The Motor Industry Pension Fund (MIPF) has completed the construction of a multi-million dollar office complex in Avondale, Harare as it grows its asset base.
The complex was delivered at a cost of about US$5m and was funded by internal resources from employee contributions in the motor industry, according to MIPF chief executive Raymond Manhika.
“Yes, we are investors in those assets. The Avondale project started during the era when exchange rates were 1:1 and so the cost is all mixed up. It (the complex) has been delivered,” Manhika said.
“The building has two floors with 4 block offices which can then be partitioned upon occupation by tenants.
The office complex is going to house any form of tenants and the complex was finished in terms of construction this year.”
Manhika indicated that the pension fund has also invested in the Zim Campus project in Bulawayo, which aims to provide accommodation for university students.
The idea was triggered by the rapid growth in student enrolment at universities, a situation which has resulted in a spike in demand for services and accommodation.
The demand has outstripped infrastructure and service capacity at universities in Zimbabwe.
It is understood that about 69,973 students are enrolled at state universities across the country of which 75% have no access to oncampus accommodation facilities.
Manhika said MIPF holds 17% stake in Zim Campus.
Pension funds play a very pivotal role in the economy by channelling current pension savings into investments in financial assets and subsequently transforming these assets into a predictable postemployment income for many around the globe.
The main objective of pension funds is to provide financial security to members and beneficiaries in the event of retirement, death or invalidity. Pension funds have a large pool of resources and can set aside cash for infrastructure development, but these institutions are currently underutilised in Zimbabwe.
Analyst Luckmore Chivandire said the multi-million-dollar pension sector, can play a critical role in transforming Zimbabwe’s infrastructure landscape.
The sector, however, is battling a myriad of challenges triggered by curry reforms implemented by the monetary and fiscal authorities.
The sector suffered erosion of value due to hyperinflationary pressures.
This led to Zimbabwe ditching the local currency and adopting a multicurrency regime in 2009, to escape hyperinflationary pressures.
Policyholders lost value of their investments during the process of conversion of balances from Zimbabwe dollars to United States dollars, estimated to be about US$3bn.
The pension industry is also battling growing contribution arrears, estimated to be ZWL$887m at the end of June this year, reflecting a 43% surge from ZWL$621m in January, according to the latest Insurance and Pensions Commission report.
Most sponsoring employers are facing viability challenges and therefore they are unable to remit monthly contributions to the pension funds and generally.