The government is enticing the insurance and pension funds to invest in agriculture in order to boost economic growth and generate significant returns, Lands, Agriculture, Fisheries, Water and Rural Development permanent secretary John Basera has revealed.
It comes at a time when local farmers are struggling to secure loans from local banks. Nearly 20 years after the government first introduced the instrument , banks are still refusing to accept 99 year leases , claiming that they are not bankable.
According to Basera, the farmers’ funding issues could be resolved by using pension and insurance funds.
“The pension and insurance funds represent savings accumulated funds set aside by individuals and organisations for future financial security, hence we can engage them to utilise these funds for agriculture financing.
“Our local pension funds and insurance funds now have a role to play in the funding of agriculture and reduce the funding gap in the sector,” Basera said.
Another strategy to increase economic growth, according to experts, is to direct incidental savings—like pension funds and insurance premiums—towards profitable industries like agriculture.
Recently, a local asset management firm, Stratus Capital Partners announced the imminent listing of the first ever agriculture-based commodity fund on the Financial Securities Exchange (FINSEC) to raise US$50m.
And the company called for how the agriculture sector could use idle capital.
Stratus Capital chief operating officer John Bere said agriculture is a critical sector for economic development in Zimbabwe as it is a significant source of employment, food security, and export earnings.
“By diverting incidental savings towards agriculture, funds can be directed to promote increased productivity, modernization, innovation, and value addition in the sector.
“Initiatives such as infrastructure development, modern farming techniques, and value chain investments can create employment opportunities and foster sustainable growth.
“By directing incidental savings towards the productive sector, particularly agriculture, economies can diversify their revenue streams and reduce their reliance on sectors with volatile incomes, such as speculative investments or inflation hedges,” Bere said.
Experts said agriculture offers an opportunity for decentralised income generation, empowering rural communities and contributing to poverty alleviation.
Bere said prioritising the productive sector can counteract negative real returns from fixed-income securities by investing in productive assets that generate substantial long-term revenues.
He said government must create an enabling environment to effectively channel incidental savings into the productive sector.
“The establishment of robust financial institutions, such as agricultural banks, farmer cooperatives, and venture capital funds, and commodity funds can facilitate the allocation and management of incidental savings towards productive ventures.
“ Government can forge partnerships with pension funds, insurance companies, and financial institutions to develop investment frameworks that align with national development agenda.
“This cooperation can unlock the potential of incidental savings by providing the necessary expertise, risk-sharing mechanisms, and knowledge exchange,” Bere said.
It is understood that in contexts where actual savings are constrained by high unemployment, inflation, and a weak local currency, diverting incidental savings towards productive sectors, for example, agriculture, offers a viable pathway for economic growth and development.
“By nurturing the agricultural sector and promoting income generation, developing nations like Zimbabwe can transition from reliance on inflation hedges and speculative investments, toward long-term sustainable growth.
“Concerted efforts, including enabling policy frameworks and fostering public-private partnerships, are essential in realizing the untapped potential of incidental savings for economic transformation,” he said.
Stratus Capital has taken a pioneering step in this direction with the listing of the Stratus Commodity Fund (SCF).
Bere said this SCF presents a golden opportunity for pension funds and insurance companies in Zimbabwe to harness incidental savings and contribute to the country’s sustainable development.
These additional funds, when wisely invested, can stimulate economic growth, generate returns, and support national development endeavors.
Bere said with the listing of the Stratus Commodity Fund, pension funds, and insurance companies have an opportunity to maximise the potential of incidental savings.
“By channeling incidental savings into the Stratus Commodity Fund, pension funds, and insurance companies contribute significantly to Zimbabwe’s sustainable development. Investing in agriculture not only strengthens the sector but also drives job creation, boosts income for farmers, and fosters food security.
“The listing of the Stratus Commodity Fund marks a significant milestone in unlocking the potential of incidental savings from pension funds and insurance companies,” Bere said.