GOVERNMENT is considering reviewing the Prescribed Asset Status criteria to align it with the intended objectives, NewsDay Business has learnt.
At law, pension funds and insurance firms are required to invest at least 20% of their investment portfolio in prescribed assets and the sector has been struggling to meet the requirements.
According to the latest Insurance and Pensions Commission (Ipec) report for the half year ended June 30, 2023 prescribed assets amounting to ZWL$700 billion, constituted 8% of the industry’s total assets. This growth is however a nominal increase of 1 027% from the prescribed assets investments of ZWL62 billion comparable same period last year.
Finance, Economic Development and Investment Promotion deputy minister David Mnangagwa has urged industry to improve compliance levels, and also support government’s resource mobilisation initiatives.
“In line with the aspirations of the National Development Strategy 1, prescribed asset status is conferred on qualifying projects in order to encourage mobilization of resources.
“During the year 2023, at least 12 projects valued at US$291,82 million and ZWL$8,5 billion were conferred Prescribed Asset status,” he said at the Zimbabwe Association of Pension Funds Principal Officers and Chairpersons Convention held in Bulawayo last week
“The compliance ratio, however, was very low at 6% as at 31 March, 2023, with a slight increase to 8% as at 30 June 2023, against the statutory requirement of 20%. Industry is urged to improve compliance levels, and also support government’s resource mobilisation initiatives. Furthermore, government is considering reviewing the Prescribed Asset Status criteria, with a view to align it with the intended objectives.”
Under prescribed assets, government requires such investors as retirement funds, to hold a certain number of investments in government-specified assets in the form of government or State-owned entities’ bonds.
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This helps government to mobilise domestic resources, allowing it to fund its expenditure when it has limited resources.
Mnangagwa said in the year to date, several projects which have been conferred Prescribed Assets Status include Pure Oil Commercial Paper (US$5 million), ZEIPF Marondera Shopping Mall (US$6,5 million), IDBZ – Rooiport (US$4,9million), First Mutual Wealth (US$5,6 million), Agrowth Debenture at US$10 million, AFC Agrobills (US$20 million and ZW$8,5 billion) and Stratus and Partners Commodity Fund, among others.
He added that several critical amendments were being placed into the financial sector legislation to strengthen the legal and regulatory framework, reduce financial sector vulnerability, re-align with international standards and enhance corporate governance.
Currently, the Insurance Bill and Insurance and Pensions Commission Bill are at various stages in Parliament, while the Deposit Protection Corporation Act and the Securities and Exchange Bills are being drafted at the Attorney-General’s Office.
