By Bothwell Nyajeka
THE past weeks have been nothing short of a roller coaster for businesses and their boards. In a space of less than 24 hours, directors were confronted with two major developments: the monetary policy statement announced by the Reserve Bank of Zimbabwe (RBZ) governor on February 27, 2026 and the outbreak of war in Iran on February 28, 2026.
For many directors, these events unfolded just as they were reviewing board packs and financial reports for the year ended December 2025. Unsurprisingly, the combination of domestic monetary policy changes and global geopolitical tensions has introduced significant uncertainty into boardrooms.
Reflecting on the RBZ monetary policy statement and the conflict in the Middle East, it is clear that both developments carry immense implications for business risk management and corporate strategy.
From a local perspective, the RBZ’s monetary policy statement brought both encouraging signals and new challenges.
On the positive side, the reduction in bank charges is expected to lower operational costs for businesses. This may also encourage companies to make greater use of formal banking channels, which could improve bank liquidity.
The extension of the Targeted Finance Facility (TFF), into 2026 will also provide some relief to companies in the productive sectors of the economy. The facility, which was introduced in January 2025, has been increased by an additional ZiG 600 million, bringing the total TFF to ZiG 1,2 billion. The TFF is disbursed through banks and is aimed at providing affordable working capital funding to the productive sectors, mainly agriculture and manufacturing.
Another welcome development is the reduction in inflation. Lower inflation contributes to price stability, making it easier for businesses to plan ahead, manage costs and develop longer-term strategies.
However, not all the news was positive. The RBZ maintained the bank lending rate at 35 percent, meaning the cost of borrowing will continue to weigh heavily on businesses. High financing costs erode profitability and discourage investment, particularly for companies that rely on debt to finance operations or expansion.
Additionally, the tight supply of ZiG means liquidity in the market is likely to remain constrained. With limited ZiG circulating in the economy, banks may have less capacity to lend. As a result, companies may continue struggling to access working capital financing, placing additional pressure on business operations.
While directors were still digesting these domestic policy signals, events on the global stage added another layer of complexity. The outbreak of war in Iran has already begun to disrupt global oil supply chains; and may significantly affect some of the measures announced by the reserve bank.
By the middle of last week, fuel prices, as announced by the Zimbabwe Energy and Regulatory Authority, had risen by about 20 cents per litre. This increase is expected to have ripple effects across the economy, as higher fuel prices typically translate into increased production and transportation costs.
These cost increases are likely to feed into inflation through higher manufacturing and distribution expenses. In addition, the prices of key imported inputs are also expected to rise.
For corporate boards, the combination of domestic monetary tightening and global supply shocks underscores the need for proactive risk management.
In response, directors should insist that management teams assess the company’s exposure to borrowing costs and the impact of tight ZiG liquidity on financial performance.
Companies may need to explore alternative financing models (including accessing the TFF) that reduce reliance on expensive borrowing.
At the same time, strong cash generation will become increasingly important. Businesses should not focus solely on accounting profits but must also pay close attention to how those profits are converted into cash. Effective working capital management and careful margin control will be critical.
In addition, boards should also request management to evaluate exposure to global market fluctuations. Companies may need to explore alternative supply chains, diversify logistics routes, and reduce dependence on imported inputs. Investing in energy-efficient technologies could also help mitigate the impact of rising fuel prices by reducing overall consumption.
In my opinion, as geopolitical tensions escalate, boards must shift from passive oversight to proactive risk management and agile decision-making processes to ensure that companies adapt to confront the emerging threats with speed.
It is also imperative that, where the impact of the risks is perceived to be material, directors should give a little more focus on stakeholder communication and engagement. This calls for the crafting of a situation specific, coherent, transparent narrative for investors, employees, and customers, explaining the impact and how the company is addressing the risks. This is crucial for maintaining stakeholder confidence during this period of increased uncertainty.
In times such as these, the role of directors becomes even more critical. The events of the past weeks serve as a reminder that business resilience depends not only on financial performance but also on the ability to anticipate risk, adapt strategies and maintain strong oversight in a rapidly changing environment.
The critical role of directors in the current environment means that, as the stewards of the company’s long-term survival, shareholders expect them to turn chaotic external events into managed risks, and in some cases, identify strategic opportunities for growth or restructuring.
Nyajeka is a Chartered Accountant and business leader. He has vast experience as a corporate executive and has sat on various boards in Zimbabwe, Botswana, South Africa and Uganda. He is currently chairman of ACR Solutions and is also a seasoned trainer and facilitator for the Institute of Directors Zimbabwe (IoDZ). For board advisory, executive coaching, leadership development and business turnaround consulting. Email him on: bnyajeka@acr4solutions.com