lift baseline annual growth toward 7 percent.
Alongside fiscal and financing reforms, the government is targeting business-climate enhancements, including easing compliance burdens and licensing costs for small businesses, improving corporate governance at state-owned enterprises, and expanding power generation. National energy planning aims to ramp up installed capacity from the current 2,000 megawatts to 5,000 megawatts by 2030, complemented by dam and irrigation investments to shield agriculture against recurring climate shocks.
Finance Minister Mthuli Ncube is scheduled to present the 2027 National Budget in November, with Treasury focused on converting recent monetary stability into expanded productive capacity and durable growth.
