IN a volatile economy with an unstable currency and high inflation, the best decision that an entity such as the National Social Security Authority (Nssa), that houses public funds, can make is find investment opportunities in stable economies.
In Zimbabwe’s case, such opportunities may be within the African region, especially in high growth destinations like South Africa, Angola, Namibia and Botswana. Stronger frontiers are available too in North and West African countries like Nigeria and Egypt. More opportunities are also available on the international markets where service industries have overtaken industrial-era manufacturing behemoths in terms of returns.
This is why on paper, Nssa’s new investment strategy, which targets Africa’s high performing and exponentially expanding sectors like insurance and banking sounds impressive.
The idea is to flee a domestic market — where decades-long mismanagement and plunder have grounded potential destinations for investment and restricted opportunities to only a handful sectors — and find assets that protect and grow the billions that Nssa should keep for workers and pensioners. Any laxity may end in a catastrophe — the collapse of an important national institution and with it, the livelihoods of present and future generations.
But does Nssa have the capacity to pick the right assets? With the benefit of hindsight the answer is, “Not exactly.”
Over the years, Nssa has failed to select the right assets to invest in, and even the firms to establish in order to unlock value for the billions of dollars of public funds under its stewardship.
Examples abound. The ill-fated Rainbow Beitbridge Hotel (RBH), where a staggering US$50 million was wasted, is a case in mind. Today RBH is a white elephant, and the crooks that were behind the fiasco have not been punished. Another is the investment into the now-defunct Capital Bank. Again, based on history, another catastrophe may be on the way due to corruption.
In the past, Nssa bosses have got richer than the fund itself, luxuriating in high end hotels and purchasing fast cars and erecting massive concrete structures while pensioners, the rightful owners of the purse, have been living in abject poverty because their earnings cannot be improved.
Investing on the African continent is no joke.The language barriers, the legal hurdles, currency volatilities and shaky economies are the troubles that confront many investors. Then there are the crooks who are experts in presenting impressive numbers to prospective investors. Nssa does not need to look far to understand that the African markets are unpredictable jungles.
African Sun Limited attempted these African forays but returned home badly bruised. What happened to Dairibord’s investments in Uganda and Malawi? And to Fidelity’s excursions into volatile South Sudan?
If one makes the right decisions, the African frontiers can be rich hunting grounds for fund managers. But Nssa should be warned to be cautious as it expands its scope. Our pensioners have suffered enough. It is time that the right decisions are made to limit the damage.