AS Zimbabwe's banking sector continues to navigate the country's evolving economic landscape, the Bankers Association of Zimbabwe (BAZ) is playing a crucial role in shaping the industry's future. In this interview with our senior business reporter, Freeman Makopa (FM), BAZ president Lawrence Nyazema (LN) shared his insights on the sector's outlook, challenges, and opportunities for growth. From the association's roadmap for 2025 to the impact of government policies on the banking sector, Nyazema provided a comprehensive overview of the issues shaping Zimbabwe's financial landscape. Find below excerpts from the interview:
FM: Can you outline the Bankers Association of Zimbabwe’s roadmap for the 2025 growth strategy?
LN: The Bankers Association of Zimbabwe provides a forum for the consideration of matters of policy and mutual interest concerning its member banks. It also provides information, research and operational support services primarily to the banking industry. In 2025, the association will continue to deliver on its mandate to its member banks, including actively engaging policy makers for the creation and sustenance of a conducive policy environment that fosters the ability of banks to perform their fiduciary duties.
FM: What is your assessment of Zimbabwe's current economic situation, and how do you think the banking sector can contribute to its recovery?
LN: Having largely withstood the El Niño-induced drought in 2024, most watchdogs expect the economy to grow in 2025, with growth bottoming out from 2% in 2024 to a projected 6% in 2025. The banking sector will continue to support this recovery and growth through, among other interventions: Providing the leaning shoulder for companies adversely affected by environmental factors such as the 2024 drought; enhancing financial inclusion, in line with the government’s drive under the national financial inclusion strategy; mobilising funding, including lines of credit from international institutions, to meet industry’s borrowing requirements.
FM: How do you think the government's economic policies will impact the banking sector and the broader economy?
LN: The government has consistently pursued, and committed to continue with tight monetary and fiscal policy stances as part of measures to foster macroeconomic stability. These measures have positively impacted the economy and the banking sector through exchange rate and price stability, which makes long-term planning easier and enhances value preservation.
Additionally, the recent introduction of the targeted finance facility by the central bank is a step in the right direction as it largely unlocks credit expansion by the banking sector, while at the same time, preserving macroeconomic actability. Going forward, the authorities should be encouraged to continue with the drive to strike a balance between pursuing macroeconomic stability and fostering economic growth.
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FM: What role do you think the banking sector can play in supporting the government's vision for economic growth and development?
LN: The banking sector plays a critical role in supporting economic growth and development through mobilisation and efficient allocation of financial resources amongst economic agents. For example, in recognition of the limited local financial resources, and the adverse impact this will have on economic activity, the banking sector has been actively mobilising lines of credit from regional and international financial institutions as part of measures to ensure that there is continued supply of credit to industry at favourable terms and conditions.
FM: What are some of the biggest challenges facing the banking sector in Zimbabwe and how is the association working to address them?
LN: The most pressing challenges facing the banking sector in Zimbabwe are unavailability of long-term funding, which reduces banks’ ability to effectively support the capital requirements of industry; climate change, which indirectly affects the banking sector through its impact on the real economy. The sector is working with, and through, relevant authorities and stakeholders to address these challenges through, among other initiatives, mobilising medium to long term funding from external financiers and actively participating in climate change mitigation and adaptation initiatives.
FM: What initiatives is the association undertaking to promote financial inclusion in Zimbabwe, and how do you think the banking sector can better serve the needs of low-income or marginalised communities?
LN: Local banks have directly, and collaboratively, invested in products, services and solutions that promote financial inclusion, including low KYC (know-your customer) accounts, microloans and financial literacy programmes. Indicating the success of these interventions, the FinScope 2022 Survey observed that the overall level of financial inclusion (banked and other formal) increased from 38% to 83% between 2011 and 2022.
FM: How do you think the regulatory environment in Zimbabwe can be improved to support the growth and development of the banking sector?
LN: Continued consultation and engagement between policy makers and the industry when formulating policies, continued policy predictability and timely adjustments to policy measures, especially when desired results are not coming through.
FM: What is your view on the current state of banking regulation in Zimbabwe, and are there any areas where you think the regulations are too restrictive or too lax?
LN: The regulatory environment remains robust and noticeably responsive to changes in the operating environment. An example of the policy flexibility is the recent introduction of the targeted finance facility by the central bank, which is in recognition of the need to unlock credit expansion by the banking sector, while at the same time, preserving the tight monetary policy stances.
FM: How do you think BAZ can work with regulators to create a more favourable business environment for banks in the country?
LN: We are pleased that our authorities maintain an open-door policy, allowing us to meet and discuss policy issues before their pronouncements. This year, we have already met with the governor of the RBZ to provide our input into the 2025 Monetary Policy Statement. This collaborative approach helps create a more favourable business environment for banks in Zimbabwe
FM: How do you think the banking sector in Zimbabwe can attract more international investment and cooperation, and what role can the association play in promoting the country as a destination for foreign investment?
LN: The banking sector can, and has always been, pursuing international best practices as well as investing in human and manufactured capital that enhances its attractiveness to international investors. Such best practices include observing the highest compliance standards, maintaining strong governance structures and growing strong financial institutions as evidenced by the strong capital, liquidity, earnings, credit ratings and credit quality ratios.
Resultantly, the sector has been able to attract significant capital through lines of credit from international investors. However, it should be noted that the attractiveness of the sector goes beyond just the banks themselves, but also needs to be complemented with macroeconomic stability, economic growth and strong institutions. In terms of the BAZ’s role in promoting Zimbabwe, the association consistently complements the government’s efforts towards international re-engagement, for example through engaging current and potential investors at global forums.
FM: What are some of the biggest challenges facing international banks operating in Zimbabwe?
LN: The challenges facing the banking sector transcend geographical boundaries. Rather than distinguishing between local and international banks, it is essential to acknowledge that our challenges are shared and interconnected. The main challenge, as has already been mentioned, is the absence of long-term funding.
FM: How do you think the banking sector in Zimbabwe can benefit from international cooperation and knowledge-sharing, and what initiatives is the association undertaking to promote this?
LN: Collaboration and partnerships with international banks can help provide access to advanced banking technologies, improve service delivery, improve risk management practices, as well as enhance capacity building. To promote these initiatives, the BAZ participates in regional and global events that help in driving the association’s strategy. The association also hosts the annual winter/summer school, which is a knowledge sharing platform that attracts participants from regional and international financial institutions.
