Excerpt from Africa Housing Finance Yearbook 2014


Zimbabwe’s economic performance weakened in 2013. The estimated GDP growth of 4.4 percent for 2012 represented a significant slowdown when compared to the growth rates of 5.4 percent, 9.6 percent and 10.6 percent experienced in 2009, 2010 and 2011, respectively. GDP growth further decelerated in 2013, to 3.7 percent, but is expected to increase to approximately four percent in 2014. This continued slowdown in the economy is as a result of limited sources of capital, policy uncertainty and the high cost of doing business. Most major sectors of the economy registered lower growth rates in 2012, and this weighed down overall economic performance. Mining and quarrying grew by 6.5 percent in 2013 compared to 10.1 percent in 2012 and 25.1 percent in 2011. Growth in the manufacturing sector has also slowed down with an estimated growth of 1.5 percent in 2013, from 15 percent in 2011. Growth in the agriculture sector has been revised down to 5.4 percent. Zimbabwe is experiencing a structural regression, with the acceleration of deindustrialisation and informalisation of the economy.

Year on year inflation has remained subdued and averaged 4.1 percent in

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Excerpt from Africa Housing Finance Yearbook 2014


Zimbabwe’s economic performance weakened in 2013. The estimated GDP growth of 4.4 percent for 2012 represented a significant slowdown when compared to the growth rates of 5.4 percent, 9.6 percent and 10.6 percent experienced in 2009, 2010 and 2011, respectively. GDP growth further decelerated in 2013, to 3.7 percent, but is expected to increase to approximately four percent in 2014. This continued slowdown in the economy is as a result of limited sources of capital, policy uncertainty and the high cost of doing business. Most major sectors of the economy registered lower growth rates in 2012, and this weighed down overall economic performance. Mining and quarrying grew by 6.5 percent in 2013 compared to 10.1 percent in 2012 and 25.1 percent in 2011. Growth in the manufacturing sector has also slowed down with an estimated growth of 1.5 percent in 2013, from 15 percent in 2011. Growth in the agriculture sector has been revised down to 5.4 percent. Zimbabwe is experiencing a structural regression, with the acceleration of deindustrialisation and informalisation of the economy.

Year on year inflation has remained subdued and averaged 4.1 percent in 2013. It is projected to slow down to four percent in 2014. The decline in inflation is largely due to the falling value of the South African Rand. This performance trend shows that the creation of the Government of National Unity in 2009, and its adoption of a multi-currency regime, brought macroeconomic stability and sustained growth for a period of five years. 2013 was an election year with Zimbabwe holding its first general elections under the new constitution. This effectively ended the four-year coalition government. Recovery has therefore continued to be fragile due to political uncertainty, the high debt burden of about US$9.9 billion and huge arrears amounting to about US$6.5 billion, as well as the unsustainable current account deficit of about 34 percent of GDP. Zimbabwe has had limited access to concessional lines of credit required for infrastructural development and retooling the manufacturing sector. Further, most of the facilities availed carry a significant risk premium and have largely been short term in tenure.


Access to finance

Despite these challenges, the Zimbabwean financial sector remains well developed and quite stable. According to the Reserve Bank quarterly report in March 2014, the country had 21 operating banking institutions (comprising 15 commercial banks, two merchant banks, three building societies and one savings bank), 16 asset management companies and 146 microfinance institutions. The 21 operating banking institutions include the Post Office Savings Bank (POSB), following the cancellation of the Trust Bank operating licence on 6 December 2013.

Zimbabwe continues to experience a high level of financial exclusion as well as usage of informal financial products and services. This is reflected in the findings of the 2011 FinScope Survey, the 2012 World Bank Global Financial Index (Global Findex) Database and the 2013 Micro, Small and Medium Enterprises FinScope Survey. The 2011 FinScope Survey found that 40 percent of all Zimbabweans aged 18 years and above were financially excluded, or not using either formal or informal financial products. This tallies with the findings of the MSME FinScope, which revealed that 43 percent of all MSME business owners in Zimbabwe were financially excluded. According to the 2011 FinScope Survey, 22 percent of all adult Zimbabweans only used informal financial products and services. The MSME FinScope shows that 40 percent of all business owners in this category only used informal financial products and services to run their enterprises. FinScope 2011 found that 38 percent of all adult Zimbabweans were formally served; that is, they used both bank and non-bank formal products. This figure tallies with the Global Findex finding that 40 percent of all Zimbabweans above the age of 15 years have an account with a formal financial institution. The MSME FinScope survey revealed that only 18 percent of business people in this category were formally served, with only 14 percent of the business owners being banked. With respect to credit, Finscope 2011 found that only five percent of all adults above 18 years of age borrow from a bank (three percent) or other formal financial institution (two percent) while 15 percent were informally served by unregulated institutions such as co-operatives and farmers’ associations. Some 31 percent borrowed from friends and relatives and 49 percent did not borrow at all. Most SME business owners (85 percent) do not borrow at all to finance their operations. Only two percent of them access bank credit products, while another two percent access other formal credit sources. About seven percent borrow from friends and relatives. Zimbabwe scores 109th out of 189 countries on the ‘ease of getting credit’ indicator, according to the World Bank’s 2014 Doing Business Report.

