Beverage Industry Warns 35% Bank Policy Rate Strains Growth

Beverage makers in Zimbabwe say the central bank’s 35% bank policy rate is limiting expansion plans by increasing borrowing costs, NewsDay Business reports.

In his Mid-Term Monetary Policy Statement, Reserve Bank of Zimbabwe governor John Mushayavanhu maintained the benchmark rate at 35% per annum. He said the rate, alongside other measures, supports price, currency, and exchange rate stability. Mushayavanhu noted that the policy curbs speculative borrowing and directs available credit to productive sectors. He promised to review the rate in line with inflation and output dynamics.

Despite this, industry players continue to call for a reduction in the rate, citing high borrowing costs as a barrier to growth. Calum Philp, chairperson of the Beverages Manufacturers Association, said the current interest rate limits affordable funding for working capital and capital investment. “For manufacturers, this has translated into deferred expansion plans, limited retooling and constraints on cash flows, especially in a high-inflation environment where liquidity is already tight,” he said.

Beverage companies are also facing high operational costs from the sugar tax, which adds millions of US dollars in expenses for leading firms. Philp acknowledged the need for monetary policy to maintain financial stability but warned that the high rate discourages formal borrowing and drives businesses to seek foreign currency loans. He called for a more accommodative interest rate policy to support productive sectors and stimulate industrial recovery.

Delta Corporation Limited corporate affairs executive Patricia Murambinda echoed these concerns. She said high interest rates reduce access to finance, increase production costs, and constrain investment in growth initiatives. “While we understand the monetary authorities’ intent to manage inflation and liquidity, a more accommodative interest rate environment would be a welcome relief for industry and consumers alike,” she said.

Murambinda highlighted the importance of public-private collaboration to improve credit availability and reduce the cost of capital. She said 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 drive growth.

She added that collaborative engagement between government, industry, and civil society is key to designing a tax and investment climate that protects public health while supporting economic recovery and competitiveness.

The beverage sector’s warnings underscore the tension between monetary policy objectives and the need for affordable financing to sustain industrial growth in Zimbabwe.