ZIMBABWE’S state-run pension fund, the National Social Security Authority (Nssa), said this week it plans to leverage the stability of regional financial institutions as it intensifies its offshore investment strategy.
Facing prolonged volatility in the domestic market — where rampant inflation over the past decade wiped out billions in savings — Nssa is turning to foreign investments to increase its portfolio.
In an interview with the Zimbabwe Independent, acting general manager Charles Shava said the diversified shareholder profiles of Pan-African financial institutions provided a source of confidence for these offshore investments.
He said Nssa’s investment choices included Kenya-based Trade and Development Bank, Africa Finance Corporation, Africa Reinsurance Corporation (Africa Re), and Afreximbank.
Notably, Afreximbank already has a substantial presence in Zimbabwe, with recent support initiatives including a US$20 million funding package for POSB and the AFC Group..
“The offshore investment strategy is premised on complying with national laws on offshore investments guidelines as promulgated from time-to-time by the government and the Reserve Bank of Zimbabwe (RBZ),” Shava told the Independent.
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“Our primary focus as a mobiliser of public funds is to contribute to local capital requirements by investing in the local market so that we contribute to National Development Strategy 1 and Vision 2030.”
He said Nssa had invested offshore to take advantage of the diverse shareholder and capital base that came with the regional financial institutions.
“However, to mitigate geographical risk for the benefit of Nssa members, we have previously invested a small portion of our funds offshore,” Shava said.
“Our offshore investment was biased towards supranational regional financial powerhouses, such as Trade and Development Bank (TDB), Africa Finance Corporation, Africa Re and Afreximbank.
“The reasons for targeting Pan-African multilateral financial institutions are that they are well established, mature and tried and tested business models with moderate business risk and solid financial position and diverse shareholder base involving African countries and developments financial institutions, which makes their capital base,” he added.
Investments offshore helped the fund to hedge against macroeconomic challenges.
“Other reasons include solid financial performance and growing profitability, consistent dividend paying history supported by predictable dividend policies, which guarantee sustainable returns to Nssa and USD (United States dollar) as main trading currency, which minimise exchange risk on our investment captive market as these entities by treaty, provide member countries with services and development impact as they focus on growth of Africa,” he said.
Afreximbank focuses on financing exports and imports, TDB supports trade and development, while AFC focuses on key infrastructure.
Africa Re mobilises insurance funds through its insurance treaties.
Shava said regional financial institutions had boosted African countries through development programmes, which Zimbabwe can also benefit from.
“Combined, these entities have poured billions of dollars into developmental programmes in African countries, consistent shareholder value creation through growth of net asset value and massive opportunity to co-invest with these entities and unlock the much-needed foreign direct investment into Zimbabwe,” he said.
With its strategic offshore investments, Nssa aims to not only secure the pensions of its members but also contribute to Zimbabwe’s broader economic goals.