Source: ‘Companies absorb Middle East war cost drivers, keep prices steady’ – herald
Martin Kadzere
Industry and Commerce Minister Mangaliso Ndlovu has said the prices of most basic commodities in Zimbabwe have remained relatively stable despite cost pressures from surging fuel prices triggered by the ongoing Middle East crisis.
Speaking at a dialogue on geopolitical risks hosted by a regional economic think tank, Africa Economic Development Strategies (AEDS), at the Rainbow Towers earlier today, Minister Ndlovu noted that most businesses have absorbed the rising costs and not passed them on to consumers, including those in logistics-heavy sectors.
Minister Ndlovu highlighted that the Government’s monitoring of a 14-product “basic basket” shows minimal price movement across the board.
“Most of these increases have been absorbed, prices have remained relatively the same,” said Minister Ndlovu.
However, the public transport sector has seen a “disproportionate increase.”
This trend is driven by the fact that fuel represents the most significant cost component in their operations.
Since the US and Israel launched military operations against Iran, Zimbabwe—which imports a third of its energy from the Middle East—has seen petrol prices surge by 43 percent and diesel prices rise by 35 percent.
To keep fuel prices accessible, the Government has implemented strategic tax relief.
While acknowledging the vulnerabilities exposed by global geopolitical shifts, Minister Ndlovu challenged local industry players to adopt an “inward-looking” approach to mitigate external shocks.
“A crisis should really drive innovation,” Minister Ndlovu said. “We need to talk about what should be the success story post this crisis.”
He suggested that citizens must adopt carpooling to reduce fuel expenses, while also emphasising the need for retrofitting and improved energy efficiency.
Furthermore, he noted it is time to embrace electric vehicles (EVs) — given their currently low adoption rates — while simultaneously boosting investment in EV charging infrastructure.
He pointed to the post-COVID-19 era as a success story for Zimbabwe, noting that the pharmaceutical sector saw the number of local producers double as the country sought to reduce its reliance on imports.
Minister Ndlovu urged other sectors to emulate this growth by developing local solutions to global supply chain disruptions.
During the question-and-answer session, a participant urged the Government to provide tax incentives for the importation of EV semi-knocked down kits and solar charging infrastructure.
The participant also advocated for the use of alternative fuels, such as pure ethanol and biodiesel, to reduce reliance on traditional petrol and diesel.
Speaking at a same policy dialogue, the Reserve Bank of Zimbabwe (RBZ) reaffirmed its commitment to a “back-to-basics” monetary policy framework, crediting its recalibrated policy for a sharp decline in annual inflation and the stabilisation of the domestic currency, the ZiG.
RBZ director Dr Nicholas Masiyandima, representing the central bank governor Dr John Mushayavanhu, unpacked the 2026 Monetary Policy Statement (MPS), describing it as a hybrid framework designed to restore policy credibility and ensure long-term price stability.
Dr Masiyandima emphasised that the central bank’s primary preoccupation is now the preservation of value through disciplined money supply management.
“We coined it as a recalibrated monetary policy framework . . . because we felt at the time that we were actually getting back to basics in terms of what the monetary policy should be and what it should entail,” he said.
He noted that the ‘back to basics’ refocus was essential for creating an environment conducive to normal business operations.
“The credibility of the policy is very, very important, because it actually affects expectations, which are key in terms of aggravating inflation outcomes,” said Dr Masiyandima.
A key pillar of the 2026 MPS is the aggressive accumulation of gold and foreign currency reserves.
Zimbabwe foreign currency reserves have surged from US$276 million in April 2024 to US$1.2 billion by December 2025.
The growth has significantly bolstered the country’s import cover, rising from a precarious 0,3 months to 1,5 months over the same period.
“Our ZiG is backed by gold as well as foreign currency reserves. That was actually necessary to clearly signal commitment to the public that gone are the days when money supply would be issued and supplied in abundance,” he said.
Dr Masiyandima highlighted that “high-powered money” (reserve money) is now covered more than six times by these reserves, a move intended to “walk the talk” regarding the restriction of liquidity.
The impact of these measures is most visible in the inflation profile. Domestic currency annual inflation, which stood near 300 percent in April 2024, has trended downward to its current level of 3,8 percent.
Addressing scepticism regarding the durable exchange rate stability, Dr Masiyandima argued that the narrowing of the parallel market premium — maintained within a 20 percent range — proves the stability is not “artificial”.
“When it (the premium) is stable, it also indicates that even the parallel exchange rate itself is not running away as it used to be before the implementation of the 2024 MPS,” he said.
Dr Masiyandima defended the RBZ’s decision to maintain the bank policy rate at 35 percent, despite a significant drop in inflation, arguing that interest rate adjustments must follow a “lag” to ensure economic stability is sustained.
He noted that while there have been public “outcries” for a bank policy rate reduction in line with falling inflation, the central bank is prioritising the prevention of a premature reversal of gains, especially given volatile global factors such as Middle East tensions.
He reiterated that the transition to a ZiG-only mono-currency system will no longer follow a fixed deadline but will instead be determined by specific economic milestones.
Dr Masiyandima clarified that the Government and the central bank have adopted a “conditions-precedent” approach, ensuring the transition only occurs once the economy achieves structural resilience.
According to the RBZ, several critical macroeconomic benchmarks must be met and sustained before the country fully exits the multi-currency regime:
The transition requires long-term macroeconomic stability, specifically characterised by single-digit inflation.
While Dr Masiyandima noted that current inflation has already trended downward significantly, the stability must be proven durable.
A major condition for the shift is the accumulation of foreign currency reserves. While reserves have grown to cover 1,5 months of imports (up from 0,3 months in 2024), the bank is targeting a robust buffer of 6 months before a full transition is triggered.
The bank aims to eliminate foreign exchange “disaggregation.”
While the current “Willing-Buyer, Willing-Seller” (WBWS) system is functioning, Dr Masiyandima indicated that future Monetary Policy Statements will introduce refinements to further improve the efficiency and effectiveness of the foreign exchange market.
He said the core objective of the measured transition is the protection of US dollar denominated financial assets.
By pegging the move to “outcomes” rather than a “cut-off date,” the bank intends to build market confidence and ensure that the ZiG is fully supported by the underlying strength of the national balance sheet.
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