DURING this week’s ceremony to honour Zimbabwe’s best insurance companies organised by this newspaper, Tinashe Muyambo, group chief executive officer at Masawara, made an important remark.
He said following the decimation of pensions and savings in the past decade, Zimbabwe must explore fresh avenues to guarantee savers a return if another calamity rattles this market.
This was an important insight — one that has been ignored by government, pension funds and insurers for many years.
The scale of losses incurred savers was big. In his report following a comprehensive enquiry into the losses, Justice George Smith and his team said close to US$6 billion was wiped out, and those affected faced a bleak future. This figure was more than Zimbabwe’s US$4,5 billion gross domestic product in 2008, when the problem occurred, demonstrating the scale of the crisis.
Many pensioners are already caught up in the vortex of a deadly crisis, because turmoil hit them as they went into retirement.
As we speak, they could only be living on National Social Security Authority payouts, which are too little.
Following decades of hard work, economic mismanagement by government, and manipulation of their savings by sector executives in some cases, has relegated them to paupers.
For now, no one really cares whether they must survive or die.
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If someone did, surely, the plight of pensioners must have been resolved by now. They are being left to starve from hunger, while those who presided over the collapse continue to enjoy life.
The sad thing is, in the aftermath of the 2008 wipe out, many waves of crises have swept through the economy, decimating the Zimbabwe dollar. Justice Smith recommended that victims be compensated.
But it looks like pension funds and insurance firms are either broke, or are reluctant to act. As debate over who is to blame continues, Zimbabwe cannot wait for another calamity to tear through markets before taking action. The protection of savers has become imperative, as Muyambo said. This will not only be good for individual savers, but the industry as well. It has suffered from waning confidence since 2008, and penetration rates have been low.
Zimbabwe cannot create generations of paupers who retire to be confronted by poverty.
This is why a suggestion by Muyambo to ‘ring fence’ savings to defend them from shocks which could rattled the volatile economy again must be taken seriously. By ‘ring-fencing’, the sector will protect savings from losses incurred by riskier operations.
The legal ramifications of such a move must be explored, and ways of making this proposal a success found. It is important that such a suggestion came from an insurance sector executive, which means among those presiding over the industry, concern over injustice is also building up. Should there be other proposals from experts, they must be put forwards and implemented speedily.
Insurance executives may be driving top range vehicles for now, out of pensioners’ savings, but they will work up without an industry to talk about.
New innovations are coming.