Industry pushes for long term financing model

LIVINGSTONE MARUFU

Industry should weigh the option of using pension funds as an alternative source of long term financing, the Confederation of Zimbabwe Industries (CZI) has said.

The call comes at a time local banks generally offer short-term working capital.

“Pension funds could be used as an alternative financing source   as it provides long term as opposed to short term finances by the banks,” the CZI chief economist Cornelius Dube said.

He added: “Investing strategy for pension funds is to split assets in search of higher returns and greater diversity and scope for the manufacturing sector including through the prescribed asset status window.”

The Zimbabwe manufacturing sector has a number of projects which got prescribed assets status.

“Innovative solutions to the country’s import dependence and limited value chain linkages can easily unlock prescribed asset status if there is a guaranteed return,” Dube said.

He said structuring projects as attractive investment opportunities for investors with acceptable risk or return profiles could make pension funds a safe investment model.

“Prescribed assets statuses that meet both the developmental and value preservation requirements of pension funds will be attractive to investors,” Dube said.

He said the industry should develop a bankable manufacturing sector value chain projects based on proven viability and importance to the development of industry.

Old Mutual Zimbabwe group CEO, Sam Matsekete also said there was a need for companies to find an alternative source of funding instead of relying on the underdeveloped capital markets and commercial bank loans.

“There is a need to promote the full spectrum of the investment chain to make financing arrangements simpler and more effective especially on long term capital sources such as insurance and pension funds which are mainly designed for long term funding.”