Zimbabwe’s banking sector is now prioritizing key productive sectors of the economy, with loans to these areas representing 72.25% of total disbursements last year, according to the Reserve Bank of Zimbabwe. The main sectors targeted include agriculture, mining, tourism, and manufacturing.
To support these critical sectors, banks have been securing lines of credit from various global financiers, focusing on businesses that generate foreign currency or are export-oriented, which enhances their capacity to repay external loans. This strategy has helped sustain the domestic economy amid the lack of long-term concessional support from multilateral lenders and the collapse of many correspondent banking relationships, which has made affordable external credit increasingly difficult to obtain.
However, accessing external funding remains challenging due to the impact of illegal Western sanctions, which portray Zimbabwe as a risky borrower and hinder access to key lenders, resulting in higher loan costs.
The shift in banking focus towards productive sectors, rather than consumptive loans, is vital for fostering business growth and economic development. This means that banks are channeling most of their available funds into initiatives that create value rather than loans for individual consumption or speculation.
Limited funding for businesses and productive sectors hampers the country’s growth potential, which is essential for job creation and sustaining existing employment. Finance, Economic Development and Investment Promotion Minister Mthuli Ncube projects a 6% economic growth this year, with the World Bank estimating a slightly higher 6.3%, driven by agriculture, mining, and tourism.
Last year, economic growth slowed significantly to just 2%, primarily due to poor agricultural performance caused by a devastating El Niño-induced drought. Nevertheless, Zimbabwe continued to progress, albeit at a slower pace.
According to the 2025 Monetary Policy Statement (MPS), total banking sector loans and advances reached ZiG55.93 billion by the end of last year, reflecting a 102% increase from ZiG27.45 billion six months prior. Lending to agriculture accounted for 14.72%, while manufacturing received 14.94%. Individuals and households made up 25.51% of total loans.
The MPS notes that the rise in aggregate banking sector loans was largely due to the revaluation of foreign currency-denominated loans, which constituted 88.17% of the total. By January 20 of this year, loans and advances had slightly decreased to ZiG50.33 billion.
Financial analyst Malone Gwadu expressed optimism about the increased loan funding directed towards key economic sectors rather than individual consumption. He emphasized that these productive sectors require funding for working capital, recapitalization, technology modernization, and as a buffer during market fluctuations.
Dr. John Mushayavanhu, Governor of the Reserve Bank, indicated that the banking sector’s financial health remained stable at the end of last year, contributing positively to economic growth. As of December 31, 18 out of 19 banking institutions reported core capital exceeding the minimum regulatory requirement of US$30 million.
Despite one institution, Time Bank, having a reported core capital of only US$4.52 million and being authorized to engage in limited commercial activities without accepting deposits, there is no risk to depositors. The Reserve Bank plans to utilize external audit reports to verify the capital positions of banking institutions.
The MPS also revealed that total banking sector assets grew from ZiG77.55 billion on June 30 to ZiG161.39 billion by year-end, with loans and advances comprising 31.39% of total assets. Although the sector reported a rise in the non-performing loans ratio to 3.37% by year-end, this remained well below the internationally accepted threshold of 5%.
Dr. Mushayavanhu noted that total banking sector deposits rose significantly from ZiG43.60 billion at mid-year to ZiG89.07 billion by year-end, primarily driven by foreign currency-denominated deposits influenced by exchange rate fluctuations.
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