Government faces US$12.65m bill as guaranteed private-sector loans go unpaid
Policy Watch
The Zimbabwean government faced potential claims of US$12.65 million and ZiG2.63 million at the end of 2025 after borrowers whose loans it guaranteed failed to repay banks, according to the 2025 Annual Public Debt Bulletin.
The non-performing guarantees involved agricultural, flower-growing and steel-manufacturing businesses whose loans were extended by CBZ Bank and NMB Bank.
The largest exposure was US$11.18 million owed by Steel Makers Pvt Ltd to CBZ. The facility was called up in 2025, but litigation was stopped after the company indicated that it was seeking to raise equity. The company was paying US$100,000 under a bridging arrangement, but the bulletin said there had been no progress on the proposed equity raise.
Other defaulting facilities included a US$500,000 loan to Shumba Tafari Pvt Ltd, whose chilli outgrowing project failed after the loss of its market and contract. CBZ was proceeding with litigation.
New Africa Agri Pvt Ltd had a US$240,000 facility after its wheat crop failed because of excessive drought. The bank was considering litigation.
A loan guaranteed for Forest Lodge Flowers Pvt Ltd had an outstanding balance of ZiG230,000. The company’s farming operations had collapsed, and it was facing insolvency and a winding-up order. NMB Bank was pursuing legal recovery of the debt.
The government also had an outstanding guarantee claim of ZiG2.63 million linked to maize and soya farmers under the 2021/22 programme. CBZ was pursuing the farmers, with a recovery rate of 68% recorded.
The guarantees were issued to support agricultural and industrial activities, but became a potential government liability when the borrowers failed to meet their obligations.
If the guarantees are called up and cannot be recovered from the borrowers, the government may have to settle the debts with public funds. The bulletin says Treasury monitors guarantees to prevent them from being called up and to limit possible pressure on the fiscus.
The report does not state that the government had paid the full US$12.65 million and ZiG2.63 million by December 2025. It records the amounts as non-performing guarantees and outlines recovery action by the banks.
The defaults highlight the risk to taxpayers when government guarantees private-sector borrowing: projects may receive funding, but the state remains exposed when the businesses fail or cannot repay.
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