Zimbabwe’s broad money supply (M3) stock reached ZiG141.1 billion in May 2026, with monetary developments indicating sustained progress in containing ZiG reserve money growth and anchoring currency and exchange rate stability.
According to data released in the 2026 Mid-Term Economic Review, the May total represents a 30.6% increase from the ZiG108.1 billion recorded in December 2025.
The overall expansion in money supply was largely driven by a 29.2% rise in the foreign currency component of broad money, which grew from ZiG87.9 billion to ZiG113.6 billion over the five months.
The scale of this increase highlights the ongoing dominance of foreign currency deposits within the economy’s broader liquidity structure.
Simultaneously, the local currency component of M3 registered a 36.8% expansion between December 2025 and May 2026, rising from ZiG20.2 billion to ZiG27.6 billion.
This growth in the local currency share, alongside sustained exchange rate stability, signals an improvement in market confidence toward the ZiG.
Households and commercial enterprises are increasingly opting to hold and execute transactions in local currency balances rather than immediately converting holdings into foreign exchange reserves.
Treasury officials attributed the controlled month-on-month trajectory of local currency broad money growth to a cautious monetary policy stance, which continues to buffer the market against underlying inflation and exchange rate volatility.
The Ministry said reserve money growth was stable and contained during the first five months of 2026, due to the implementation of prudent monetary policy.
Reserve money stock increased by 19.8%, from ZiG29.4 billion in December 2025 to ZiG35.2 billion in May 2026.
“The overall trajectory reflects a well-managed and stable monetary framework. The reserve money stock was largely made up of statutory reserves in foreign currency (65.9%) and foreign currency excess reserves (14%), while local currency statutory reserves, local currency excess reserves and currency issued comprised the remainder,” the Mid-Term Economic Review said.
It added that while the local currency component of reserve money grew by 30.4% from ZiG5.3 billion to ZiG6.9 billion over the period, the growth is within the reserve monetary target for the second quarter.
Diaspora remittances are projected to reach US$3.1 billion by the end of 2026, up from US$2.8 billion in 2025, significantly improving the current account performance.
Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, said diaspora remittances surged by 41% year-on-year to reach US$1.5 billion during the first half of 2026 from US$1.1 billion realised during the same period in 2025.
“The increase in remittances significantly contributed towards the growth of the current account surplus,” he said in the 2026 Mid-Term Budget and Economic Review.
He added that foreign currency receipts increased by 47.8% to US$10.7 billion for the period from January to June 2026, compared to US$7.3 billion received during the same period in 2025.
The Minister highlighted that the growth was primarily driven by increases in export receipts, diaspora remittances, and private sector loans.
“Despite the subdued global growth prospects and geopolitical and trade tensions, the country’s external sector position has demonstrated remarkable resilience,” he said.
Export receipts and diaspora remittances accounted for 70.3% and 14.4% of the total receipts, respectively, for the period from January to June 2026.
Foreign currency payments increased to US$7.3 billion during the first half of 2026, representing a 44.9% year-on-year growth compared to US$5 billion recorded during the same period in 2025.
“The elevated foreign currency inflows compared favourably with foreign currency payments, resulting in a net surplus which boosted foreign currency deposits within the banking sector as well as foreign currency in circulation. This development played a pivotal role in supporting exchange rate stability and enhancing confidence in the foreign exchange market,” the Minister said.
Prof Ncube noted that the current account is also estimated to have registered a surplus of US$616.3 million, a turnaround from a deficit of US$22.5 million recorded in the corresponding period of 2025.
He added that the current account balance is projected to improve from a surplus of US$2.1 billion in 2025, to US$2.6 billion in 2026, reflecting stronger export performance and sustained secondary income inflows.
Zimbabwe recorded a strong fiscal outturn in the first half of 2026, with cumulative government revenue collections reaching ZiG137.8 billion between January and June, surpassing the targeted ZiG124.4 billion by 10.8%.
According to figures presented by the Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube in the 2026 Mid-Term Budget Review, the half-year performance represents progress toward the country’s full-year target of ZiG287.6 billion.
In US dollar terms, revenue collections for the period January to June 2026 amounted to US$5.3 billion, with tax revenue accounting for US$5.0 billion, and non-tax revenue amounting to US$325 million.
Value Added Tax (VAT) maintained its position as the primary driver of public revenue, generating 28.3% of total collections during the period.
