Nelson Gahadza
FBC Securities says the recent placement of Beta Holdings Limited, Khaya Cement Zimbabwe, and Metro Peech & Browne Wholesalers under corporate rescue highlights a concerning trend in Zimbabwe’s corporate financing landscape.
In its 2025 economic outlook report, FBC said these companies, despite operating in key sectors of the economy, have faced severe financial distress primarily due to structural weaknesses in the country’s financial markets.
“One of the common issues underlying these predicaments in all the cases is the mismatch between long-term obligations and short-term funding.
“Zimbabwe’s financial sector struggles to provide long-term credit facilities due to macroeconomic instability, unpredictable currency dynamics and a history of high inflation.
“As a result, companies rely heavily on short-term borrowing to fund long-term capital projects, creating a liquidity mismatch,” reads the FBC report.
FBC said the prevailing contractionary monetary policy regime aimed at combating inflation has also made interest rates to remain prohibitively high, making the short-term loans expensive.
It added that servicing these short-term obligations while waiting for returns from long-term investments places companies under immense financial strain.
“The consequences of the financial strain include, among others, cash flow pressures resulting in companies facing persistent liquidity crunches as short-term debt repayments outpace revenue cycles,” FBC said.
It added that short-term borrowing cycles lead to debt rollovers, increasing the overall debt burden, and insufficient working capital results in operational inefficiencies and supply chain disruptions.
“Sadly, the cases of Beta Holdings Limited, Khaya Cement Zimbabwe, and Metro Peech & Browne Wholesalers are not isolated incidents.
“Many other companies in Zimbabwe, across various sectors, are likely facing similar operational and financial challenges.
“As a result, jobs are being lost, economic inequalities are growing, Zimbabwe continues to lose critical skills through brain drain and risks losing its attractiveness as a conducive business destination to foreign investors,” FBC said.
However, the firm said creating an environment that allows and sustains the introduction of long-term financial instruments such as infrastructure bonds, corporate bonds and public-private partnerships (PPPs) to mobilise long-term capital.
“Consistent and predictable monetary policies to boost investor interest in long-term financing arrangements are required and incentivising pension funds and insurance companies to allocate more resources to long-term corporate investments,” reads the report.
FBC said reducing in-house operations by outsourcing services like logistics or IT will also reduce companies’ financial burden, and leveraging digitisation and e-commerce platforms will lower operational costs.
It said companies should also leverage on regional or international finance options for long-term capital.
“Without these interventions, Zimbabwe risks witnessing a wave of corporate failures, further weakening the economy,” FBC said.
