HARARE – The finance ministry has acknowledged that it deliberately withheld loan repayments deducted from civil servants’ salaries over the past four months, a move it says was necessary to investigate widespread allegations of predatory lending by banks and microfinance institutions.
In a two-page press statement dated 24 December 2025, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said Treasury intervened after mounting evidence showed some payroll-linked lenders were charging exorbitant interest rates and violating regulations governing salary deductions.
“Over the past four months, Treasury has observed that there have been delays in the disbursement of payroll-deducted loan repayments to certain financial institutions,” Ncube said, adding that the delays were “the result of a deliberate and necessary intervention by Treasury” to address non-compliance by some lenders.
According to Treasury, investigations revealed that some institutions breached the Moneylending and Rates of Interest Act, the Microfinance Act, and regulations that cap loan repayments at 50 percent of a borrower’s net monthly salary.
In extreme cases, Treasury said, civil servants were left with “virtually no disposable income,” with loan deductions absorbing 100 percent or more of their earnings.
“These developments compelled Treasury to intervene promptly, in order to protect the well-being of public sector employees and ensure compliance with the law,” the statement reads.
Treasury insisted the withheld remittances were not a repudiation of government obligations, but a temporary measure to allow for a compliance audit of all active payroll-linked lenders, in collaboration with the Reserve Bank of Zimbabwe (RBZ) and other regulators.
“As of today, Treasury has resolved the remittance issues with the vast majority of participating financial institutions. Payments have resumed accordingly, following confirmation of regulatory compliance,” Ncube said, adding that outstanding cases remain under review.
However, the admission has drawn sharp criticism from economic analysts, who argue that the government’s approach raises serious concerns about governance, legality, and the protection of workers’ rights.
An independent analyst said while the intention to curb exploitative lending practices was understandable, the method employed was deeply problematic.
“Salary deductions are not government funds. They are the earnings of employees, deducted under contractual agreements with third-party lenders,” the analyst said. “For the government to withhold these funds without prior notice, consultation, or legal clarity is to interfere with private financial obligations and potentially expose civil servants to penalties, blacklisting, and reputational harm.”
The analyst noted that allegations of illegal interest rates and excessive deductions by lenders were not new, describing them as “an open secret for years,” and questioned why authorities had failed to act earlier through established regulatory channels.
“What is new and alarming is the government’s decision to act unilaterally, without transparency, and without a clear regulatory framework to protect both borrowers and lenders,” the analyst said.
The episode, they added, highlights a broader failure in Zimbabwe’s financial system, particularly the absence of a robust consumer credit regime.
“In a functional economy, such abuses would be addressed through financial regulation, legal enforcement, and institutional oversight, not through arbitrary withholding of funds,” the analyst said.
“The fact that the government had to resort to this measure is an indictment of its own regulatory inertia.”
Treasury, however, maintains that it remains committed to preserving the integrity of the salary-based deduction system and strengthening oversight to ensure ethical lending practices.
“Ethical and lawful lending practices are essential to safeguarding the financial security of Zimbabwe’s workforce and ensuring the long-term health of the financial sector,” Ncube said, urging financial institutions, civil servant unions and the public to support reforms aimed at creating a fairer and more transparent credit environment.
Analysts say the incident now places pressure on government to urgently establish a rules-based, transparent consumer credit market that protects workers from exploitation while respecting contractual obligations.
“Anything less,” the analyst warned, “is a betrayal of the very civil servants who keep the state machinery running.”
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