Beverage makers say 35% RBZ rate hampers growth

Zimbabwe's beverage industry has raised concerns over the Reserve Bank of Zimbabwe's (RBZ) decision to maintain the bank policy rate at 35% per annum, saying the high interest rate is constraining growth and limiting access to affordable financing.

In his Mid-Term Monetary Policy Statement, RBZ Governor John Mushayavanhu explained that the benchmark rate, maintained at 35%, is crucial for stabilising prices, the currency, and the exchange rate. He added that the rate helps curb speculative borrowing and ensures available credit is directed towards productive sectors, with future reviews contingent on inflation and economic output dynamics.

However, industry players argue that the persistently high rate is stifling expansion.

"The prevailing interest rate of 35% continues to place a significant strain on business operations. It increases the cost of borrowing, reducing access to affordable funding for working capital and capital investment needs," Beverages Manufacturers Association chairperson Calum Philp told NewsDay Business.

Philp said the rate has led to deferred expansion plans, limited retooling, and cash flow constraints, particularly in a high-inflation environment where liquidity is tight. Beverage companies are also grappling with additional costs imposed by the sugar tax, which adds millions of US dollars in operational expenses.

"While we recognise the need to anchor inflation and maintain financial sector stability, the current rate is negatively affecting productive sectors and discouraging formal borrowing, pushing businesses towards foreign currency loans," Philp said.

Delta Corporation Limited corporate affairs executive Patricia Murambinda echoed these concerns, noting that the high interest rate restricts access to working capital, increases production costs, and limits investment in growth initiatives.

"A more accommodative interest rate environment would be a welcome relief for industry and consumers alike. Access to affordable and long-term financing remains limited, especially for capital-intensive sectors like manufacturing," Murambinda said.

She highlighted the need for enhanced public-private collaboration to improve credit availability and reduce the cost of capital. Despite the challenges, Delta remains optimistic for 2025, focusing on operational efficiency, product innovation, environmental sustainability, and market expansion.

"Strategic investments in digital transformation, route-to-market efficiency, and stakeholder partnerships will be key growth levers," Murambinda said, adding that collaborative engagement between government, industry, and civil society could help design a tax and investment climate that balances public health priorities with economic recovery and competitiveness.

As Zimbabwean businesses contend with high borrowing costs, calls for a more accommodative interest rate policy continue, with industry leaders urging the RBZ to consider measures that support productive sectors and stimulate industrial growth.