THE founder of one of Zimbabwe’s biggest banking groups — Nicholas Vingirai — this week delivered a damning indictment of Zimbabwe’s financial system, blaming its “crippled” state on regulatory volatility and a collapsed infrastructure that has left banks unable to fund businesses and eroded public trust.
The top banker, who helped establish Intermarket Holdings Limited, which now operates as ZB Financial Holdings Limited, warned unpredictable shifts in interest rates and monetary policy had made long term planning nearly impossible. This instability, he said, had severely undermined the capacity of banks to act as engines of industrial growth.
Vingirai was speaking on the side-lines of the ongoing “In Conversation with Trevor Ideas Festival” in Nyanga.
“If your regulator tweaks or changes interest rates often, you are not going to have direction,” Vingirai said. “You cannot price your own funding properly because nobody knows what the rate will be tomorrow. The market is not signalling properly as to where interest rates are going.”
He said efforts to stabilise the economy must be structured, predictable and sustainable to give businesses a fighting chance.
“If it is not sustainable, whatever stabilisation arrangement will change against business any day and businesses won’t survive,” he stated.
Vingirai framed the instability as part of a broader destruction of Zimbabwe’s financial architecture.
“We have destroyed our financial sector. We do not have a currency. They are mobilising US dollar deposits,” he said. “People no longer trust the banks. So the banks have no capacity because they do not have a deposit base to support industry.”
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He contrasted the current situation with the past, recalling a time when Zimbabwe had a functional banking system with clear institutional specialisation. Merchant banks funded industry and commerce, commercial banks handled daily transactions and personal loans, while discount houses supported liquidity management.
This structure, he said, fostered efficiency, provided liquidity support and encouraged healthy competition.
According to Vingirai, a wave of bank closures between 2004 and 2008 dismantled that system.
“It means you have killed competition in the funding sector. Customers have few choices and those that remain do what they like when customers come for funding,” he said.
He added that banks have abandoned their traditional role of developmental lending.
“Currently, banks are no longer funding business as a core activity,” Vingirai said. “They focus on transactional banking, money transfers, more than industry and commerce. The expertise in the banks has evaporated.”
This shift, he warned, has severe implications for startups, which already face challenges in establishing market presence, building technical teams and competing against established brands.
Vingirai said Zimbabwean start-ups continue to struggle for funding despite recent government initiatives, as persistent headwinds — including high inflation, currency volatility and limited access to capital -remain.
“If we are talking of local start-ups, they will struggle. You are looking for funding in a financial sector that is broken down. They do not have the capacity to fund even established businesses, let alone a startup,” he said.
Consequently, startups are forced to compete against well-established firms that once had access to credit lines which no longer exist in Zimbabwe’s banking system.
“So, fighting against such established entities is not going to be easy,” he noted. “This hits startups more than it does established institutions.”
