According to the two largest industry and commerce business groups in the country – Confederation of Zimbabwe Industries and Zimbabwe National Chamber of Commerce – the dramatic surge in the cost of borrowing tightened corporate credit conditions, raised production costs, and strained business investment. They are calling for the central bank to downshift to rate hikes between 80% and 100% so that borrowing costs do not rise so high that businesses must halt production. The World Bank also joined the chorus of concern that higher interest rates had crimped investment in the country. Higher borrowing costs also pushed down spending by households, adding to the disquiet over inflation and collapsing living standards. A new law barring health workers from going on strike for an extended period of time underscores how the government is choosing to react to the cost-of-living squeeze on household budgets.
SOURCE: THE CONVERSATION