The Zimbabwe Investment and Development Agency (ZIDA) is encouraging businesses to take advantage of the Targeted Finance Facility (TFF), a concessional loan program introduced by the Reserve Bank of Zimbabwe (RBZ) to boost exports and enhance the competitiveness of locally produced goods.
The facility, launched in December last year, offers banks borrowing rates of 20 percent, allowing them to lend to businesses at a maximum rate of 30 percent, significantly lower than the 43 percent average corporate lending rate. This makes it an attractive financing option for companies seeking to scale up production and improve profitability.
In its latest investor bulletin, ZIDA highlighted the TFF’s potential to reduce production costs and enhance the market competitiveness of Zimbabwean products. The facility provides funds in Zimbabwe Gold (ZiG), which must be repaid within 270 days in either ZiG or foreign currency at the prevailing exchange rate. However, access to the facility requires strict collateral, with accepted security including foreign currency reserves, gold-backed digital tokens, short-term treasury bills, and other central bank instruments. ZIDA believes these safeguards will ensure financial stability while supporting economic growth.
The initiative comes as Zimbabwe’s banking sector faces liquidity shortages, which have pushed US dollar interest rates to around 20 percent, according to Bankers Association of Zimbabwe (BAZ) president Lawrence Nyazema. The ongoing credit squeeze has been exacerbated by tight monetary policies aimed at stabilizing the local currency. Finance Minister Mthuli Ncube has defended the Government’s approach, stating that controlling liquidity growth is necessary to prevent excessive volatility of the local currency. He emphasized that excessive liquidity expansion could lead to macroeconomic instability, making it crucial to manage financial flows carefully
