Zimbabwe raises savings rates, cuts POS charges

The Reserve Bank of Zimbabwe (RBZ) has introduced a series of bold monetary policy measures aimed at promoting the use of the Zimbabwe Gold (ZiG) currency and enhancing economic stability. These measures, announced by RBZ Governor Dr. John Mushayavanhu in his 2025 Monetary Policy Statement, include increased interest rates on savings and time deposits, and the elimination of charges on transactions valued at US$5 or its ZiG equivalent.

Addressing journalists and bank executives in Harare, Dr. Mushayavanhu emphasized that the central bank's interventions, anchored on a tight monetary policy stance, have been instrumental in maintaining exchange rate and inflation stability.

To reward depositors and encourage a culture of saving, the RBZ has raised interest rates on savings and time deposits. ZiG savings accounts will now earn a minimum of 5 percent interest, up from 3.5 percent, while time deposits will attract 7 percent, up from 5 percent.

Similarly, US dollar savings accounts will now offer a minimum of 2.5 percent, up from 1 percent, and time deposits will attract 4 percent, up from 2.5 percent. Dr. Mushayavanhu urged banks to offer depositors rates above these minimums to foster confidence in the banking sector.

In a bid to promote financial inclusion and the use of ZiG, the RBZ has directed banks to exempt all transactions below US$5 or its ZiG equivalent from charges. Additionally, accounts maintaining balances below US$100 or its ZiG equivalent will remain exempt from bank charges.

The central bank is also collaborating with the Bankers Association of Zimbabwe and payment service providers to devise strategies for reducing overall bank charges and encouraging the use of electronic cash. These mechanisms are expected to be finalized by mid-2025.

To promote digital transactions, banks and payment service providers have been instructed to ensure all business accounts are equipped with Point-of-Sale (POS) machines or approved digital payment systems. Dormant POS machines or other inactive digital transaction devices must be reported to the RBZ.

In addition, trading licenses will now require applicants to have functional POS machines and bank accounts, a move aimed at enhancing the use of formal banking channels for transactions.

Dr. Mushayavanhu outlined that the new policy measures are aligned with the RBZ's Strategic Plan (2025-2029), which focuses on maintaining price and financial stability. He expressed optimism that these initiatives would support the country's targeted 6 percent GDP growth for 2025, a significant rebound from the 2 percent growth recorded in 2024 due to an El Nino-induced drought.

The RBZ has also expanded the Targeted Finance Facility (TFF) to assist wholesalers and retailers in addressing working capital challenges. The facility, funded by banks' statutory reserves, allows beneficiaries to access foreign currency for imports upon submission of bona fide invoices.

To enhance access to foreign exchange, the RBZ has removed weekly limits on funds accessible from the interbank market, previously capped at US$500,000 for primary users and US$100,000 for secondary users. Authorised dealers are now required to on-sell foreign exchange at internationally competitive margins, following the removal of a 5 percent cap.

The new measures align with the government's vision under the National Development Strategy to reduce reliance on the US dollar and promote the use of ZiG as part of broader dedollarisation efforts. Dr. Mushayavanhu noted that complaints from stakeholders about discriminatory pricing practices favoring the US dollar had been addressed, with the RBZ taking steps to ensure fair treatment of ZiG in all transactions.

The Reserve Bank's policy measures are expected to bolster confidence in the domestic currency and banking sector while supporting economic growth and stability in 2025 and beyond.