PENSIONERS need not fear a sudden and unplanned return of the Zimbabwe dollar, which could upset savings and reverse current efforts aimed at growing confidence in the pensions industry, a cabinet minister has said.
By Clive Mphambela
Addressing delegates to the 38th annual congress of the Zimbabwe Association of Pension Funds in Victoria falls recently, Minister of Economic Planning and Investment Promotion Tapiwa Mashakada said fears of a slide back to the Zimbabwe dollar were unfounded as the country’s agreed economic blueprint, the medium term plan (MTP) guaranteed the continued use of the multi-currencies until 2015.
Mashakada was responding to a representative of First Mutual Life Assurance, Peter Shonhiwa, who pointed out that the great fear among consumers of insurance and pension products that the Zimdollar might come back soon was slowing down the recovery of the sector.
“Very so often, we read reports about pronouncements by people in government that the Zimbabwe dollar is about to return and this causes fear and panic among pensioners,” Shonhiwa said.
Mashakada said pension funds should be protected as they play a significant role in the economic development of the country as they are the core of any economic development.
He said the pensions industry was a big source of savings and formed the largest proportion of the deposit base of the banking sector, and therefore its liquidity.
In addition, the majority of stock market and property investments are owned by pension funds Delegates asked Mashakada when the full demonetisation of the Zimbabwe dollar was going to happen as this was contributing to the loss of confidence in the pensions sector and financial services in general.
In response, Mashakada said: “Government looked at the issue and agreed that a value be placed on the Zimbabwe currency balances. The exercise was shelved when validity and accuracy of the Zimbabwe dollar balances was thrown into question when initially the figures were estimated at US$37 million, only for it to balloon to three times that amount just before the process was finalised,” Mashakada said.
Another delegate, Wadzanai Phiri, a councillor with Zapf and operations manager at Marsh Insurance Brokers, said government should shoulder part of the responsibility for the demise of pensions values as it was responsible for printing the local currency, which lost value.
“It is unfair that blame for loss of policy values after dollarisation is being heaped on players in the industry when it was government that played a major role in the diminution in value of the local currency.” she said.
“Government therefore contributed to the erosion of value for Zimbabwean pension funds,” Phiri emphasised.