Treasury pushes pension industry into impact investment

CLOUDINE MATOLA

Treasury has urged Zimbabwe’s pensions industry to channel more capital into impact investments such as renewable energy, agriculture and small-to-medium enterprises (SMEs), arguing the shift could both stimulate economic growth and deliver inflation-protected returns for retirees, Business Times can report.

Speaking at the Zimbabwe Association of Pension Funds annual conference in Victoria Falls, Deputy Finance Minister Kudakwashe Mnangagwa said pension funds should play a more active role in financing productive sectors of the economy.

“Pension funds have the capacity to drive national development while securing sustainable retirement outcomes,” Mnangagwa said.

“Government seeks a sector that prioritises impact investing in renewable energy, agriculture and SME financing — sectors that grow the nation while providing inflation-hedged returns for pensioners. Aligning pension capital with productive investment is not merely a choice,it is a strategic imperative for our nation’s growth.”

He said government wanted a pensions industry that acted as “a proactive partner in national growth” rather than a passive holder of assets.

Mnangagwa warned that the sector remained overly concentrated in property and listed equities, limiting its ability to generate stable income streams while leaving key productive sectors underfunded.

“We also note with concern that investment remains heavily concentrated in property and listed equities, limiting the sector’s ability to generate stable income while leaving productive sectors like infrastructure and energy underfunded,” he said.

As of December 2025, the pensions sector comprised 971 funds serving close to one million members, with total assets valued at about US$3.11bn.

However, Mnangagwa said much of the industry’s recent growth had been driven by market revaluations rather than recurring cash flows.

“True success lies in shifting from a reliance on valuation gains to sustainable, cash-generative investments that mirror real economic activity,” he said.

The deputy minister also flagged mounting structural weaknesses within the industry, including rising contribution arrears and delayed benefit payments.

Contribution arrears have climbed to ZWG3.28bn, equivalent to roughly US$126m, undermining funding ratios and weakening the alignment between long-term liabilities and assets, he said.

Unpaid benefits remain the sector’s most persistent compliance issue, accounting for 46.5% of regulatory complaints.

“It is unacceptable that our members, who have worked for decades, should face delays in payouts due to weak records or fragmented systems,” Mnangagwa said.