BEVERAGE makers say the central bank’s 35% bank policy rate is straining expansion plans as it increases the cost of borrowing, NewsDay Business can report.
In his Mid-Term Monetary Policy Statement, Reserve Bank of Zimbabwe governor John Mushayavanhu maintained the bank policy rate at 35% per annum despite complaints that it was costly for business.
Mushayavanhu said the benchmark rate, together with other measures, was critical in supporting the prevailing price, currency and exchange rate stability.
The bank policy rate managed to stem speculative borrowing and ensured that available credit was channelled towards the productive sectors of the economy.
Mushayavanhu promised to review the rate in line with changes based on inflation and output dynamics.
However, calls to reduce the bank policy rate continue as companies have been saddled with a high cost of borrowing, limiting their ability to expand or increase cash flows.
“The prevailing interest rate of 35%, maintained by the RBZ, continues to place a significant strain on business operations. The current interest rate increases the cost of borrowing, thus reducing the availability of affordable funding for working capital and capital investment needs,” Beverages Manufacturers Association chairperson Calum Philp told NewsDay Business in an interview.
“For manufacturers, this has translated into deferred expansion plans, limited retooling and constraints on cash flows, especially in a high-inflation environment where liquidity is already tight.”
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Beverage makers are already reeling from high costs associated with the sugar tax that continues to add millions of United States dollars in expenses for top-producing firms.
Philp acknowledged the need for the monetary policy to anchor inflation and maintain financial sector stability, but warned that the current rate was negatively affecting productive sectors.
He added that the rate discouraged formal borrowing and pushed many businesses to borrow in foreign currency.
“The recent decision to maintain the rate, rather than reduce it, cements the high cost of doing business,” Philp said.
“In an industry where margins are already under pressure, expensive credit adds to the cumulative burden, undermining competitiveness and discouraging investment.”
He said there was a need for a more accommodative interest rate policy that supported productive sectors, stimulated industrial recovery, and aligned with the broader objective of achieving economic growth.
In a separate interview, Delta Corporation Limited corporate affairs executive Patricia Murambinda said the 35% rate is presenting challenges for businesses seeking affordable working capital.
She said high interest rates reduced access to finance, increased the cost of production, and constrained investment in growth initiatives.
“While we understand the monetary authorities’ intent to manage inflation and liquidity, a more accommodative interest rate environment would be a welcome relief for industry and consumers alike,” Murambinda said.
“Access to affordable and long-term financing remains limited, especially for capital-intensive sectors like manufacturing.
“While we have longstanding relationships with several local banks, the current interest rate regime and risk-averse lending criteria make it difficult to access the full spectrum of financing required to sustain and grow operations.”
She said there was scope for enhanced public-private collaboration to improve credit availability and lower the cost of capital.
Murambinda said Delta remained optimistic in its 2025 outlook, as it was focused on operational efficiency, product innovation, environmental sustainability and market expansion.
“We expect a more stable policy environment, improved access to raw materials, and enhanced consumer purchasing power to contribute positively to our performance,” she said.
“Strategic investments in digital transformation, route-to-market efficiency and stakeholder partnerships will also be key growth levers.”
Delta remains engaged in conversations around fiscal reforms, industrial policy and public health, she said.
“We believe that with collaborative engagement between government, industry and civil society, Zimbabwe can design a tax and investment climate that protects public health, while enabling economic recovery and competitiveness,” Murambinda said.
