Zimbabwe: Insurance Firms Invest $800m in Prescribed Assets

Aug 11, 2017 | Financial Gazette; All Africa

The insurance and pensions industry has invested nearly $1 billion in prescribed assets in the last six years, as they sought to comply with the country's legislation on portfolio investments.

Pension funds are required by law to invest at least 10 percent of their portfolio in prescribed assets, while life and funeral assurance companies are required to invest 7,5 percent of market value of the total adjusted assets in prescribed assets. Short-term insurance companies are required to invest five percent of their funds in prescribed assets. Prescription of assets is done by the Ministry of Finance and Economic Development in a bid to mobilise funds for the development of infrastructure projects. However, institutions that wish to get prescribed asset status on their money market instruments apply through the Insurance and Pensions Commission (IPEC). IPEC said it had approved several applications for investments in prescribed assets from 2010, a year after the country ditched its domestic currency for a multiple currency regime, to 2016. "Between 2010 and 2016, IPEC approved prescribed assets applications worth more than $800 million covering various sectors of the economy ranging from housing, energy, food security and other infrastructure development projects," Tendai Karonga, the IPEC commissioner, told an insurance and pensions indaba in the capital last week. Money market instruments that were granted prescribed asset status during the period include the Infrastructure Development Bank of Zimbabwe's $65 million bond to finance energy projects covering ZESA's prepaid metering and power generation projects. This was approved in 2014. During the same year, the Central Africa Building Society, a banking unit of Old Mutual Zimbabwe, issued a $62,8 million bond to fund the servicing and construction of low cost houses in Budiriro, while Bindura Nickel Corporation issued a $20 million bond to finance the restart of its smelter to process nickel for export. Read more on All Africa. Source: All Africa