Government urges pensions industry to increase uptake of prescribed assets


Government urges pensions industry to increase uptake of prescribed assets

Staff Writer

Harare, Government says it is keen to see the pension’s industry redirect resources that deepen the financial services sector as it urged the sector to increase uptake in prescribed assets.

The insurance and pensions industry has been saddled by investing in prescribed assets pushing to the fore the narrative that the performance of these narratives were worrying in a volatile economy like Zimbabwe.

But chief communications director in the Ministry of finance, Clive Mphambela told a recent ZAPF annual conference that the sector should not see Prescribed Assets as value eroding , rather they should harness the many opportunities in the various sectors of the economy.

“In addition to the traditional Government and quasi-Government instruments, Treasury is approving prescribed assets in privately issued instruments for projects that align with our developmental aspirations under NDS1.

“There are opportunities in agriculture, mining, infrastructure and indeed in the innovation space and I urge pension funds and insurers to harness such opportunities, including projects that support exports for foreign currency generation.

“We are particularly keen to see the Pension fund industry in Zimbabwe begin to direct resources to investments that also deepen the financial sector such as the Venture Capital industry, the asset finance /leasing industry, investment banking and the ICT sector,” he said.

Mphambela said having interacted with pension funds he got the impression that prescribed Assets are considered by some players as a form of value erosion for pension funds.

However, he said the legal requirement for prescribed assets was informed by a number of key pillars including the fact that  the world over, insurance companies and pension funds harness long-term savings for deployment to various sectors of the economy through financial intermediation.

He added the fact that the funds are arguably the largest source of domestic savings after taxes and policyholders and pension scheme members were expected to benefit directly and indirectly from the investments of a developmental nature.

“Whilst the contemporary discussions in the investment profession relate to the need to embrace impact investing and ESG, these concepts are the ones that underpin the issue of prescribed assets.

“The only difference is that ESG and impact investing is not legislated in some countries. Having said that, my key message is that we should not consider prescribed assets as value eroding.” he said.