Agriculture, infrastructure, and energy projects dominate prescribed asset instruments

Staff writer

Harare, Projects in agriculture, infrastructure, agriculture and energy dominate the list of investments that were granted Prescribed Asset Status in the nine-month period to September 30, 2024.

At law, pension funds and insurance firms are required to invest at least 20% of their investment portfolio in prescribed assets to make the projects attractive, but the sector has been struggling to meet the requirements.

According to the Insurance and Pensions Commission (Ipec) Q3 2024 pensions report, NMB was granted a PAS to raise US$10 million and ZiG8 million to finance summer cropping while AFC raised US$35 million for winter cropping.

On infrastructure development, Lamcet is raising US$41 million to construct a five-star hotel while Dabuka Village is raising US$45 million to construct student accommodation and residential stands.

Okavango requires US$13 million for a solar energy project, while Tokwe Mkosi needs US$15.2 million for a hydro energy project.

According to the Ipec report, prescribed asset investments increased by 62.3%, from US$149 million on 30 September 2023 to US$241.83 million (ZWG 3.41 billion) as of the reporting date.

“The increase was driven by revaluation gains and new investments. The Commission continues to enforce compliance with approved instruments to ensure the industry meets the 20% regulatory threshold,” reads part of the report.

Ipec said during the third quarter of 2024, the Minister of Finance, Economic Development, and Investment Promotion granted prescribed asset status to five applications.

It said the approved prescribed assets offer the industry an opportunity to diversify its portfolio while supporting investments in projects that drive national growth and align with the National Development Strategy (NDS1).

Consequently, the industry is encouraged to invest in prescribed assets to meet the regulatory minimum requirement of 20% of total assets.

“The Commission would want to reiterate that it is the responsibility of the pension fund to do proper due diligence before investing pensioners’ funds in such various projects. Regular project performance monitoring by the fund in line with agreed investment terms remains important.”