Following the findings of the 2011 FinScope survey, the Zimbabwean authorities have put in place various measures with a view to improving financial inclusion in the country. A Memorandum of Understanding between the central bank and commercial banks seeks to reduce bank charges and lending rates as well as increase deposit rates. The Reserve Bank of Zimbabwe (RBZ) announced in January 2014 in its monetary policy statement that banks now have to justify and obtain approval from the RBZ before effecting increases on charges and lending rates. The authorities also envisage the establishment of an Ombudsman for the financial sector, a Microfinance Advisory Council as well as the finalisation of a Microfinance Bill. Further, the central bank stipulated that commercial banks were required to provide at least 30 percent of their lending to small and medium enterprises. These initiatives are meant to foster confidence in the financial sector, particularly commercial banks, and, in the process, improve financial inclusion. Mobile money is also spreading quickly in Zimbabwe, linked to the rapid spread of mobile phone penetration.   Examples of mobile banking products that have been launched include: Kingdom Bank’s Cellcard, Tetrad’s eMali, Econet Wireless’ Ecocash; Cabs Bank’s Textacash, Interfin Bank’s Cybercash and CBZ Bank’s mobile banking, among others.

As at 30 June 2014, total credit provided by the financial sector amounted to US$3.81 billion, an increase from US$3.7 billion at 31 December 2013. The deceleration in lending since 2012 is due to factors including a declining growth of deposits and the uncertainties in the economy that arise in an election year. Five commercial banks dominated lending with 59.18 percent of the total. Lending continues to be largely for the short-term requirements of working capital and consumer durables. A sectoral analysis of loans and advances by commercial banks shows that most of the lending went to the industrial sector (26.07 percent), households (21.21 percent), transport (16.95 percent) and agriculture (15.68 percent). The proportion of lending to the construction sector continues to be low (1.73 percent).

According to RBZ statistics, mortgage lending was US$278.1 million dollars as at the end of December 2012 compared to US$199.5 million for December 2011, which represents a growth of 39.4 percent. When compared to the position as at December 2012, mortgages to the end of May 2013 grew by 10.5 percent. In the 2014 National Budget, tax incentives were announced for financial institutions providing mortgage finance.

Mortgage lending is largely undertaken by Central African Building Society (CABS), CBZ Bank, FBC Bank and ZB Building Society. CABS remains the largest mortgage lender in Zimbabwe. In 2014, the financial institution advanced a total of US$8.6 million in housing mortgage loans. At end December 2012, CABS’s housing mortgage loan book was US$96 431 384 comprising US$87 279 9869 for medium and low density housing development and US$9 151 398 for the ‘high density’ sector. In 2013, the financial institution increased its lending significantly and by June it had extended mortgage advances amounting to US$27 942 391, which surpasses the annual figure for 2012. CABS is a beneficiary of a five-year loan from the PTA Bank, a 10-year facility from Shelter Afrique and mobilisation of US$10 million from Proparco, all of which are meant to increase the tenure of mortgage lending to customers. Mortgage loans are charged at 15 percent variable interest, with a 75 percent loan to value and 25 percent repayment to income. In 2014, CABS introduced a 20 year housing mortgage loan.

