THE Zimbabwe Association of Pension Funds (ZAPF) says the prevailing stable macroeconomic stability provides a firm foundation for long-term capital formation, underscoring this as the core business of pension funds.Investment in Zimbabwe
This follows the Reserve Bank of Zimbabwe (RBZ) 2026 Monetary Policy Statement (MPS), themed “Deepening Domestic Currency Usage to Consolidate Price and Exchange Rate Stability”, presented on February 27.
The policy aims to entrench price and currency stability while laying the groundwork for a transition to a mono-currency system once all preconditions have been achieved.
Reserve Bank Of Zimbabwe
As of June 30, 2025, Zimbabwe’s pension sector was valued at US$2,63 billion (approximately ZiG 70,76 billion), anchored by investments in properties and equities
The sector includes 968 registered occupational pension funds.
Zimbabwe’s pension industry is still recovering from the impacts of the 2008 hyperinflation, and focusing heavily on US dollar-denominated assets, adopting inflation-hedging strategies and improving the regulatory framework under the Insurance and Pensions Commission (Ipec).
In its analysis of the MPS and its strategic implications for the pension fund industry, ZAPF said the policy represents a critical moment in the journey towards sustainable economic growth.
Economic stability, characterised by single-digit inflation and a stable exchange rate, transitions the operational environment from “hyperinflationary survival and value preservation” to “real return generation and strategic consolidation.”
Furthermore, ZAPF said the central bank had provided explicit guarantees safeguarding foreign-currency-denominated pension assets during the eventual transition to a single currency.
Insurance and Pensions Commission (Ipec)
“The central bank noted significant progress toward meeting the conditions for a market-led transition to mono-currency by 2030,” said ZAPF.
“Critically for our industry, the RBZ guaranteed that the adoption of a mono-currency will not eliminate foreign-currency accounts, foreign-currency denominated pension fund holdings, or US dollar-based equities such as those on the Victoria Falls Stock Exchange (VFex).”
ZAPF said the 2026 monetary conditions provide several distinct tailwinds for the pension sector, including value preservation, guarantee on US dollar assets and reduced operational costs.
The organisation said the reduction of annual ZiG inflation to 4,1 percent halts the chronic erosion of pension values that has plagued the industry for decades.
In other key fundamentals, Zimbabwe’s foreign currency reserves grew significantly from US$276 million in April 2024 to US$1,2 billion by December 2025, driven by record gold production and export earnings.Investment in Zimbabwe
This surge in the RBZ holdings provides approximately 1,5 months of import cover and supports the durable stability of the ZiG currency. ZAPF believes the prolonged stability will foster planning and economic growth.
“If this stability is sustained over the next 18 to 36 months, trustees and their expert advisors will be able to forecast liabilities and asset growth with a higher degree of certainty,” ZAPF said.
“The explicit policy pronouncement safeguarding foreign currency-denominated pension assets and VFex equities from forced liquidation or conversion is a key positive for the industry.
“This de-risks the transition to a mono-currency and protects the offshore and hard-currency portfolios that funds have been accumulating since the inception of US dollar contributions under Sub Account B (formerly Sub Account B).
They said the policy will also provide a favourable fixed income market, saying that the maintenance of the Bank Policy Rate at 35 percent against an inflation rate of 4,1 percent results in high positive real interest rates.
“Pension funds with any ZWG can earn higher interest rates in the short term as they look for long-term investments.”
“Pension funds and pension fund members process a high count of transactions related to contributions and benefit payouts. The capping of POS charges at 1,5 percent, withdrawal charges at two percent and the removal of cash deposit fees will result in significant savings for pensioners.
“However, we also recommend that pension funds continue to encourage pensioners and members to open pension accounts.”
Despite the positive trajectory, ZAPF trustees may need to manage risks like suppressed equity earnings due to the high cost of capital, noting that a bank policy rate of 35 percent makes domestic borrowing prohibitively expensive for corporations.
The association said highly leveraged companies listed on the ZSE and the VFex may struggle to meet debt service costs, leading to compressed profit margins, reduced dividend payouts, and suppressed equity valuations in the short to medium term.
“USD interest rates of between 10 percent and 20 percent that prevail in the market are also still quite expensive relative to the USD inflation rates,” said ZAPF.
ZAPF also said trustees might face increased compliance and know your customer (KYC) burdens, noting the RBZ’s directive for mobile network operators to implement enhanced due diligence (EDD) and screen for “ghost users” to combat fraud and money laundering.
“Pension funds that rely on mobile money platforms for rural pensioner payouts may face temporary logistical hurdles as operators enforce stricter identity verifications.”
“While current yields are high, the RBZ indicated that the achievement of single-digit inflation provides scope for an eventual, data-dependent downward review of the Bank Policy Rate. Funds that only invest in short-term paper face reinvestment risk if rates are aggressively cut in late 2026 or 2027.”-herald