Personal Income Tax served as the second-largest contributor at 16.6%, while Corporate Income Tax and Excise Duty accounted for 13.8% and 8.5% of aggregate revenues, respectively.
“The positive revenue performance during the period January to June 2026 reflects improved domestic economic activity, strengthened tax administration systems, enhanced compliance monitoring and the continued implementation of revenue mobilisation initiatives,” Treasury said.
The Ministry said revenue growth is expected to maintain its positive momentum through the remainder of the year.
Fiscal authorities project that ongoing economic expansion, combined with administrative reforms, enhanced compliance enforcement, and the full rollout and integration of new policy measures, will continue to support revenue performance through the end of 2026.
The mining sector recorded over US$4 billion in mineral export receipts during the first half of 2026, buoyed by strong international commodity prices that offset early-year production slumps, latest figures show.
According to the 2026 Mid-Term Review, the rally in global commodity markets helped offset operational bottlenecks experienced across several domestic mineral subsectors.
“Although production was typically subdued during the early months of the year, favourable international commodity prices significantly boosted export earnings, compensating for some operational challenges experienced across several mineral subsectors,” Treasury said in the 2026 Mid-Term Review.
The Ministry of Finance added that revenue performance held up well despite severe headwinds in key subsectors, most notably within platinum group metals (PGMs).
The PGM subsector performed poorly during the half-year period following prolonged maintenance shutdowns at major smelter facilities.
It added that export volumes were curtailed by the government’s implementation of its progressive value-addition and beneficiation policy.
The government’s value-addition and beneficiation policy effectively banned the export of raw chrome ore and lithium concentrates.
Treasury revised the full-year 2026 growth forecast for the mining sector to 5.6 percent, on account of anticipated increase in production of gold, PGMs, coal, and lithium production, underpinned by favourable international mineral prices and continued investment in the sector.
In 2026, gold output is projected to increase to 55.6 tonnes from the initial projection of 50 tonnes, mainly due to sustained high international gold prices driven by safe-haven demand, as well as significant investments by major gold producers.
Cumulative gold output for the first half of the year was 21,39 tonnes, representing a 5.2% increase from 20,34 tonnes recorded in the same period in 2025.
PGMs are projected to experience a modest increase in production this year compared to the 2025 production levels, despite a slump in the first quarter of 2026, due to a prolonged smelter maintenance shutdown at one of the major producers.
In terms of export earnings, PGMs generated US$1.2 billion during the first half of 2026, 74.1% above the US$690 million earned in the corresponding period of 2025.
Coal production is now projected at 8.1 million tonnes, representing a 24% increase from the 2025 output of 7.2 million tonnes.
Treasury said the growth in coal production will be largely driven by sustained demand for thermal coal by thermal power producers, increased supply from the revival of coal mining houses, and stable and increasing demand for coking coal.
The Ministry added that lithium concentrate output is projected to decline by 3% to 2.1 million metric tonnes this year, from 2.2 million metric tonnes recorded in 2025.
This is despite lithium products export earnings growing by 229.8% to US$782.2 million during the first half of 2026, from US$237.2 million in the first half of 2025.
Spodumene concentrates earned US$671.7 million on volumes of 520 940 tonnes, 11.1% lower than 2025, yet earnings up 208%, reflecting substantially firmer realised prices.
The developments come as the mining sector generated a record US$7.3 billion in export earnings last year, compared to US$5.9 billion in 2024.
Mining remains the mainstay of Zimbabwe’s economy, generating nearly three-quarters of national export receipts and contributing at least 14% to gross domestic product.
The government is establishing an Infrastructure Development Fund (IDF) to accelerate critical infrastructure projects and ease fiscal pressure on public finances by leveraging capital from domestic, regional, and international institutions.
In the 2026 Mid-Term Budget Review, Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube said the new fund will back capital projects by borrowing against earmarked revenue streams.
The financing framework will target critical economic and social infrastructure across six primary sectors, including energy, irrigation, education, healthcare, rail, and roads.
As part of the initial rollout of the IDF framework, he said a US$400 million loan facility has been arranged with local financial institutions to fund key transport corridors.
“As part of this initiative, an arrangement has been made with local financial institutions to mobilise a US$400 million loan towards completion of the remaining 33km on the Harare-Beitbridge Road, construction, rehabilitation and maintenance of the Harare-Chirundu Road and Bulawayo-Victoria Falls Road, among other high-priority road projects,” the Minister said.
