The Sunday Mail
Tinashe Makichi Business Reporter
The insurance industry has mobilised US$30 million to fund Zimbabwe’s Command Agriculture programme for the 2017-2018 season.
The move is expected to boost Zimbabwe’s agricultural production and effectively reduce food imports that are piling pressure on the country’s import bill at a time the annual trade deficit averages US$3 billion. Industry regulator, the Insurance and Pensions Commission (Ipec), has already approved applications for prescribed asset status for the upcoming agricultural season.
Among the approved applications is US$50 million worth of funding to Government for the development of irrigation infrastructure to support Command Agriculture. This adds to a US$20 million facility that has been availed by two of the country’s financial institutions – Agribank and FBC – to finance projects in the upcoming agricultural season.
IPEC Commissioner Mr Tendai Karonga told The Sunday Mail Business that the commission has also approved CBZ AMA Bills worth US$80 million to finance the purchase of grain from the 2016-2017 agricultural season.
“There are ongoing discussions on another application for prescribed asset status for Command Agriculture support for the upcoming season to the tune of US$30 million,” Mr Karonga said in an interview recently. In the last three years, the insurance and pensions sector has contributed over US$200 million in Prescribed Assets towards infrastructure development, Mr Karonga added.
Life insurance companies reported an average investment into prescribed assets of 14 percent against a minimum prescribed asset ratio of 7,5 percent as of March this year, Mr Karonga said. Short-term insurance companies recorded an average investment of about 13 percent, which is more than double the minimum requirement of 5 percent.
“This shows the industry’s appetite to contribute to the country’s infrastructural development,” said Mr Karonga. Apart from insurance and pensions, Ipec has also raised a red flag over continued minimal participation of funeral assurance companies in funding the economy’s strategic projects.
The funeral assurance industry’s current prescribed asset ratio is slightly above 1 percent, which is below the stipulated ratio of 7, 5 percent. The Finance and Economic Development Ministry has also expressed concern at the slow rate at which funeral assurance companies have been supporting economic projects.
As at March 31, 2017, the prescribed assets investment from the funeral assurers was around $480 000. Some companies in the sector have made no contribution to date. “IPEC takes great exception to this and continues to urge funeral assurance industry players to comply with the 7,5 percent prescribed asset ratio.
“IPEC expects Zimbabwe Association for Funeral Assurers to present a plan on how the industry intends to deal with this deficit,” said Mr Karonga.
He recently said there is a plan to increase the current minimum capital requirements for funeral companies with a view to minimise risk while increasing the cash base in order to timeously honour claims.
The current minimum capital requirement for funeral assurers, in terms of Statutory Instrument 21 of 2013, is $1,5 million while the revised minimum capital requirement for funeral assurers will be $2,5 million once the new regulations take effect.
As at March 31,2017, Mr Karonga said three funeral assurers’ capitalisation levels were below the minimum capital requirement of $1,5 million.
