Source: Contractors priced out as lending costs hit 50% -Newsday Zimbabwe HARARE, July 4 (NewsDay Live) – The construction sector is facing a mounting financing crisis, with contractors increasingly being priced out of the market by borrowing costs of up to 50% a year, threatening infrastructure development and economic growth, Zimbabwe Building Contractors Association (ZBCA) […] The post Contractors priced out as lending costs hit 50% appeared first on Zimbabwe Situation .
Source: Contractors priced out as lending costs hit 50%** -Newsday Zimbabwe**
HARARE, July 4 (NewsDay Live) – The construction sector is facing a mounting financing crisis, with contractors increasingly being priced out of the market by borrowing costs of up to 50% a year, threatening infrastructure development and economic growth, Zimbabwe Building Contractors Association (ZBCA) president Tinashe Manzungu has warned.
Industry leaders say that while the government has moved to reduce bureaucratic hurdles by scrapping some building permit requirements, the benefits of those reforms risk being undermined by soaring lending costs, which are limiting contractors’ ability to invest, expand and execute projects.
“The average cost of borrowing for contractors today extends up to 50% per annum, making credit prohibitively expensive,” Manzungu said.
“This has slowed sector growth, discouraged investment and limited contractors’ ability to scale operations.”
His remarks highlight a growing disconnect between Zimbabwe’s infrastructure ambitions and the financial realities facing the companies expected to deliver roads, housing projects, industrial facilities and public infrastructure.
At a time when the government is pursuing an ambitious development agenda, many contractors say they are being locked out of growth by lending rates that make long-term investment commercially unviable.
Industry executives say borrowing at rates approaching 50% significantly raises project costs, erodes profit margins and makes it difficult for contractors to secure working capital for new contracts.
For smaller firms, the situation is even more severe.
Many lack access to alternative sources of finance and are increasingly finding themselves unable to compete for larger projects that require substantial upfront capital commitments.
The result, according to industry players, is a sector operating below its potential despite growing demand for construction services.
The construction industry is widely regarded as a critical pillar of Zimbabwe’s economy because of its strong linkages with manufacturing, mining, transport, engineering and real estate.
Growth in the sector creates jobs, stimulates demand for locally produced materials and supports broader economic activity.
However, contractors warn that these benefits are increasingly being threatened by the high cost of capital.
The financing pressures come as authorities seek to accelerate investment through regulatory reforms designed to remove bottlenecks that have long delayed project implementation.
Government has eliminated certain building permit requirements in a move aimed at streamlining approvals and reducing administrative delays.
According to Manzungu, the reform could have a significant impact on project delivery timelines.
“The removal of certain building permit requirements is expected to reduce project timelines by 20% to 30%, cutting bureaucratic delays.”
The changes are expected to speed up project approvals, reduce compliance costs and improve efficiency across the construction value chain.
For years, developers and contractors have complained that lengthy approval processes increased costs and delayed investment decisions.
The reforms are, therefore, being welcomed as an important step towards improving the ease of doing business.
Yet industry leaders argue that regulatory efficiency alone will not unlock growth if contractors remain unable to access affordable finance.
While obtaining approvals may become easier, executing projects still requires capital, equipment, labour and materials — all of which depend heavily on access to reasonably priced funding.
“The sector needs both regulatory efficiency and affordable capital,” Manzungu said.
Without addressing financing constraints, contractors fear the country could struggle to realise the full economic benefits of the reforms.
The construction sector’s concerns also carry wider implications for the economy.
Zimbabwe faces significant infrastructure deficits across housing, transport, water systems, schools and industrial development.
Meeting those needs will require strong participation from local contractors capable of delivering projects at scale.
Industry executives warn that sustaining such participation will remain difficult as long as financing costs remain prohibitively high.
At the same time, Manzungu cautioned that efforts to accelerate project approvals should be balanced with measures that preserve quality and safety standards.
The warning reflects concerns that reducing administrative requirements should not come at the expense of proper oversight in a sector where quality failures can have serious economic and public safety consequences.
For now, contractors view the government’s permit reforms as a positive step.
However, they insist that the biggest obstacle to growth lies elsewhere.
Zimbabwe may be cutting red tape, but for many builders, the most significant barrier remains access to affordable finance.
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