Bongi Khumalo
Treasury says Zimbabwe is setting up a US$500 million El Niño protection fund to prepare for potential drought during the 2026/27 agricultural season.
Addressing a virtual press conference at the ongoing 2026 International Monetary Fund (IMF) and World Bank Annual Meetings, Permanent Secretary in the Ministry of Finance, George Guvamatanga said the fund will be split evenly between cash reserves and physical grain stock.
Guvamatanga added that the government is building a US$250 million cash reserve alongside US$250 million in strategic grain stocks, including maize, wheat, and small grains procured directly from local producers.
“We have been buying grain, small grains, maize, and wheat from local farmers and we expect by the end of the year that we will be sitting on a total El Niño protection fund of half a billion,” he said.
“But I need to be very clear here that of the half a billion, US$250 million is cash and US$250 million will be grain, so that will give us a very strong start into the year, but we will also make further provisions in the 2027 budget for further funding to support the adverse impact that will be brought forward by the El Niño phenomenon.
“But we think we are very much prepared this time around to deal with it depending on how severe it will be,” he added.
Treasury plans to make further fiscal allocations in the 2027 national budget to cushion the country against lingering adverse climate impacts.
As part of broader structural reforms, Treasury is targeting a long-term revenue composition of 90% tax revenue and 10% non-tax revenue by 2030.
Finance Minister, Mthuli Ncube, said the cash component would provide authorities with resources to respond to emerging needs from the beginning of next year, complementing allocations to be made in the 2027 National Budget.
“Maybe just to add on the acquisition of grain, but on the broader El Nino response, we want to make sure that as we go into the 1st of January next year, we have about US$250 million in terms of back pocket that we will then utilise to respond to the El Niño phenomenon,” he said.
The announcement comes as Southern Africa faces recurring weather extremes driven by the El Niño-Southern Oscillation phenomenon.
Severe droughts across the region have repeatedly disrupted rain-fed farming, destroyed cereal harvests, and caused widespread hunger, placing heavy pressure on state finances.
Previous El Niño episodes severely cut national maize production, forcing Zimbabwe to buy costly food from abroad and launch emergency social protection programs to help millions of vulnerable families.
The Minister said Zimbabwe’s economy is projected to grow by 3,5% next year despite the threat of El Niño.
“The Zimbabwean economy is growing robustly. Even with El Niño threatening us, we still expect a growth rate of 3,5 percent, which is even higher than what we experienced in 2024 when we had a similar climate shock. Every sector is doing well, whether looking at manufacturing, agriculture, mining and so forth,” Ncube said.
Climate change has increased how often and how hard these dry spells hit Southern Africa, forcing Treasury to shift from reactive disaster spending to proactive financial planning.
The dual structure of the buffer, combining cash with physical food supplies, is designed to make food available immediately while giving the government the money it needs to fund emergency relief, support irrigation systems, and buy extra food if the weather gets worse.
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