He said tranche financing is already underway, with US$100 million secured and pending the fulfillment of standard conditions precedent.
To reassure lenders and secure commercial terms, Prof Ncube said the loan repayments for the facility will be strictly ring-fenced against revenue collections from the Zimbabwe National Roads Administration.
Zimbabwe’s major transport corridors, including key routes connecting to South Africa, Zambia, and regional tourism hubs, have faced persistent funding constraints and heavy wear.
Establishing off-budget financing mechanisms, such as the IDF, anchored by guaranteed revenue streams, allows the government to accelerate highway rehabilitation without adding direct pressure on the national budget.
Treasury says it paid US$170 million in external debt servicing between January and June 2026, covering active loans, legacy obligations, and token payments.
Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube said the government serviced the active loan portfolio, legacy debt and token payments amounting to US$161 million, US$5.5 million and US$3.6 million, respectively.
“During the second half of 2026, US$117 million is projected to be paid towards outstanding external debt. Government, during the same period, made payments to Mining Houses for arrears amounting to US$246.4 million,” Prof Ncube said in the 2026 Mid-Term Budget Review.
He added that domestic debt service payments totalling ZiG15.3 billion were made toward principal repayments of ZiG13.5 billion and interest payments of ZiG1.8 billion.
In 2025, the government paid US$307.45 million toward servicing its external debt portfolio. The payments were dominated by obligations under active credit facilities, even as the country’s total public debt burden expanded slightly to US$21.8 billion.
Zimbabwe’s total public and publicly guaranteed debt stock increased by 1.4% year-on-year to US$21.82 billion as of December 2025, representing 37.4% of nominal gross domestic product.
In local currency, total debt reached ZiG566.85 billion. The increase was largely driven by an expansion in domestic expenditure arrears coverage to service providers, which jumped from ZiG875 million in 2024 to ZiG35.37 billion (US$1.36 billion) following ongoing government verification and audit exercises.
External obligations accounted for 54.1% of the national debt stock at US$11.76 billion, while domestic commitments made up the remaining 45.9% at US$10.06 billion.
The government continues to pursue its Arrears Clearance and Debt Resolution Roadmap to normalise relations with international lenders.
Head of the Zimbabwe Public Debt Management Office, Andrew Bvumbe, noted that institutional technical support has “enhanced progress in debt reporting practices and transparency… strengthening fiscal transparency, sustainability, and prudent debt management” as the country navigates its debt restructuring process.
Foreign direct investment (FDI) inflows into Zimbabwe surged to US$964.9 million last year, from US$566.7 million recorded in 2024, driven primarily by large-scale capital deployments in mining and energy projects.
Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube said the upward momentum continued into the first quarter of 2026, with direct investment inflows reaching an estimated US$192.5 million.
He said this reflects an increase from US$185 million recorded in the previous quarter and US$183.4 million in the corresponding quarter of 2025.
“FDI is projected to grow at a steady rate of 5.5% between 2026 and 2028,” Ncube said, presenting the Mid-Term Budget Review.
He said the country’s efforts to promote investment are bearing fruit, as evidenced by stronger foreign direct investment activity, with the Zimbabwe Investment and Development Agency issuing 871 licenses in 2025 compared to 709 in 2024.
Going forward, he said work is underway to review the National Investment Policy and the National Investment Incentive Framework to ensure that Zimbabwe remains competitive, transparent and aligned with international best practice.
The Minister said the developments are expected to sustain growth of FDI inflows, supported by other economic reforms.
The sustained growth in foreign capital inflows comes against the backdrop of government efforts to stabilise the macroeconomic climate, improve the ease of doing business, and implement structural reforms.
Zimbabwe recorded an annualised quarterly gross domestic product (GDP) growth rate of 6.8% during the first quarter of 2026, anchored by robust performances across major productive sectors, new data shows.
In his mid-term budget review, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the expansion was primarily driven by double-digit estimated growth in manufacturing, mining, agriculture, and the wholesale and retail trade sectors.
He said GDP growth in 2026 is projected at 5%, riding on the growth momentum achieved in 2025 and robust performance in the first half of 2026.
“The projected growth reflects the expansion of domestic production capacity, enhanced energy availability and macroeconomic stability,” he said.
The Treasury chief said the economy grew by 8.3% in 2025, significantly higher than the initial projection of 6.6%.
“The domestic economy experienced robust economic growth in 2025 due to a favourable macroeconomic environment characterised by price, currency and exchange rate stability, as well as improved energy availability which supported strong performance across all productive sectors,” he said.
