Over the past few years Zimbabwe’s financial market has been pre-dominated by the United States Dollar as the preferred legal tender among the other currency such as the ZIG, Rands, Euro, Yen etc prescribed in the RBZ Act under multi-currency system. As a result the USD has been the most preferred loan option. Borrowing in USD offers borrowers stability and certainty unlike with the local currency which has an ever fluctuating market rate due to inflationary pressure.
Benefits of USD Loans
- Stability against local currency Depreciation – The USD has proven to remain stable over the years in the Zimbabwe, unaffected by inflation rates that resulted in the scrapping of of at least 2 local currencies the Bond Note & $RTGs. This has made the USD loans a reliable loan option insuring that businesses and individuals who have borrowed are not victims to inflation risks or government policies which results in currency depreciation.
- Below is an illustration of how an overnight government policy change affected result in the depreciation of the value of a ZIG LOAN by 44% in comparison with the USD Loan that remained stable
| Date | USD LOAN | Bank Rate | ZIG LOAN |
| 26/09/24 | $1000 | $1 = 14 (Zig) | 14 000 (Zig) = $1 000 |
| 27/09/24 – Rate Change | $1 = 25 (Zig) | ||
| 28/09/24 | U$1 000 | $1 = 25 (Zig) | $14 000 (Zig) = $560 |
- Access to large Amounts – The stability and predictability offered by the USD over the past decades compared to the local currency has prompted most financial institutions to prefer offering large loans in USD. Institutions that offer loans can allow borrowers to access loans as high as 10 times their salary if they are borrowing in USD as they have trust in the currency’s stability .
- Competitive Interest Rates – The cost of borrowing for USD loans is usually market competitive with rates ranging from as low as 10% to 20%, thus reducing the cost of borrowing . On the other hand borrowing in the local currency can result in a very high interest rate which could range from 30% to 50% as lenders are taking precautionary measures against the unstable currency.
Where to get USD Loans in Zimbabwe
In Zimbabwe lending business is regulated by the Reserve bank of Zimbabwe thus all lenders should be registered by under the MONEYLENDING AND RATES OF INTEREST ACT. Institutions must have a moneylenders’ licences, below are some of the institutions authourised to offer USD loans :
- Commercial Bank
- Banks are the primary providers of USD loans and offering loans that range from personal, business and mortgage loans. They usually offer these loans to those in formal sectors that is the formally employed and the formal businesses. The borrowers should be account holders or reputable businesses with a traceable track-record. The borrowing capacity is usually unlimited and with low interest rates that can be as low as 7% per month. Som examples of leading commercial banks include CBZ, CABS , FBC Bank, Ecobank and NMB Bank
- Microfinance Institutions
- These usually provide loans to those who do not qualify for bank loans these are usually individuals and small businesses in the informal sector. The loans are usually short term USD loans with flexible payment terms. However the down side is that the interest rates are usually high ranging from 15% to 20% per month. Some Key Microfinance institutions include MoneyMart, GIF, GoldenKnot, Lenderspark and MountFin