CBZ Bank had the second largest housing mortgage loan book in 2012. As at 31 December 2012 its mortgage loan book was US$89 980 277. CBZ had total mortgage advances of US$137 205 371 by 31 December 2013. CBZ charges interest rates ranging between 14 percent and 18 percent over tenures ranging from two to 10 years. In his 2013 budget speech, the Minister of Finance advised that CBZ Bank had made a commitment to provide US$10 million to fund housing for civil servants. Government would provide a matching amount in order to create a US$20 million Housing Fund for civil servants. In the 2014 Budget Speech it was stated that government would capitalise the Civil Service Housing Loan Scheme. CBZ is also a beneficiary of the lines of credit from the PTA Bank and Shelter Afrique.

FBC Building Society also extended mortgage lending to its customers but its annual report does not state how much this was. The financial institution had a long-term (over five years) tenure book of US$1 1242 430, in which the mortgage loans are incorporated. The building society is also enjoying facilities from the PTA Bank and Shelter Afrique. ZB Building Society had a mortgage book of US$5 880 248 as at 31 December 2012.

The National Development Loan Facility is a revolving fund that was created in 2010 with an initial allocation of US$25 million. In 2012, government provided an additional US$7.9 million to the fund, followed by an amount of US$6.9 million in 2013. In his budget speech for 2013, the Minister of Finance advised that 10 percent of the resources provided would be used to fund rural housing programmes. The Infrastructure Development Bank of Zimbabwe (IDBZ) acts as a project manager and financier on behalf of the Ministry of National Housing and Social Amenities.



During the past four years, Zimbabwe has been recovering from a decade of economic decline and instability. The economic decline worsened poverty levels and annual average gross household incomes, currently estimated at US$2 545, are still very low. According to available statistics, 72.3 percent of Zimbabweans live below the poverty line. The low levels of income, coupled with high levels of illiquidity have negatively affected affordability. There is a high default risk due to retrenchments. As at June 2013, 6.86 percent of CABS’s loans in high density areas were in arrears. While building societies and commercial banks are beginning to introduce medium-term facilities, most lending is on a short-term basis. Financial institutions have limited access to offshore lines of credit and there is reluctance by the public to commit funds for long periods. Maximum repayment periods of 10 years currently apply on loans, with the exception of the recently introduced 20 year housing loan from CABS.

Lending rates are still high in Zimbabwe due to the high cost of funds for financial institutions. While the authorities have made efforts to contain lending rates and bank charges, interest rates charged by building societies remain at an average of 15 percent. A Memorandum of Understanding between the RBZ and banks was signed providing for an additional penalty of percentage points for any defaulting clients, however this was discontinued in December 2013. Further, those home builders who access consumer bank loans for purposes of buying a residential stand or constructing a house pay higher interest rates of as much as 20 percent, depending on the institution. An Insurance and Pension Sector Housing Fund was established to address the housing backlog. The Fund is expected to be funded from proceeds of housing bonds to be issued to companies in the pension and insurance industry.

Despite the high cost of funds, financial institutions have developed innovations to reduce the cost of borrowing for low income clients. CABS offers a low priced mortgage product for borrowers in high density areas on which an interest rate of 12 percent is charged as opposed to 15 percent that applies to borrowers in low density areas. Further, in an effort to enable low income earners to access housing finance, building societies collaborate with employers to provide loans at subsidised rates. CBZ has introduced a product called ‘the Cash-Plus Housing Savings Product’ targeted at the informal sector. It involves the potential borrower saving with the institution for 12 months after which the client then qualifies for a loan equivalent to his/her savings.

The harsh liquidity environment has also created an opportunity for Zimbabweans to buy land from local authorities and land developers on a staggered basis – something which was rare in the past. Deposits for some schemes are as low as US$660, with monthly installments spread over periods of three to five years. This flexibility is an improvement from the past when either one had to have cash or a mortgage facility to pay for the property.


Housing supply

The major housing objective of Zimbabwe’s national strategy, the Medium Term Plan (2011-2015), is to eliminate the housing backlog and halve the housing dependency ratio at the household level by the year 2015. This is quite a daunting challenge considering that the Ministry of National Housing and Social Amenities estimates the current national housing waiting list to be 1.5 million. The number is likely to be higher considering that some local authorities do not collect and submit returns to the ministry. Further, most home-seekers have stopped renewing annually, after losing hope following lengthy periods of fruitless waiting. Others cannot register as they do not have the required documentation, while others are unaware of the system. Harare’s waiting list is about 500 000 while those of Gweru, Mutare and Bulawayo are about 17 000, 50 000 and 100 000 respectively.