He added that the economy also benefited from strong export performance, increasing investment activity and continued growth in domestic demand, which reinforced business confidence and provided a firm foundation for accelerated economic growth.
The Minister noted that the stronger-than-anticipated outturn was underpinned by above-average rainfall and favourable international mineral commodity prices.
He highlighted that improved electricity generation at both public and private power stations supported robust performance across key sectors of the economy.
“The real GDP growth rate places Zimbabwe among the few top African countries that recorded high growth rates in 2025. The country is behind Ethiopia, which recorded a growth of 9.2%, while the majority recorded a growth rate of less than 4%,” he said.
Zimbabwe’s annual inflation rate in ZiG declined to 3.2% in July, down from 4.7 percent recorded in June, reflecting sustained price stability, official statistics show.
According to the latest data released by the Zimbabwe National Statistics Agency, month-on-month price growth slowed significantly in July.
The ZiG month-on-month inflation rate slowed to 0.1 percent in July, down 0.5 percentage points from 0.6 percent in June. On an annual basis, ZiG inflation stood at 3.2 percent.
Price pressures in United States dollars remained similarly subdued. The USD month-on-month inflation rate printed at 0.3 percent for July, up slightly from 0.1 percent in the prior month, while year-on-year USD inflation was recorded at 3.1 percent.
Taking into account the multi-currency transaction mix within the economy, ZIMSTAT reported a blended, weighted year-on-year inflation rate of 3.2 percent.
Analysts say maintaining the trend will depend on consistent economic policies, exchange rate stability and stronger domestic production.
While inflation remains positive, the July data indicates that the pace of price increases is moderating, adding to signs of a more stable economic environment.
Martin Kadzere, The Herald
Zimbabwe’s manufacturing sector is undergoing a structural shift from basic operational survival towards expansion and regional competitiveness, driven by steady gains in production capacity and export growth, according to recent study findings.
The findings, delivered at the Zimbabwe Industrialisation Conference and Expo (ZICE 2026) at the Harare International Conference Centre (HICC) by Africa Economic Development Strategies (AEDS) executive director Professor Gift Mugano, show that domestic producers are increasingly leveraging retooling and plant modernisation to capture larger market shares across regional value chains.
The two-day conference, being held under the theme “Accelerating Industrial Growth through Regional Value Chains, Innovation and Trade”, was organised by the Ministry of Industry and Commerce in partnership with AEDS, an economic think tank and national export promotion and development body ZimTrade.
The study notes that the sector’s export trajectory has accelerated significantly over the past four years.
The baseline study, which surveyed 2 071 respondents across all 10 provinces, combined a primary field survey of 1 721 commercial entities and 350 key stakeholder interviews with data from the Zimbabwe National Statistics Agency’s national accounts and trade data to assess the sector’s health.
Manufactured exports surged from US$175.8 million in 2021 to US$228.7 million in 2023, before climbing sharply to US$437.6 million in 2024 and reaching US$584.8 million in 2025.
He noted that maintaining the upward trend will be essential to meeting the target of US$1 billion in exports by 2030.
Prof Mugano revealed that domestic industrial borrowing was now overwhelmingly funding long-term productive capacity rather than temporary operational overheads.
According to the report, 81.8 percent of financed firms directed their capital specifically towards industrial upgrading and export development.
Among surveyed manufacturers, purchasing new machinery and production equipment emerged as the single largest capital priority at 35.1 percent of firms.
An additional 12,4 percent of businesses prioritised warehouse and logistics infrastructure, while another 12,4 percent directed funds toward expanding into new export markets.
The remaining capital allocations included new product development and value addition at 7,3 percent, retooling existing plant infrastructure at 7,2 percent, renewable energy investments at 6 percent, and digitalisation and artificial intelligence adoption at 4 percent, the report says.
“Zimbabwe’s manufacturers are borrowing to expand productive capacity, modernise operations and access new markets, not merely to finance day-to-day operations,” the report says.
“Industrial finance should therefore prioritise affordable long-term capital for machinery, technology, export expansion and value addition, enabling firms to accelerate industrial transformation and import substitution.”
However, the study notes that about 44 percent of total industrial capacity remains idle, identifying unutilised plant capacity as the single largest constraint on national competitiveness.
Survey respondents cited electricity reliability and power costs, foreign currency access and exchange volatility, high costs of long-term commercial finance, regulatory burdens and informal market competition as the principal operational bottlenecks holding back full production.
