Staff Writer

Zimbabwe’s pension funds and insurers could play a much bigger role in financing infrastructure, housing, industry and productive sectors if the right reforms are put in place, global pensions expert, Fiona Stewart from the World Bank has said.

Speaking at an Insurance and Pensions Symposium hosted by the Insurance and Pensions Commission (IPEC) last month, Stewart said insurance companies and pension funds are vital sources of long-term capital that can help bridge development financing gaps in emerging economies.

For Zimbabwe, where infrastructure deficits remain acute and long-term domestic capital is scarce, the message was particularly relevant.

The country faces persistent challenges in roads, power generation, water systems, health facilities and affordable housing.

At the same time, banks remain heavily reliant on short-term deposits, limiting their ability to fund long-gestation projects.

In such an environment, pension and insurance assets — by their nature long-term — are uniquely positioned to support national development.

Stewart said developing countries collectively face annual investment needs of about US$3.9 trillion, but current spending stands at only US$1.4 trillion, leaving a significant gap.

Institutional investors can help narrow this shortfall if policymakers create enabling conditions that support effective capital deployment.

“Insurance companies and pension funds can play an important role in boosting capital markets,” Stewart said, stressing that their role goes beyond preserving value for contributors and policyholders to also supporting broader economic growth.

Zimbabwe’s pension industry has historically struggled with trust deficits, inflation shocks and concerns over value erosion.

For many contributors, preserving retirement savings has become as important as growing them.

This makes Stewart’s emphasis on governance and prudent investment especially important.

She said strong governance systems are directly linked to better investment returns and stronger institutional resilience.

Key pillars include strategic planning, operational risk management, internal audit systems, fraud prevention and robust service standards for members.

For Zimbabwe, this suggests that strengthening governance at pension funds and insurers is not just a regulatory issue, but an economic imperative.

Better governance could allow institutions to confidently expand beyond traditional low-risk holdings such as bank deposits and short-dated Treasury instruments, which often fail to protect value in inflationary environments.

Stewart noted that portfolio diversification is critical to improving real returns and managing risk.

Globally, pension funds invest across a broad mix of listed equities, bonds, property, infrastructure, private markets and offshore assets. This diversified approach helps preserve long-term value while spreading risk.

In Zimbabwe, many pension funds remain concentrated in property and short-term money market instruments, partly because of market constraints and limited confidence in broader investment vehicles.

However, Stewart argued that countries need to expand available financial instruments if they want institutional investors to play a bigger developmental role. This includes corporate bonds, housing finance products, infrastructure instruments, listed securities and well-structured unlisted investments.

That is particularly relevant for Zimbabwe’s infrastructure ambitions.

Projects such as renewable energy plants, toll roads, dams, industrial parks and low-cost housing schemes all require patient capital. Pension funds and insurers could become anchor investors in such projects if risks are properly structured and governance standards are strong.

Stewart also stressed the need for sound financial infrastructure, including effective securities settlement systems, electronic trading platforms, custodian institutions, strong accounting and audit systems, and clear legal and regulatory frameworks.

Zimbabwe has made progress in deepening capital markets through the Victoria Falls Stock Exchange and policy efforts to broaden financial inclusion.

But market depth remains limited, and investment products suited to long-term institutional investors are still relatively few.

To fully unlock pension and insurance capital, Zimbabwe will need policy consistency, macroeconomic stability and credible reforms that rebuild confidence.

Stewart said lasting political commitment is essential for pension and capital market reforms to succeed. She said countries that act early to build funded pension systems and develop strong investment ecosystems are better placed to support sustainable economic growth.

For Zimbabwe, the opportunity is clear.

The insurance and pensions sector can become more than a passive custodian of savings. It can be a catalyst for industrialisation, job creation and infrastructure development.

But this will require more than rhetoric. Regulators, fund managers and policymakers must work together to improve governance, expand investment options, strengthen market institutions and restore trust in long-term savings.

If that happens, Zimbabwe’s pension and insurance assets could shift from simply being pools of capital to becoming engines of national transformation — delivering not only better returns for pensioners, but broader and more sustainable economic impact.