The National Social Security Authority (Nssa) is mulling setting up a building society, businessdigest has established.
Report by Chris Muronzi
A well-placed source said Nssa would soon make an application to the Reserve Bank of Zimbabwe, adding consultations between the central bank and pension fund on the matter had already begun.
“Nssa will soon make an application to the Reserve Bank with a view of getting an operating licence,” the source said.
“Nssa feels strongly that it would tap into the housing business through the provision of mortages.”
According to the source, the move sits well with the Ministry of Finance’s view that around US$50 million of the fund’s prescribed assets be invested in housing.
The source also added that Nssa was now averse to investing in banks given the recently hiked minimum capital requirements by the Reserve Bank compelling commercial banks be capitalised to the tune of US$100 million by June 2014.
Nssa currently has stakes in Capital Bank, formerly Renaissance Merchant Bank (RMB), after the fund converted debt-to-equity, FBC Holdings and ZB Holdings Ltd.
The fund hinted it would prefer a merger of the building societies controlled by companies it holds equity in.
Building societies are under statutory obligation to raise US$80 million by June 2014. By pushing for the merger of building societies, Nssa hoped to avoid raising significant amounts of money in capital for the institutions.
The situation has been made worse for its given the biting liquidity challenges in the economy and Nssa’s general market perception of being a cash-rich institution that has had to act as knight in shining armour to businesses it has interests in.
Last year Nssa advanced a US$10 million loan to RTG, a company it has an equity stake in and underwrote its US$5 million rights issue.
Apart from RTG, Nssa also underwrote Afre Corporation’s US$8,6 million rights issue. Nssa controls Afre Corporation after it bought Econet’s 19% stake a few years back and a 32% stake owned by RMB.
Analysts say the plan to set up a building society would also help Nssa, which has a huge land bank, to unlock some of the value and provide mortgage financing to would be homeowners.
Sources added Nssa was planning to consolidate Capital Bank’s operations into the building society.
This also lends credence to reports Capital Bank had shed off over 50% of its workforce.
The source said Nssa wants a leaner workforce that would be consolidated into the building society. But management at the bank was quoted in the local media this week saying the move to cut back on labour was to lower the bank’s cost base. Capital Bank had earlier indicated plans to become a microbank but there are many other applications for such institutions awaiting the enactment of the Micro Finance Bill.