Projects granted prescribed asset status

FIVE projects that are denominated in United States dollars including one in local currency have been granted a prescribed asset status, a development that accords the insurance and pensions industry an option to invest in such assets to meet their statutory obligations.

Prescribed assets are bonds or securities issued by the government, local government, quasi-government organisations or any other bond that may be accorded the prescribed asset status.

According to a pensions report released by the Insurance and Pension Commission (IPEC) for the quarter ended June 30, 2022, the projects that have been granted a prescribed asset status by the Government were in mining, agriculture, tourism and energy sectors.

“As at 30 June 2022, the commission had recommended six applications for conferment of prescribed asset status to the Ministry of Finance and Economic Development.

“During the period under review, the number of approved applications increased by three from the previous quarter,” said IPEC.

The issuers for the planned investments were Zororo PA, which was seeking to raise US$45 million for its planned solar energy project, Centragrid (US$29,5 million) also for a solar project, Nhaka Life (US$10 million) for cattle-backed investments and Mangwana Opportunities Pvt Ltd’s US$5 million to finance productive sectors of the economy —agriculture, mining and tourism.

Equinox was also seeking to raise US$9 million for a solar energy project while Agrowth sought $2 billion to finance the winter cropping season.

These entities are required by law to hold a portion of their investments in prescribed assets.

Extending prescribed asset status beyond bonds and other Government paper to “alternative projects” has been necessitated by calls from the industry for investment assets that can hedge against inflation and have greater socio-economic impact.

Extending prescribed asset status beyond bonds and other Government paper to “alternative investments” has in the past been called for by industry for investment assets that can hedge against inflation and have greater socio-economic impact.

An economic analyst Ms Chipo Warikandwa said the approval of the project for prescribed asset status was a step in the right direction as it reaffirms the Government’s total commitment to the development of the insurance and pensions sector as well improvement of the socio-economic standard of the citizens.

“The approval of the prescribed asset status on major projects across the country by Treasury as indicated in the IPEC report for the quarter ended June 30, 2022 is a major leap forward in as far as supporting the growth and development of players in the insurance and pension sector “Not only is the Government supporting insurance companies and pension funds to thrive, but the generality of the ordinary citizens through improved socio-economic impact.

“For instance, if a solar project is developed or agriculture output is developed, that goes a long way in improving the well-being of the surrounding communities and the nation at large,” she said.

Meanwhile, IPEC indicated that during the period under review registered occupational pension funds increased to 978 compared to 972as at June 30 last year.

The increase was mainly due to newly registered funds over the period under review.

IPEC said a total of 615 were active, constituting 63 percent of the industry funds.

The remaining 37 percent were either paid up or undergoing dissolution as per the Dissolution Directive issued by the commission to dissolve inactive funds.

“The industry’s total membership including beneficiaries, increased by 7 percent from 915 975 as at June 30, 2021 to 976 060 as at June 30, 2022.

“This was mainly as a result of the new funds,” said IPEC.

The industry’s assets as at the period under review 2022 stood at $800 billion, which was a nominal increase of 304 percent from a value of $198 billion as at June 30 last year.

Investment properties accounted for $298,56 million compared to $74 million during the comparative period last year.

“Equities had a nominal increase of 250 percent from $343 million as at June 30, 2022 from $98 million as at June 30, 2021.

“This is mainly attributable to fair value gains and acquisition of equities from contributions received by pension funds,” said IPEC.-ebusinessweekly