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Zim must appreciate actuaries: Makwanya

ZIMBABWE has over the years grappled with an acute shortage of actuaries due to several factors, not least a devastating economic crisis which has buffeted the country for almost two decades. Last week, the Actuarial Society of Zimbabwe (ASZ) held its annual conference to address these and other issues. Zimbabwe Independent business reporter Melody Chikono (MC) caught up with ASZ president Lorraine Makwanya (LM). Below are excerpts of the interview:

MC: What economic development role can be played by actuaries in an economy like Zimbabwe?

LM: There are certain skills that the actuarial training imparts on its members. The key ones to note are around data analysis, development and pricing of insurance products, assessing the financial soundness of entities in financial services through a process called actuarial valuation and enterprise risk management.
These skills are important in ensuring that the resource allocation activities of the financial services industry are done properly and for the good of the economy. For example, actuaries participate in asset allocation decisions of pension funds and life companies. Through this activity, they can ensure investments are made to support the economy and community, as well as provide a good return.

Insurance products that are developed by actuaries can improve the sustainability of economic activities of companies and individuals as they ensure that companies can live on after major catastrophes such as fire, theft and drought. For individuals, these can ensure that children continue to have their needs (including education) met after the death of their parent. These children can later contribute meaningfully to economic growth.

In major financial transactions, actuaries can play an advisory role in assessing the viability of deals, assessing risks in the transactions and providing mitigating solutions to the parties in the transaction. As you know, economies thrive on financial transactions, significant business and government deals.

MC: Last week, you held a conference in Harare. What were the main issues emerging from the conference?

LM: The fourth ASZ Convention ran under the theme: Agile, Swift & Strong. We chose this theme because we are living in a world of volatility, uncertainty, high complexity and ambiguity. What others may call a Vuca world. Therefore, to remain relevant and thrive in this environment, calls for agility. I define agility as the ability to think quickly and clearly or ability to deal with new situations quickly and effectively. Agility requires a growth mindset that does not trivialise the nature of change. Being truly agile requires us to learn to be both strong (resilient, reliable, and efficient) and swift (fast, nimble, and adaptive).

The main take-aways from the conference for me were:

l The actuarial profession needs to come out of its shell and clearly state its relevance in the country. We need to be more visible. The depth of our skills has been uncontested for years; however we continue to be mostly confined to niche spaces in the financial services industry. We believe that we can add value to more stakeholders and it is up to us to communicate what we can offer and branch out into these fields. This needs that we need to partner with more stakeholders such as government, businesses, other professions and the public at large. Our responsibilities have always included working for the public interest;

l We need to increase the strength and capabilities of the (Actuarial) Society. We discussed a number of ways to achieve this and this included making sure that we have more actuaries in the country by supporting actuarial education, putting in place locally relevant standards for the profession;

  • We also discussed what the vision of the society should be over the medium to long term and how we go about achieving this vison;
  • We also had technical discussion on a number of areas including how to structure infrastructure investments, how to better price health and general insurance; and
  • Finally, we had a session where we received feedback from members. I must say that the input from members was actually the highlight of the convention, our members are raring to go forward, and I believe that if we harness that energy, we will produce a vibrant profession. It is that pledge of member support that gives me the courage to take on this noble challenge to drive the profession to the next stage.

MC: At the conference, a South African presenter indicated that Zimbabwe was lazy in terms of developing the actuarial profession and visibility. As the association, what are you doing to address that?

LM: The comment from the speaker was premised on the significant contribution that Zimbabwe-born actuaries are making to actuarial societies across the world. However, our reality is that:

  • The Zimbabwean economy has faced a number of challenges which the actuarial profession has not been immune to. The economic decline usually referred to as the lost decade led to significant movement of actuaries into the diaspora as the skills of the profession are sought after. The society’s activities, therefore, had to be scaled back considerably during this period;
  • The Actuarial Society of South Africa (Assa) had more than 1 400 qualified actuaries in 2016 compared to the current 15 we have in Zimbabwe; and more than 2 600 students compared to the current 350 registered with the society. The scale of the societies is very different;
  • I believe that Mr Mulaudzi (who is the president-elect of Assa) said this to challenge us and we take the challenge. Rome was not built in one day. At the convention we shared the steps that we have been taking to strengthen the profession. We have been very deliberate on the priorities for the profession that will deliver the maximum impact and we made progress on them;
  • We would like to strengthen actuarial education in Zimbabwe. We are in the progress of registering an education trust that will support actuarial education in universities and also support those who are still to complete their examinations to qualify quicker;
  • We are working at introducing a practice module that would ensure that actuaries operating in Zimbabwe know enough about our environment. Actuarial education is international and there is need to augment the knowledge with local context; and
  • We are also prioritising sharing of knowledge and thought leadership and the convention is one platform that allows us to do that. The convention has been growing from strength to strength and it currently attracts 200 delegates and runs over two days.

