HomeBusiness DigestInsurance: Govt clamps down on foreign investors

Insurance: Govt clamps down on foreign investors

FINANCE minister Patrick Chinamasa says government will clamp down on foreign investors who insure their investment and projects outside the country.

Taurai Mangudhla

He said government plans to ensure a certain percentage of all business founded by a foreigners was locally insured.

He was speaking at Fidelity Life Assurance’s Southview Park low cost residential housing scheme groundbreaking ceremony this week.

Chinamasa said insuring externally was depriving the local insurance business and the economy at large of potential business.

“As we negotiate big power or road projects we have to factor in the portion of risk that can be insured locally,” said Chinamasa.

Insurance and Pensions Commission (Ipec) acting commissioner Pupurai Togarepi concurred with Chinamasa, saying there was need for action to redress the situation as industry has already lost millions in potential business.

He said government must make insurance part of any agreements reached with foreign investors.

“As Ipec, we are working flat out talking to government so that people who want to externalise their risk ensure that the risk to be externalised exceeds local capacity,” Togarepi said, adding the insurance body was motivated by Chinamasa’s statements which apparently show that government is fighting in its corner.

“If the risk is paid locally, it means liquidity to the country.
The risk is small, but the companies need insurance,” he said.
Ipec’s 2013 report shows total industry assets grew by 31% to US$1,6 billion by December 31 2013, up from US$1,2 billion in 2012.

Chinamasa said his office was currently devising ways to mobilise resources from insurance and pension companies towards infrastructure development, particularly housing schemes.

“Insurance companies and pension funds are a huge source of mobilisation of resources. As we go forward, I want those resources mobilised towards infrastructure development and not consumption, it could be housing or power generation,” said Chinamasa.

“I am going to be talking to these insurance and pensions companies directly and bilaterally with a view to excite them into housing development.”

Chinamasa, who was guest of honour along with Local Government minister Ignatious Chombo, celebrated Fidelity life’s US$30 million land development project which will see 5 300 low cost residential stands being sold as support to ZimAsset.

The event was also attended by Agriculture minister Joseph Made and Defence minister Sydney Sekeramayi.

Chinamasa said Fidelity was making its contribution towards ZimAsset targets to avail 125 000 housing units either directly from government or in partnership with private players.

“Government, through my ministry, had no hesitation to give this project prescribed asset status and we’re going to have more projects coming. In fact any housing project will get prescribed asset status,” said Chinamasa.

Despite the current liquidity crisis, he said, Zimbabweans have huge demand for residential property.

As a result, 2 000 stands had been presold.

Chinamasa said his ministry would give favourable terms to mortgage providers to support the project which requires US$110 million for the house construction phase alone, and another US$50 million for additional supporting infrastructure like schools, shopping centers, churches and community centers.

Development of the project is expected to commence soon
and take between 15 and 18 months.

Chombo said his ministry was in the process of coming up with a land development bill to protect citizens from being duped by unscrupulous land developers.

He said government is also drafting a civil service low cost residential housing scheme to be unveiled upon finalisation.

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