We are trying: Treasury

ROBIN PHIRI

Treasury has launched a last-ditch push to stabilise Zimbabwe’s fragile economy as growing policy uncertainty, inflationary pressures, and currency volatility , among many other problems have left businesses in turmoil, threatening to upend the ‘s fragile industrial recovery.

Head of the Zimbabwe Public Debt Management Office in the Ministry of Finance, Economic Development and Investment Promotion, Andrew Bvumbe, said the Treasury is doing all it can to restore predictability in the economic environment and attract much-needed investment.

“We are doing all we can to ensure macroeconomic stability and the predictability of the economic environment, and this includes issues relating to the exchange rate reforms, which are very critical for investors,” Bvumbe said.
“This includes their capacity to remit dividends outside to their headquarters. So as you are aware, the Government has been implementing structural reforms both in terms of the monetary policy [and] foreign exchange to bring predictability to the market for investors.”

But despite those assurances, uncertainty has engulfed local industry. Companies are now facing a deteriorating outlook due to a convergence of headwinds that have made business operations increasingly unsustainable.

 Business Times can report that policy inconsistency, excessive taxation, foreign currency shortages, and regulatory burdens are all eroding business confidence and forcing many firms to scale down or shut their operations altogether.

The country’s convoluted economic environment has become a minefield for many corporates.

Several firms have either halted expansion plans, scaled back operations, or exited the market completely.

Imara Asset Management, in its latest strategy paper, painted a bleak picture of the road ahead.

It added that the current foreign currency pricing model, alongside forced use of the local currency, continues to suffocate firms. The tightening liquidity situation is compounding the pressure.

“High borrowing costs in excess of 30%, which, if the ZWG is to remain stable, would be prohibitive, if not financially disastrous for any borrower, making such loans a risky undertaking for any lender,” Imara stated.

Tax tensions between companies and the Zimbabwe Revenue Authority (ZIMRA) have also become increasingly combative as the government tries to maximise revenues within a limited fiscal space. However, analysts warn that without simplifying the tax regime, business viability will continue to decline.

Despite Cabinet being tasked with easing the regulatory burden, progress has been minimal.

Treasury is also unlikely to relax the foreign currency surrender requirements, which remain critical to the government’s de-dollarisation strategy.

The much-criticised Intermediated Money Transfer Tax (IMTT) is similarly expected to remain in place, spelling further trouble for already strained firms.

Experts have flagged the absence of long-term patient capital as a critical weakness in the economy. This has led to a rise in US dollar borrowing costs, with many businesses struggling to service debts unless they earn in hard currency.

“This is even more critical at the moment when access to outside funding has become more difficult,” Imara noted. “Due to the shortage of capital in the economy, we are seeing borrowing costs creep higher. Unless backed by real US$ earnings, most corporates’ ability to repay will be significantly constrained.”

The country’s persistent inflation crisis has compounded the situation. Zimbabwe continues to operate in a hyperinflationary environment, making long-term planning near-impossible for most companies.

 The Confederation of Zimbabwe Industries (CZI) has already warned that the nation is unlikely to achieve the targeted ZiG annual inflation rate of 30%, further weighing down prospects for business growth.

Nonetheless, some corporates maintain a cautiously optimistic tone, hopeful that the current monetary stability can be sustained if supported by fiscal discipline and reform.

Innscor Africa Holdings company secretary Andrew Lorimer said: “The authorities continued to maintain a tight monetary policy stance, and whilst the market experienced constrained liquidity as a result, the stable currency dynamics have ultimately benefitted the end consumer through more efficient pricing discovery and allowed for a consequential improvement in business sentiment.
“The Group remains hopeful that the prevailing stability will be sustained, and maintains an optimistic, yet cautious outlook, with fiscal discipline being the key determinant in mitigating inflationary pressure and currency volatility.”

Fidelity Life Assurance company secretary Ruvimbo Chidora echoed similar sentiments, pointing to improved foreign currency availability.
“The Reserve Bank of Zimbabwe reported improved availability of foreign currency on the official interbank market, supported by an increase in its foreign currency reserves. Additionally, growth in key sectors including agriculture is expected to bolster overall economic recovery. These developments suggest a strengthening economic environment with promising prospects for sustained stability and growth moving forward.”

Delta Corporation’s company secretary, Faith Musinga, noted that while progress has been made, significant challenges remain.
“The Zimbabwean economy faced challenges including high inflation, currency instability, and route-to-market policy changes.”

Rainbow Tourism Group company secretary Tapiwa Mari added:
“The operating environment in Zimbabwe continued to present challenges during the first quarter of 2025. The Zimbabwe Gold (ZwG) showed relative stability following its debut in 2024.”

However, the Reserve Bank of Zimbabwe (RBZ) is projecting a brighter future. Deputy Governor Innocent Matshe expressed optimism over the country’s economic trajectory, citing strong foreign currency inflows, growing confidence in the ZiG currency, and the resilience of the banking sector.

“The stability we are seeing now can only be sustained. So the only way from here is up. And what up means is that as we enter the economy in this stability, we are trying to foster confidence and trust, not only locally… we are trying to foster confidence and trust locally and internationally, to create an environment where currency is not an issue for business,” Matshe said.

He added that the RBZ has maintained a zero-overdraft policy and avoided monetising government deficits, while leveraging foreign currency inflows from exports, mining, remittances, and industrial activity to shore up reserves.

“With increased foreign currency inflows from exports, mining, remittances, and industry, this has assured the country of sufficient foreign exchange to meet its import needs,” he said.

Matshe also noted that the country’s gold-backed reserves are expected to help maintain exchange rate stability, though he stressed the need for movement in line with global market dynamics.

“I would be happier if the movement in the exchange rate will be in tandem with international market conditions as we all know that most of our reserves are in gold; therefore we should see a movement as prices change, not only for gold, but for other minerals as well.”

On liquidity, Matshe dismissed fears of a crunch, explaining that the central bank is using various tools—including intraday and targeted finance facilities—to maintain liquidity flow. He revealed that total ZiG deposits stand at $16.9 billion, representing 18% of the total money supply.

Looking ahead, he was confident that the current exchange rate stability will be sustained in the medium term, supported by sound money supply management and increased forex inflows.

Zimbabwe’s biggest lobby group, the Confederation of Zimbabwe Industries (CZI) has reaffirmed the private sector’s key role in industrial transformation.

Speaking at the ongoing  EU-Zimbabwe Business Forum, CZI CEO Sekai Kuvarika highlighted the growing adoption of integrated value chain models, particularly in agriculture and processing.

“We are observing a significant shift towards integrated value chain business models,” Kuvarika said. “Investors are increasingly engaging in both production and processing activities, particularly in sectors like dairy and horticulture, to enhance efficiency and profitability.”

She pointed to new opportunities in crops like blueberries and avocados, where downstream processing such as oil extraction and product diversification is gaining traction. Such integration, she added, boosts efficiency and reduces costs while improving quality.

Kuvarika stressed that public-private collaboration will be critical in unlocking Zimbabwe’s industrial potential, a message that reinforces government rhetoric on improving the ease of doing business.

Still, for many firms, survival in Zimbabwe’s complex economy remains a high-wire act—and until reforms translate into consistent policy execution, businesses are likely to remain on edge.