MC: Why do you think the country is failing to retain enough actuaries?

LM: I think that the economy, outside mainstream financial services, has not fully appreciated the value that the actuaries can bring to business and government operations. Other economies have been actively seeking these skills and going all out to get them.

In part, this is because the profession has not yet effectively communicated the value that it can add outside traditional fields. This was identified at the convention as one of the areas that we need to fix. I think the more demand we see in the market, the more actuaries we will attract. I have seen a number of actuaries returning home in the last few years.

Another factor may be for the market to offer remuneration that competes globally. A stable economic and operating environment also helps.

MC: The Insurance and Pensions Commission of Zimbabwe (Ipec) now requires insurance companies to incorporate actuaries within their operations. Do you have capacity to provide such a number, considering there are only a few actuaries in the country?

LM: The move by Ipec is a welcome development as it enhances the soundness of the insurance and pensions sectors. There are enough actuarial resources so far to meet service delivery needs in Zimbabwe.

Should the demand for actuarial services exceed the capacity of local firms, the skills can be brought in from other markets. The Actuarial Society of Zimbabwe is working on introducing a practice module that governs the work that actuaries do in the Zimbabwe market. The module will be in line with international best practice insofar as actuarial reporting is concerned and will be tailored to suite the Zimbabwean context.

MC: What are the main challenges faced by actuaries in Zimbabwe?

LM: The biggest challenge is the time it takes for one to qualify as an actuary, given the high opportunity cost of time spent studying. This has been due to lack of adequate tutorial support at the highest level, and demanding work schedules for senior specialists on the cusp of qualification.

The next would be the limited role that actuaries were required to play, typically inhibited to ticking off statutory requirements, which frustrated actuaries for having received thorough training to help manage risk in big organisations.

MC: As the Actuarial Association of Zimbabwe, what are your long-term plans for the profession and the country?

LM: We must build an organised profession, properly regulated and one that takes the lead in protecting the public interest. To do that, our plans are:

  • We have to put in place our own fellowship examination for actuaries. We are not naïve about it, we are aware that it will take many years but certainly that is one thing that will allow us to provide the necessary support to our members to qualify quickly. Thankfully, we are increasing our level of integration with local universities so that there will be a joint effort towards that.
  • We have to retain more actuaries in Zimbabwe for the sake of teaching and helping out with our regulators. A plan is underway to establish a fund for that purpose.

I think in the long term, once we achieve the above two, many other things around developing new fields, thought leadership, engaging with other professions in Zimbabwe will fall into place.

These plans fall squarely within the objectives of the Actuarial Society of Zimbabwe, which are:

  • To promote and represent the actuarial profession in Zimbabwe and to develop and maintain contacts with other actuarial bodies worldwide;
  • To encourage and support the education of actuarial students and to facilitate the continuing professional development of actuaries;
  • To encourage financially sound and ethical practices in the industries in which actuaries operate; and
  • To harmonise the standard of actuarial work done in industry for regulatory purposes, in collaboration with Ipec in Zimbabwe.

MC: What are the main issues that need to be understood about your profession?

LM: I think the first myth for me to dispel is that actuaries are not as expensive as people think they are and this barrier needs to be broken before people can have the confidence to hire the services of an actuary. Actuaries do not charge for an enquiry, so I encourage businesspeople to approach actuaries for meet and greet session; to solicit their views on how to approach certain problems. Running any business requires an understanding of

  • Economic factors;
  • The underlying commercial environment;
  • Demographic developments;
  • Labour force developments; and
  • Investment markets. Actuarial modelling is a key component in gaining this understanding.

Actuaries are trained to solve financial problems, not just in insurance and pensions, but in any financial space. The source of misunderstanding of what actuaries do is that they are normally left to carry out a valuation of things that have already happened and that creates a serious lag in the knowledge that can only be gained if attitudes change.

The same way that actuaries can review the financial cost of past events, they are equally equipped to provide guidance at the planning stage.

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