The 2012 National Housing Policy seeks to address the challenge of the huge housing backlog through a partnering and facilitating approach to housing development and management so as to leverage community and private sector initiatives. In this regard, the policy aims to strengthen the role of local authorities as well as facilitate and encourage the participation of civil society and the private sector in housing development.

Even so, the government plays a pivotal role in housing development through direct provision of houses as well as land. Since 2010, the Zimbabwe government has availed a total of US38.9 million for the development of housing on and off site infrastructure as well as the construction of at least 2 904 housing units across the country. Individuals on the waiting list and who can afford to pay the required deposits and installments access the housing with a loan from the National Housing Development Loan Facility.

Financial institutions are also promoting housing developments projects. In late 2012, Harare City Council signed an agreement with CABS to build 3 102 core houses for low income earners in Budiriro, Harare. Each core house would be on 300m2 of land and is estimated to cost US$12 000. Beneficiaries will pay an initial deposit and CABS will provide mortgage finance which would be repaid over a stipulated period. 985 units have so far been completed however there is concern over the ability of low income earners to qualify for the units – deposits are high (25 percent) and only 244 applicants have been approved. The building society is undertaking another housing development in Hatcliffe, Harare involving 971 housing units, also on 300m2. The other building societies are implementing their own schemes across the country. CBZ is set to service 1 095 low cost residential stands in Nehosho, Gweru, for the construction of low cost housing which will benefit low income groups. ZB Bank has stands in Springvale and ZB Building Society has developed 800 residential stands ranging in size from 300m2 to 2 000m2 and will offer mortgage finance to beneficiaries to enable them to build houses. The building society has also entered into a partnership with Beitbridge Town Council involving the building of 150 low cost housing units which would be offered to beneficiaries on a 10 year mortgage.

In late 2011, Fidelity Life Assurance Company launched a housing project on a 34 hectare plot in Manressa, Harare. The project involved developing housing stands which would then be sold to home seekers. The company is currently engaged with the City of Harare to undertake a US$20 million housing development project to the south of Harare.  In this project, 2 000 out of the total 5 950 stands available for sale have already been sold with another 1 500 expected to be sold by the end of 2014 either on cash or installments.

Damofalls, one of the most active land development companies in Zimbabwe, is implementing projects for housing development in various cities which include Ruwa, Norton, Kwekwe and Darwendale. Other property developers such as the DATco Group are also active across the country.

According to their umbrella body, the Zimbabwe National Association of Housing Cooperatives (ZINAHCO) have provided the bulk of housing units which were constructed during the past decade. The association argues that even during the hyperinflation era, co-operatives continued to develop housing units when all the other players had suspended operations. The cooperatives acquire land from a private owner, government or a local authority and then service it using subscriptions from members. Figures from the City of Harare indicate that co-operatives are a powerful force in housing provision. In the year 2011, the city allocated 2 954 stands to 41 cooperatives.

ZINAHCO is also implementing a scheme involving the construction of core houses in Chiredzi, Harare, Chitungwiza, Mutare, Kariba, Bulawayo, Redcliff and Mvuma. The organisation intended to build 713 units during the years 2012/2013 but they only accessed funding for 559 units. To date they have completed 389 houses while the balance is work in progress. The houses are sold to members of ZINAHCO who pay for them over a period of six years. The cooperative body pointed out that the loan extended to members was concessional but was slightly above break-even point to ensure sustainability of the programme. The funding for the project was provided by Homeless International. ZINAHCO has also forged partnerships with other donors such as Rooftops Canada, Shelter Norway, Swedish Cooperatives Centre and CIDA and undertook an exchange visit to Canada in 2013. Through these partnerships, the association provides its members with skills in the areas of cooperative management, financial literacy, livelihood skills, contract management and construction services, amongst others.

ZINAHCO is of the view that the major impediments to meaningful supply of housing in Zimbabwe are limited access to land, challenges in accessing finance and poor government capacity in providing off site bulk infrastructure. They also pointed out that there was need to revamp outdated legislation which frustrates housing development.

The delivery of serviced stands is an approach being adopted to improve access to affordable housing. In July, Bulawayo City Council announced that it was going to release 2 131 stands ranging in size from 200m2 to 600m2, in four residential suburbs. The local authority requires residents to pay a deposit of 35 percent of the value of the stand and the balance in monthly installments. The Zimbabwe Project Housing Trust has also embarked on a programme to provide over 4 000 low income residential stands in Rangemore, Bulawayo although civil works for this project are currently on hold.   These initiatives anticipate a self-build housing process that is common throughout the country.


