“A deliberate four-month audit has unmasked systemic violations of the Microfinance Act, reclaiming the livelihoods of public sector employees from predatory lenders.”
By Conrad Mwanawashe
ZIMBABWE’S Treasury has unearthed predatory lending practices by a well-knit syndicate that transformed the public payroll into a hunting ground, leaving civil servants in severe financial distress.
Contrary to recent media narratives suggesting a breakdown in public financial management or a “grand heist”, the recent four-month delay in remitting salary deductions by the Ministry of Finance, Economic Development and Investment Promotion was a deliberate and necessary intervention calculated to halt systemic non-compliance.
Treasury’s investigations unmasked a culture of flagrant regulatory disregard where lenders were found in direct violation of the Moneylending and Rates of Interest Act [Chapter 14:14] and the Microfinance Act [Chapter 24:29].
The audit exposed three primary breaches:
- Exorbitant Interest Rates: MFIs and certain banks were charging usurious rates far beyond legal thresholds.
- Violations of the In Duplum Rule: In a direct breach of Zimbabwean common law, lenders permitted accumulated interest to exceed the original principal debt.
- Breaching Repayment Caps: While regulations strictly cap loan repayments at 50% of a borrower’s net monthly salary, investigators found civil servants left with zero disposable income, as lenders illegally absorbed 100% of their earnings via the Salary Service Bureau (SSB).
The Ministry maintains that withholding remittances was never an act of repudiating government obligations. Instead, it was a targeted audit measure designed to freeze the flow of funds and force lenders to justify their terms.
“These delays, however, do not reflect any breakdown in public financial management systems. Rather, they are the result of a deliberate and necessary intervention by Treasury, executed in the context of an urgent and comprehensive investigation into widespread non-compliance by some lenders.
“This investigation was triggered by mounting evidence of exorbitant interest rates being charged by certain microfinance institutions and banks,” Finance Minister Mthuli Ncube said in a statement.
By halting the automatic deductions, Treasury broke the cycle of exploitation that had long abused the SSB framework.
“This situation has created significant social and economic challenges for affected workers, including financial distress, limited access to basic household needs and heightened vulnerability to hardship.
“These developments compelled Treasury to intervene promptly, in order to protect the well-being of public sector employees and ensure compliance with the law.” Minister Ncube added.
“Treasury remains firmly committed to promoting responsible lending and upholding consumer protection standards across the financial sector.
“The temporary withholding of remittances was a targeted measure intended to allow for a full-scale compliance audit of all active payroll-linked lenders, as well as to facilitate regulatory engagement with the Reserve Bank of Zimbabwe (RBZ) and other oversight bodies on the appropriateness of prevailing loan terms and interest rates.”
This intervention is already yielding results.
” 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. As of this date, only two institutions remain under active review and discussions are ongoing to address the outstanding concerns in good faith and within the framework of the law.
“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,” the Minister added.
As of December 24, 2025, the “sweep” is nearing completion but two specific institutions remain under active review, with ongoing discussions to address outstanding legal and ethical concerns.
Moving forward, the Ministry is partnering with the Reserve Bank of Zimbabwe (RBZ) and the Insurance and Pensions Commission (IPEC) to permanently strengthen oversight.