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Zimbabwean consumers failing to secure loans from banks
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Zimbabwean consumers are facing increasing difficulties in accessing loans from traditional banking institutions due to low wages and the escalating cost of living, according to the IH Zimbabwe Consumer Sector Report 2025 released by financial services firm IH Securities.
The report highlights a growing liquidity crisis in the formal financial sector, largely driven by restrictive monetary policies that have constrained lending. At the same time, the average wage for over half of the employed population is reportedly below US$100 per month, making formal credit largely inaccessible for many households.
"The National Financial Inclusion Strategy 1 was launched in 2016 in a bid to improve access to quality and affordable financial services to previously underserved communities," IH Securities noted. "Deliberate measures undertaken within the period to stimulate participation include initiatives ranging from lowering know-your-customer (KYC) requirements, financial literacy programmes, digitisation drives and the establishment of women's and micro, small and medium enterprises desks in the halls of banking institutions."
While mobile money platforms have expanded financial access and usage, the traditional banking sector remains out of reach for many. The report shows that although individual loans have increased from 13.6% in early 2020 to 28.4% as of the first quarter of 2025, most consumers continue to rely on microfinance institutions rather than conventional banks.
IH Securities attributes this credit gap to a combination of tight monetary policy, stagnant wages, and a spike in the cost of living.
"Average earnings of 55% of the employed population were less than US$100," the report stated. "Job losses within the 3 months of the reporting period emanated mainly from those engaged in agriculture and domestic activities, while IT and electricity sectors had the lowest job losses."
Data from the Zimbabwe National Statistics Agency's Labour Force Survey for Q3 2024 underpins these findings, illustrating a decline in employment opportunities and disposable incomes.
On the cost of living, the report observed steep inflation in key expenditure categories. Food prices, for instance, rose by 21.6% between May 2024 and May 2025, with meat prices soaring by 27.9%. Rentals increased by 16.1%, although energy prices remained relatively flat in US dollar terms.
As a result, Zimbabwean households have increasingly turned to loans to cover basic needs, rather than invest in assets or grow businesses. However, the barriers to formal credit access remain high.
Despite the challenges, IH Securities struck an optimistic tone about the broader consumer outlook for 2025. The firm expects the recovery from El Niño-induced disruptions and improving global commodity prices to positively influence the economy.
"We also believe that consumer demand in the year will be further buoyed by strengthening remittances, which grew 22% in 2024 to US$2.2 billion," the report said.
These remittance inflows, combined with expected improvements in aggregate demand, are projected to provide a soft cushion for consumer activity in 2025, even as the formal credit environment remains constrained.
The report highlights a growing liquidity crisis in the formal financial sector, largely driven by restrictive monetary policies that have constrained lending. At the same time, the average wage for over half of the employed population is reportedly below US$100 per month, making formal credit largely inaccessible for many households.
"The National Financial Inclusion Strategy 1 was launched in 2016 in a bid to improve access to quality and affordable financial services to previously underserved communities," IH Securities noted. "Deliberate measures undertaken within the period to stimulate participation include initiatives ranging from lowering know-your-customer (KYC) requirements, financial literacy programmes, digitisation drives and the establishment of women's and micro, small and medium enterprises desks in the halls of banking institutions."
While mobile money platforms have expanded financial access and usage, the traditional banking sector remains out of reach for many. The report shows that although individual loans have increased from 13.6% in early 2020 to 28.4% as of the first quarter of 2025, most consumers continue to rely on microfinance institutions rather than conventional banks.
IH Securities attributes this credit gap to a combination of tight monetary policy, stagnant wages, and a spike in the cost of living.
"Average earnings of 55% of the employed population were less than US$100," the report stated. "Job losses within the 3 months of the reporting period emanated mainly from those engaged in agriculture and domestic activities, while IT and electricity sectors had the lowest job losses."
On the cost of living, the report observed steep inflation in key expenditure categories. Food prices, for instance, rose by 21.6% between May 2024 and May 2025, with meat prices soaring by 27.9%. Rentals increased by 16.1%, although energy prices remained relatively flat in US dollar terms.
As a result, Zimbabwean households have increasingly turned to loans to cover basic needs, rather than invest in assets or grow businesses. However, the barriers to formal credit access remain high.
Despite the challenges, IH Securities struck an optimistic tone about the broader consumer outlook for 2025. The firm expects the recovery from El Niño-induced disruptions and improving global commodity prices to positively influence the economy.
"We also believe that consumer demand in the year will be further buoyed by strengthening remittances, which grew 22% in 2024 to US$2.2 billion," the report said.
These remittance inflows, combined with expected improvements in aggregate demand, are projected to provide a soft cushion for consumer activity in 2025, even as the formal credit environment remains constrained.
Source - Newsday