Property markets

The demand for residential property remains high in Zimbabwe, though activity has been hampered by low disposable incomes and the deterioration in liquidity conditions, particularly during the first half of 2013. The market is still active, albeit at subdued levels, particularly for medium density houses, flats and cluster units. Prices for units in this category up to a value of US$150 000 have witnessed an increase due to the high demand. More expensive homes are taking much longer to sell and have witnessed price stagnation.

Despite the tight liquidity conditions, rentals continue to go up. Rental increases of 10 to 35 percent have been common since the end of 2012 but largely for high and medium density properties. In the same vein, the prices of serviced stands went up significantly in all areas – in some areas by as much as 50 percent during the last 12 months.

Zimbabwe ranks 93rd out of 189 countries according to the World Bank’s 2014 Doing Business Report for the indicator ‘ease of registering property’. The five procedures take 36 days and cost 7.8 percent of the property value.


Policy and regulation

The introduction of the National Housing Policy in 2012 provides an opportunity for the Government of Zimbabwe to address a number of factors that impeded housing development in the past. In addition to stimulating housing delivery through state and non-state partnerships, the new policy addresses the need for more housing designs and development models and an increased range of permissible building materials and construction models. This will also involve a relook at legislation and some by-laws that may no longer be relevant.

Zimbabwe also needs to address the prevailing economic challenges which are making it difficult to access funding for infrastructural and mortgage financing. The country requires long-term funding to address infrastructure bottlenecks needed for effective housing delivery. Zimbabwe requires more capacity to avail loans for both land and housing development. It is hoped that the process of addressing the huge debt overhang and arrears which has commenced will gather momentum and unlock greater opportunities for robust economic performance.

The Land Development Bill will regulate the activities of land developers. The legislation will provide for the registration and regulation of the conduct of land developers. It is expected that this will provide more protection to the public from unscrupulous land developers.

The thrust by the Ministry of Finance and the Reserve Bank of Zimbabwe to improve financial inclusion is also expected to improve opportunities for housing finance in the country. In particular, the introduction of a Microfinance Act is expected to increase competition for traditional financial institutions to the benefit of borrowers.



Zimbabwe has experienced a number of positive political developments during 2013. The major political parties managed to agree on a draft new constitution which was endorsed through a peaceful referendum. The draft constitution was then approved by both houses of Parliament and signed into law. Despite the haggling on dates, national elections were conducted in a peaceful environment. The atmosphere has also been tranquil after the announcement of the election results and it is hoped this will be sustained.

Despite the liquidity challenges, the country has a stable macroeconomic environment. Zimbabwe continues to enjoy low inflation and has implemented prudent fiscal policy characterised by a cash budgeting system. However, the country faces challenges on the external account. It is hoped that the process of normalisation of relations with Multilateral Financial Institutions will gather momentum and pave the way for a solution to the debt and arrears challenge. Such a development would lead to significant inflows which are required to address the current liquidity problems. It would also spur the performance of the economy, leading to increased household incomes.

It is hoped that the establishment of a PPC cement production plant in northern Zimbabwe, and one in Masvingo, will support further growth in housing supply as the cement capacity of the country increases. These developments and the measures being put in place by the authorities to foster increased financial inclusion provide hope that the housing finance situation will witness significant improvement in the foreseeable future. It would appear the Medium Term Plan as well as the Housing Policy accurately articulate what is required in order to improve housing delivery in Zimbabwe. These now need to be implemented.



African Economic Outlook, Zimbabwe 2014.

Government of Zimbabwe (2012). National Housing Policy 2012, Government Printers, Harare.

Government of Zimbabwe (2011). Zimbabwe Medium Term Plan 2011-2015, Government Printers, Harare.

Government of Zimbabwe (2012). The National Budget: Sustaining Inclusive Growth with Jobs, Government Printers, Harare.

Zimbabwe Government (2012). The 2013 National Budget Statement: “Beyond the Enclave: Unleashing Zimbabwe’s Growth Potential”, Government Printers, Harare.

Reserve Bank of Zimbabwe (2014). Monetary Policy Statement, Reserve Bank, Harare. and Quarterly Industry Report.

World Bank, Doing Business 2014.

Zimbabwe National Statistical Agency (2013). Poverty Income Consumption and Expenditure Survey 2011/12 Report.















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