Zimbabwe and the wider region will struggle to scale renewable energy investment unless they mobilise deeper pools of long-term domestic capital, according to Sam Matsekete, chief executive officer of Old Mutual Zimbabwe.
In an interview at the Sadc Energy Week held in Victoria Falls, Matsekete said the focus had been on how to strengthen funding not only for renewable generation, but also for the transmission and distribution infrastructure required to make new capacity viable.
“The discussion this morning was very useful. Our panel was focusing on how we can enhance financing of renewable energy as well as the infrastructure that is supposed to accompany that renewable energy generation in terms of transmission and distribution,” he said.
A central theme, he noted, was the need for greater participation by pension funds and insurance companies — institutions that manage long-term savings and are structurally suited to patient capital.
“For us to be able to scale up the investment that we would direct into long-term projects, renewable energy included, we need to be gathering and harnessing resources,” Matsekete said. “That means promoting long-term savings and patient money that we would usually see coming through insurance funds and pension funds. If we don’t do that, our capacity will always be constrained and our ability to scale up the investment will always be compromised.”
Encouraging long-term savings, however, requires deliberate incentives and regulatory coordination. According to Matsekete, de-risking frameworks and policy coherence are essential to attract both domestic and foreign capital.
“One observation made is that the regulations, the policy-making, as well as the innovation from the industry must work together to create products that start to excite money and flows of capital that are probably avoiding the formal channels,” he said. “If they come in, we can scale up the aggregation of investable funds.”
Equally important is the quality of the projects themselves. “The way the projects are structured must make them investable. We are talking about viability — they should be bankable. There is a lot of policy support required to de-risk some of those projects,” he added.
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Matsekete cited the example of a US$150 million green bond issued by Copperbelt Energy Corporation, which was oversubscribed.
“They were looking for US$150m and it was oversubscribed. When you pierce through the veil, the oversubscription was coming primarily from pension funds, insurance funds and institutional investment funds gathered elsewhere in other markets,” he said.
The structure offered tax incentives, including a reduced 15% withholding tax, and benefited from government assurances over policy stability. It also featured a clear off-take arrangement with mining houses, providing predictable cash flows.
“When we invest, we are investing for cash flows,” Matsekete said. “People see projects, but we are investing for cash flows that will generate the return of capital and the return on capital. That structure excited people because it was designed like that.”
For Matsekete, the key question is why similar structures cannot mobilise domestic and regional savings.
“Are we not able to put similar structures in place for locally harnessed pension and insurance funds? I think we can,” he said. “The people bringing in what we call foreign money are insurance funds and pension funds from foreign territories — except that we are incentivising them.”
Developing attractive frameworks for local institutional investors would, he argued, deliver additional dividends: downstream community benefits and stronger negotiating leverage when partnering with foreign capital.
“When you have local money partnering with foreign money to scale up a project, you are able to negotiate better terms,” he said.
Despite significant renewable energy potential, several projects have failed to reach financial close. According to Matsekete, weak off-take structures and tariff tensions are often to blame.
“Sometimes projects are not configured to identify the right off-take arrangements,” he said. “Private sector investors are looking for a return.”
He highlighted the tension between energy as a public utility — where affordability considerations influence tariffs — and private capital seeking commercially viable returns.
“You may have an off-taker prepared to pay a commercial rate because they need consistent supply and it makes business sense for them. You want to be able to connect that demand with an investor who finds that viable,” Matsekete said. “Those are the elements that need to be factored into the project and supported by the regulatory framework.”
Long-term risk remains another major hurdle. Renewable energy investments typically run for 10 to 15 years, requiring confidence in currency stability, policy continuity and value preservation.
“In our environment, investors will always ask: what is the confidence that I can get my money out? Or if it is long-term money gathered locally, how do I get assurance that I am not going to lose value over 15 years?” he said. “We have to think about how we defend value and promote the returns expected over that period.”
For Matsekete, the path forward lies in aligning regulation, fiscal incentives and project structuring to crowd in institutional capital — particularly domestic savings pools that remain underutilised.
“We are in business,” he said. “If the policy environment attracts people and the projects are structured for bankability, the capital will come.”
