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Business Reporters
THE Reserve Bank of Zimbabwe (RBZ) successfully launched its new ZiG Denominated Term Deposit Facility (ZiGDTDF), allotting ZiG331,6 million in the 90-day bill auction held on Thursday, in a move the central bank says will establish a benchmark interest rate floor and strengthen the monetary policy transmission mechanism.
While total bids of ZiG391,6 million represented 78,32 percent of the ZiG500 million on offer, the RBZ allotted 84,68 percent of all bids received — a sign of strong take-up among participating banks, building societies, deposit-taking microfinance institutions, corporates and individuals.
The weighted average rate of allotted bids came in at 10,98 percent, well above the prescribed minimum savings and time deposit rates of 5 percent and 7,5 percent, respectively.
Accepted bids ranged from a high of 25 percent to a low of 10 percent, demonstrating healthy price discovery in the nascent market for the instrument.
In remarks ahead of the auction results, RBZ Governor Dr John Mushayavanhu had positioned the ZiGDTDF as a “game- changer” that would push banks to offer rates above the deposit facility rate to attract savings and time deposits, thereby ensuring positive real returns and supporting a domestic savings culture.
“The ZiGDTDF is a game-changer as it will push banks to offer rates above the deposit facility interest rate to attract savings and time deposits,” he said.
Dr Mushayavanhu said the instrument was designed to modernise monetary policy and strengthen its transmission through the economy. The 90-day bills are tradable, hold prescribed and liquid asset status, and are eligible as collateral for Reserve Bank accommodation.
The RBZ confirmed that the interest rate will be market-determined through the auction system to support the development of a proper yield curve.
A yield curve is simply a line that connects interest rates on bonds that have the same credit quality, but different maturity dates, for example, 90-day, one-year and five-year government bills.
Normally, the curve slopes upwards: The longer you lend your money, the higher the interest rate you receive. Without a reliable yield curve, banks cannot scientifically price loans or mortgages, and long-term saving becomes a gamble.
With one, a central bank can signal its credibility and guide expectations across the entire economy. The central bank described the timing of the facility as “perfectly right”, leveraging current macroeconomic stability to advance one of the key conditions precedent for transitioning to a monocurrency — anchoring the use of ZiG for both transaction and saving purposes.
“The timing is perfectly right and was determined after taking into account a confluence of factors and the need to leverage the obtaining macroeconomic stability,” Dr Mushayavanhu said.
He said the ZiGDTDF was central to the Reserve Bank’s efforts to meet the conditions precedent for transitioning to a monocurrency system.
“One of the primary conditions precedent is to ensure increased use of ZiG for both transaction and saving purposes. In this regard, the ZiGDTDF is expected to anchor the use of ZiG for saving purposes in the medium term,” he said.
Dr Mushayavanhu added that the ZiGDTDF was the open market operations (OMO) instrument that would complement the existing Non-Negotiable Certificate of Deposit (NNCD).
OMO refers to the buying and selling of government securities (like the new 90-day ZiG bills) in the open market by a central bank to either increase or decrease the amount of money circulating in the economy.
“This is the OMO instrument we announced in the February Monetary Policy Statement. It will complement the NNCD. It is meant to achieve a number of things: to enable economic agents to begin to use ZiG as a store of value,” he said.
“Despite us prescribing interest rates for savings and time deposits to banks, we are not seeing much traction on the part of banks.
“We also need to start the process of defining a yield curve, and the instrument will assist in controlling reserve money by mopping up excess liquidity, although this is not an issue at the moment. It will run alongside the existing NNCD OMO instrument.”
On the question of accessibility, Dr Mushayavanhu said the minimum investment thresholds had been calibrated against actual deposit data held by the Reserve Bank.
“There is quite a sizeable number of individuals and corporates with funds in the banking system well above the set minimum investable thresholds,” he said.
He said individuals who did not meet the threshold independently could participate through collective investment arrangements.
“Individuals can pool resources through asset and fund managers, with a view to collectively invest in the instrument,” Dr Mushayavanhu said.
Investment analyst Ms Rudo Ndlovu described the inaugural auction outcome as a validation of the central bank’s policy direction.
“What we are witnessing is the construction of a ZiG yield curve in real time,” she said.
“A weighted average allotment rate of just under 11 percent on risk-free, 90-day ZiG paper is a landmark data point for the market. It gives investors, lenders and depositors a credible anchor from which to price ZiG-denominated risk, and that is enormously valuable for the long-term deepening of our domestic financial markets.”
Ms Ndlovu said the RBZ’s decision to reject a portion of the bids received was a significant signal of institutional discipline.
“The RBZ’s selective allotment, accepting only ZiG331,6 million of the ZiG391,6 million in bids, demonstrated an issuer operating from a position of monetary strength rather than fiscal desperation. That discipline is precisely what separates sound monetary management from the mistakes of the past,” she said.
Economist Dr Shaun Chikovore said the ZiGDTDF represented a cornerstone of Zimbabwe’s renewed commitment to reserve money discipline and exchange rate sustainability under the 2026 Monetary Policy Statement.
“The RBZ has introduced an instrument that simultaneously achieves multiple monetary policy objectives,” he said.
“It sterilises excess liquidity, it anchors inflation expectations, and it begins to build the institutional infrastructure of a functioning ZiG capital market. These are not small achievements.”
Dr Chikovore expressed confidence that market participation would deepen as familiarity with the instrument grows.
“Zimbabwe’s financial sector is sophisticated and adaptive,” he said.
“As the ZiGDTDF establishes a track record, and as its prescribed asset and liquid asset status is fully operationalised by market participants, we should expect to see the coverage ratio move decisively above 100 percent in subsequent auctions. The trajectory is firmly in the right direction.”
The ZiGDTDF forms part of the Reserve Bank’s broader open market operations toolkit as it transitions towards indirect monetary policy management.
The central bank said the facility was expected to support positive real returns and facilitate the development of money and capital markets in support of the National Development Strategy 2.
