RBZ expands TFF with additional ZiG600m
CLOUDINE MATOLA
The Reserve Bank of Zimbabwe (RBZ) has injected an additional ZiG600m into its Targeted Finance Facility (TFF), effectively doubling the fund to ZiG1.2bn, despite subdued uptake of the initial allocation by industry, Business Times can report.
The TFF, introduced in January 2025, was designed to provide concessionary working capital to productive sectors of the economy at a time when high borrowing costs and liquidity constraints were stifling industrial activity.
However, the facility has struggled to gain traction. RBZ Deputy Governor Dr Innocent Matshe recently acknowledged that the initial envelope, equivalent to US$300m, remains under-utilised, with companies citing elevated interest rates as prohibitive and unsustainable.
Presenting the 2026 Monetary Policy Statement last week, RBZ Governor Dr John Mushayavanhu confirmed the expansion of the facility under unchanged terms and conditions.
“The Reserve Bank introduced the TFF in January 2025, aimed at ensuring a continued flow of credit to the productive sectors of the economy. In this regard, RBZ is extending the facility under the same terms and conditions and will avail an additional ZiG600m under the TFF in 2026, making a total of ZiG1.2 billion available to productive sectors,” Mushayavanhu said.
The expansion comes as authorities attempt to strike a delicate balance between supporting industry and safeguarding macroeconomic stability. While the central bank has maintained a tight monetary stance to entrench price and currency stability, businesses have been lobbying for more accommodative financing conditions to unlock production and investment.
Market analysts say the enlarged facility could provide a meaningful boost to output—if uptake improves.
Research firm FBC Securities said increasing the TFF to ZiG1.2 billion has the potential to stimulate employment and gross domestic product growth, particularly in key sectors such as agriculture, manufacturing and small-to-medium enterprises (SMEs).
“Expansion of the TFF supports productive sectors such as agriculture, manufacturing and SMEs through concessionary funding. This will stimulate output, employment and GDP growth through increased capacity investments and utilisation. Beneficiary sectors gain cheaper capital while banks expand lending portfolios under structured support,” FBC said.
However, the firm warned of downside risks.
“Risk arises if funded projects underperform, potentially increasing credit risk exposure,” it added, underscoring concerns around asset quality in an already fragile operating environment.
Beyond expanding the TFF, the RBZ also unveiled a new liquidity management instrument, the ZiG Denominated Term Deposit Facility (ZiGDTDF), aimed at strengthening monetary control and deepening the domestic money market.
According to Mushayavanhu, the ZiGDTDF will enable the central bank to mop up excess liquidity while preserving the value of ZiG deposits held by banks.
“The ZiGDTDF will enable the RBZ to effectively mop up excess liquidity while preserving the value of ZiG deposits for banks. The facility will be opened to banks on a voluntary basis, allowing them to deposit excess liquidity for a return and acquire certificates of deposit which will be tradable in the inter-bank market and can be used as collateral to access finance facilities from the central bank,” he said.
The introduction of the facility also lays the groundwork for an interest rate corridor framework—an important step in modernising Zimbabwe’s monetary policy architecture.
Under this framework, the Bank Policy Rate will continue to serve as the benchmark interbank rate. The interest rate on the ZiGDTDF will act as the floor (lower bound) of the corridor, while the overnight accommodation rate will set the ceiling (upper bound) for interest rates in the economy.
Dr Mushayavanhu said the ZiGDTDF will initially be structured as a fixed-term instrument with maturities starting from a minimum of 90 days, targeting structural excess liquidity in the banking system.
The expansion of the TFF and the rollout of the ZiGDTDF underscore the RBZ’s dual mandate: to support productive sectors while entrenching monetary discipline.
Yet the central question remains whether industry will respond.
Businesses have consistently argued that high interest rates and tight liquidity conditions are constraining production, even as the central bank insists that premature easing could reverse recent gains in price and exchange rate stability.
With ZiG1.2bn now on the table, the success of the TFF will ultimately hinge on whether the pricing and structure of the facility align with the realities of operating in Zimbabwe’s volatile economic landscape.