The findings also highlighted heavy structural concentration within the sector, revealing that five core subsectors — food processing, beverages, chemicals, construction materials and metals — currently generate roughly 95 percent of total manufacturing output.
Looking ahead to 2027, 63.1 percent of surveyed executives reported optimism regarding the prospects for the manufacturing sector, while 54.7 percent expressed confidence in the broader macroeconomic environment.
The report detailed that manufacturing’s overall contribution to national Gross Domestic Product (GDP) expanded from 16.8 percent in 2025 to 17.1 percent in the first quarter of 2026.
This steady trajectory keeps the manufacturing sector on course towards achieving the national target of US$1 billion in annual manufactured exports by 2030.
Within regional markets, exports to the Common Market for Eastern and Southern Africa (COMESA) reached US$22.8 million in the first quarter of 2026, up from US$7.4 million in prior tracking periods, with iron and steel products accounting for 30.2 percent of those regional shipments.
However, weak domestic industrial linkages continue to strain Zimbabwean manufacturers, who relied on foreign suppliers for 54.31 percent of their raw materials in 2025, up from 52 percent in 2023.
The report revealed a severe structural gap in local supply chains, with only 7 percent of surveyed firms reporting strong linkages with domestic suppliers or customer networks.
Vertical integration remains low across the sector and is heavily concentrated in a few subsectors, led by food processing at 34 percent and textiles at 14 percent.
Manufacturers cited the outright unavailability of local inputs as the main reason for importing at 59 percent, followed by cheaper foreign pricing at 24 percent and superior international quality at 14 percent.
To address these supply chain vulnerabilities, the study outlined a strategic action plan focused on building a dedicated domestic intermediate-goods sector.
Key policy recommendations included launching anchor-firm and supplier-development programmes, aligning Special Economic Zones (SEZs) and industrial clusters with import-substitutable value chains, and actively integrating small and medium enterprises (SMEs) as local supply chain partners rather than economic bystanders.
Addressing global market readiness, the report notes that while 58 percent of manufacturing firms have integrated basic operational sustainability practices — such as energy efficiency (17 percent) and waste management (19 percent) — Environmental, Social and Governance (ESG) compliance remains low.
Fewer than 8 percent of companies currently maintain formal emissions monitoring, structured ESG reporting, or carbon certification.
The report cautions that targeted policy support will be essential to help local manufacturers meet tightening international carbon and due-diligence standards to avoid future trade barriers.
The study has identified a portfolio of commercially viable, investment-ready projects across agro-processing, digital infrastructure, mineral beneficiation, transport manufacturing and fertiliser production.
Combined, the projects provide an immediate opportunity to mobilise private capital, strengthen value addition, accelerate import substitution, create employment and expand Zimbabwe’s industrial base.
Sustained investments in plant, machinery, and technology are continuing to drive the modernisation of Zimbabwe’s manufacturing sector, boosting both industrial productivity and overall competitiveness.
Survey findings show that a substantial portion of firms are actively committing capital to equipment and technology upgrades, reflecting widespread business confidence in long-term expansion rather than immediate survival.
While the adoption of Artificial Intelligence (AI) remains in its early stages, researchers highlighted significant scope for future productivity gains as digital transformation spreads across the sector, noting that early adopters of advanced tech are already outperforming their peers.
To drive the country’s industrial policy forward, the study outlines four critical priorities required for full economic transformation.
First, Government agencies must adopt absolute dollar value rather than national export share when reporting manufactured export growth across all official government tracking.
Second, policymakers must establish a robust import-substitution base by directing a targeted US$3,03 billion industrial programme into key subsectors, specifically fertilizers, fabricated steel, pharmaceuticals, plastics, and agro-processing.
Third, to push national manufacturing capacity utilisation above 60 percent, the report urges decisive action to stabilise power reliability, lower working-capital costs, and secure raw material availability.
Finally, the country must bridge its severe intermediate-goods gap by developing domestic supply industries to aggressively reduce the sector’s current 54 percent reliance on imported raw materials.
“Manufacturing is now the largest single sector of the Zimbabwean economy, and the economy grew 8,29 percent in 2025 on the rebased national accounts,” the report says.
“Exports remain concentrated in commodities, but the opportunity is clear: over US$3 billion of imports can be made at home and the same capacity can serve regional markets under AfCFTA, COMESA and SADC.”
