NSSA building society project slammed

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The National Social Security Authority (NSSA)’s decision to form a building society, officialy launched on Wednesday with an initial capital of US$25 million, has been described by analysts as a poor investment decision that could prejudice pensioners of funds.

By Fidelity Mhlanga

The National Building Society (NBS), officially opened by Vice-President Emmerson Mnangagwa, has been created out of the national pension scheme and the Workers Compensation Insurance Fund with 60% and 40% stakes respectively.

The bank offers a 9,5% interest rate payable over a 25-year period with 30% of the housing loans reserved for civil servants.

Bulawayo-based economist Eddie Cross said there is no need for the authority to add a building society to its portfolio given the existence of other building societies in the market with experience in mortgage lending.

“There is absolutely no need for Nssa to set up a building society. What does it know about running a building society? It makes no sense whatsoever,” Cross said. “They should have set this up in one of the established building societies such as Cabs. It is a duplication that is completely unwarranted and another poor business decision by Nssa.”

Cross, who sits on both the budget and the public accounts committees in Parliament, said Nssa had possibly lost billions of contributors’ funds through bad investment decisions since its inception.

Zimbabwe National Chamber of Commerce CE Chris Mugaga also expressed concerns of duplicity by Nssa.

“Nssa is the majority shareholder in FBC Holdings and ZB Holdings, why can’t they pursue their strategy in these two entities. One may question that isn’t duplicated activity,” he said. “They have to act above the normal way of banking to gain public confidence. Government must tighten controls especially on governance.”

Economist John Robertson said there is need for the NBS to improve the conditions of repaying the mortgage.

“We need to bring the interests rate down and offer more years to pay the house,” Robertson said. “Unless the building society improves the conditions of paying the initiative, it won’t make any difference.

At the moment the monthly payment is very high and people can only afford to buy a small house unless Nssa can give a mortgage that is more flexible.”

Nssa had by June 2015 lost more than half of its nearly US$700 million — about US$350 million — total investment portfolio due to market volatility, bad deals and mismanagement of public funds, according to a Deloitte report on Nssa.

Nssa released unsecured public funds to several banks including Interfin (US$4 930 767), Capital (US$4 196 000), Royal (US$343 907), Genesis (US$585 855) and Tetrad Securities (US$1 353 000).

The authority also lost US$30 million in Capital Bank when its licence was cancelled last year by the Reserve Bank of Zimbabwe.

One thought on “NSSA building society project slammed”

  1. James Dhludhlu says:

    Mr Editor, there is a huge difference between the words, “duplicity” and “duplication” and they are not related at all!

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