The recurrent cement shortages in Zimbabwe, which have intensified through 2024 and into 2025, are routinely interpreted as signs of an “economic recovery” or a “construction boom.” While these explanations contain elements of truth, they are ultimately superficial and misleading.
By Brighton Musonza
A deeper examination of the forces driving cement demand reveals a far more structural and troubling reality: these shortages are the outward expression of chronic financial repression, distorted patterns of capital allocation, and the near-total absence of viable, low-risk stores of value within the Zimbabwean economy.
The Real Sources of Liquidity in a Dollarised-yet-Repressed Economy
Zimbabwe operates under a highly unusual monetary arrangement. Although formally dollarised since 2019, the economy remains subject to persistent foreign-exchange controls, periodic reintroductions of local-currency instruments such as the ZiG, and a banking sector that provides negative real deposit rates—both in terms of official inflation and, more dramatically, when measured against depreciation in the parallel exchange market.
In this environment, surplus liquidity does not arise from normal economic channels such as corporate profitability or bank-driven credit creation. Instead, it is generated largely through three quasi-informal but highly cash-intensive streams:
- Artisanal and small-scale gold mining, including significant leakages bypassing Fidelity Printers & Refineries
- Cross-border trading and commodity smuggling, particularly involving fuel, minerals, and agricultural produce
- Diaspora remittances, much of which flows directly into informal networks rather than the formal banking system
These activities inject substantial amounts of US-dollar cash directly into households, micro-entrepreneurs, and informal syndicates—economic agents who face a severe shortage of viable, inflation-proof investment options.
The Collapse of Traditional Safe Assets and the Flight to Concrete
In a normal financial system, surplus liquidity would be absorbed by government securities, corporate bonds, equities, or bank deposits offering positive real yields. In Zimbabwe, by contrast:
- Treasury bills and bonds are scarce and offer yields well below expected inflation and exchange-rate risk.
- The Zimbabwe Stock Exchange is shallow, volatile, and dominated by a handful of counters, with investors wary of settlement and governance risks.
- Bank deposits offer structurally negative real returns, and repeated bank failures (2004, 2019–2021) have severely eroded public confidence.
In the face of this institutional vacuum, economic actors—from gold buyers to households supported by remittances—have converged on a defensive investment strategy: converting surplus USD cash into physical structures capable of generating rental income.
Residential stands in high-density suburbs, peri-urban cluster housing units, shop fronts, and rural business centres have effectively become the informal equivalent of government bonds. The popular phrase captures this logic clearly:
“building something chinondipa rent”—building something that pays me rent every month.
Here, cement becomes the critical input into Zimbabwe’s de facto store-of-value system.
Demand Forecasting Failure in a Distorted Market
Zimbabwe’s three major cement manufacturers—PPC Zimbabwe, Sino-Zimbabwe Cement, and Khayah Cement—continue to base production and import strategies on conventional indicators: historic sales patterns, official GDP forecasts, and anticipated public-sector infrastructure spending.
This approach repeatedly fails to capture the most important driver of actual demand: the massive, defensive, liquidity-absorbing private construction activities driven by financial repression.
Thus, when inflows from gold mining, remittances, or informal trade increase, private actors quickly convert cash into building materials—pushing cement demand far beyond installed clinker capacity or available imports. Retail prices on the parallel market have reached US$25–30 per bag, levels justified by the superior returns cement delivers when deployed in rental property construction relative to any formal financial asset available domestically.
Policy Implications: Cooling an Overheated Sector Without Killing Growth
Zimbabwe’s construction sector is not simply expanding; it is overheating—and doing so in a highly inefficient manner. Capital that could be directed towards manufacturing, export agriculture, or renewable energy is instead being absorbed by low-productivity rental housing and small retail structures, many of which may face high vacancy rates once the current liquidity surge fades.
This presents the Minister of Finance, Professor Mthuli Ncube, with a difficult but essential task for the 2026 National Budget and subsequent fiscal policy measures.
Introduce measured macro-prudential restraints on construction activity
- Temporarily raise stamp duties or capital-gains taxes on second and subsequent property transfers executed within short holding periods.
- Introduce phased increases in property rates on incomplete or speculative structures to discourage land banking and reduce pressure on cement and steel.
Create alternative, safe, liquid, USD-denominated saving instruments
- Issue 3–7-year infrastructure bonds on the Victoria Falls Stock Exchange (VFEX), offering 6–8% dollar-denominated yields backed by toll-gate or electricity-tariff revenue streams.
- Permit pension funds and insurance companies to channel a portion of their portfolios into such instruments to deepen market participation.
Channel construction into nationally productive areas
- Accelerate implementation of the national housing policy through public–private partnerships offering serviced stands and mortgage financing at scale.
- Provide tax incentives for institutional build-to-rent schemes rather than continued reliance on fragmented individual landlords.
Strengthen cement-supply resilience
- Expedite approvals for new clinker capacity—such as the proposed Sino-Zimbabwe and Livetouch Investments expansions.
- Negotiate medium-term cement import quotas within SADC and AfCFTA frameworks to cushion seasonal shortages without undermining local producers.
Conclusion
Zimbabwe’s cement shortages are not evidence of robust economic recovery. They are instead a stark warning sign of more fundamental vulnerabilities: chronic financial repression, an absence of credible, yield-bearing savings instruments, and an economy increasingly dependent on informal USD liquidity.
Unless policymakers confront these structural issues directly, the country will continue to channel scarce foreign exchange into concrete structures—many of them incomplete—while dynamic, high-growth sectors are starved of the investment they urgently need.
The challenge for the 2026 Budget is therefore not to celebrate a misleading “construction boom,” but to cool it, redirect it, and—most importantly—offer savers a more credible hedge than yet another unfinished flat in Mabvuku.
