THE Government has placed the mobilisation of domestic savings at the centre of its strategy to sustain higher levels of investment and economic growth during the National Development Strategy 2 (NDS2) period, running from 2026 to 2030.
This comes as Zimbabwe seeks to reduce reliance on volatile external funding while rebuilding long-term capital for infrastructure and industrial development.
Under NDS2, investment programmes will be underpinned by domestic resource mobilisation through the deepening of savings, with the Government targeting a significant increase in gross national savings to 25 percent of gross domestic product (GDP) by 2030.
National Development Strategy 2
This marks a sharp increase from current savings levels of about 10 percent of GDP, which policymakers and analysts agree are insufficient to support the country’s development ambitions.
“The Government’s savings drive will be supported by deepening the financial sector, expanding financial inclusion from 84 percent achieved under NDS1 to above 90 percent by 2030 and developing a strong long-term savings market anchored on pensions, insurance and capital markets,” reads part of the NDS2 document.
Worldwide, savings and capital markets are recognised as key pillars of economic development, providing long-term funds that finance productive investment and support sustainable growth.
Zimbabwe’s challenge, analysts say, is to convert relatively high financial inclusion into meaningful and durable savings that can be channelled into long-term investment.
Economic expert and a member of the central bank’s Monetary Policy Committee, Mr Persistence Gwanyanya, said savings were a critical component of any country’s growth matrix, particularly for a capital-scarce economy such as Zimbabwe that is seeking to rebuild after years of underinvestment.
“At the current level of about 10 percent of GDP, the level of savings is inadequate to provide investable capital to close the infrastructure gap as well as other capital projects which support the country’s aspirations of a prosperous upper middle-income economy,” he said.
He noted that NDS2 has identified funding requirements of about US$2 billion annually to rebuild the economy, underscoring the need for a deliberate strategy to mobilise domestic savings.
“Given the scale of infrastructure and capital projects that Zimbabwe is undertaking, there is a need to build long-term savings,” Mr Gwanyanya said, adding that these savings are typically provided by pension funds, insurance and capital markets.
He warned that the prevailing model of funding capital projects using short-term finance was not sustainable, as it exposed the economy to currency and price volatility.
“As such, just like most successful global economies, such as China and, closer to home, South Africa, there is a need to seriously consider rebuilding long-term savings,” he said.
“In infrastructure-model economies, long-term capital spanning more than 20 years is normally used for projects such as roads and dams.”
Financial analyst, Mr Malone Gwadu, said long-term savings constituted patient capital that is pivotal for real capital formation in any economy.
“Real capital formation in any economy, be it industrial re-tooling or infrastructure development, is largely capacitated by savings from individuals and institutions such as insurance, pension funds and capital markets,” he said.
He said these are domestic tools that are homegrown that aid national development.
Mr Gwadu noted that while Zimbabwe had made notable progress in financial inclusion, the next phase should focus on aligning inclusion towards savings rather than merely transactional and consumption-related usage of financial services.
“Financial products ought to be innovated to incentivise the banking public to save more,” he said. “For institutions, the policy framework needs to incentivise long-term saving, such as a stable currency to avoid hedging by companies through investing in hard assets, tax breaks for savings and tailored credit products for saving institutions such as back-to-back credit.”
Mr Gwadu said domestic savings should be the starting point before considering external financing, as this reduced vulnerability to external shocks and lowered a country’s global risk profile.
“Domestic savings also deepen local capital markets and ensure maximum economic participation of locals ahead of externals, which has a multiplier and accelerator effect on economic growth and development,” he said.
According to NDS2, enhancing savings mobilisation will strengthen the breadth, depth and inclusivity of the financial system, thereby supporting private sector development and sustainable economic transformation.
Central to this effort will be restoring confidence in long-term savings, particularly within the insurance and pension fund industry.
During the NDS2 period, the Government’s comprehensive strategy to revitalise the long-term savings market will focus on strengthening governance, transparency and accountability in the management of savings within insurance and pension funds.
The Government has also committed to rebuilding public confidence by resolving outstanding pre-2009 pension and insurance compensation cases, ensuring fair compensation to affected policyholders and pensioners.
In addition, innovative long-term investment products are expected to be introduced to diversify savings options and attract broader participation, including from the diaspora, which is increasingly viewed as a potential source of stable, long-term capital.
“To safeguard the integrity and stability of the savings system, the Government will enhance regulatory oversight and consumer protection while promoting sound corporate governance across financial institutions,” reads part of the NDS2 document.
“Financial literacy and awareness programmes will also be intensified to encourage a culture of savings and increase participation in formal long-term savings and investment schemes.”
Investment analyst, Mr Enock Rukarwa, said increased domestic savings play a critical role in reducing reliance on foreign financing, but cautioned that local resources alone might not be sufficient to meet Zimbabwe’s development needs.
“What is of key importance is whether what we are generating locally is sufficient to drive the desired level of economic development that we want as an economy,” he said.
“As much as our local market can support the economy, there is still a need for external support.”
He noted that experiences from other economies showed that while domestic markets played a critical role, complementary support from the external sector remained necessary.
“If there are initiatives that we can engage in to restore foreign support, that would be very critical for the economy,” Mr Rukarwa said.
He pointed to progress made under NDS1 in expanding financial inclusion, which now stands at more than 80 percent, as an encouraging foundation for the savings mobilisation drive under NDS2.
According to Mr Gwanyanya, the RBZ recently rolled out a clear and robust financial inclusion strategy to push financial inclusion to target levels of 90 percent by 2030.
He said given the effects of a high level of informalisation on the transmission mechanism of economic policies, policymakers have taken a keen interest in measures to reverse informalisation and drive financial inclusion.
Particle: “At the current level of about 10 percent of GDP, the level of savings is inadequate to provide investable capital to close the infrastructure gap as well as other capital projects which support the country’s aspirations of a prosperous upper middle-income economy.”-herald
