Source: NSSA demands dividends | The Financial Gazette March 2, 2017
THE National Social Security Authority (NSSA) is piling pressure on investee companies, with a push even for management or board changes, as it seeks reasonable returns from its investments.
NSSA is desperate to extricate itself from the perception that its board and management have a care-free attitude towards its investments.
This was after the compulsory pension fund lost millions of United States dollars through bad investments in several companies and banks since its formation in 1989.
NSSA is also pushing for a turnaround of its fortunes to better serve its clients in the wake of criticism over poor pension payouts.
The authority is currently paying pensioners a paltry US$60 per month.
It has, however, become aggressive in its push for change in Zimbabwe Stock Exchange (ZSE) listed companies in which it has shares amounting to 10 percent and above in order to get meaningful returns on its investments.
NSSA has begun requesting remuneration packages of managers and directors from the companies it has a sizeable shareholding, with a possibility that these could be reviewed in cases where they may be too high or not commensurate with a company’s fortunes.
Robin Vela, NSSA chairman, said the performance of companies in which they had an interest has a direct impact on their operations and how they are viewed by the market and pensioners.
He revealed that NSSA would be re-organising its shareholding in some listed companies to create value.
“For us to perform better, we expect all companies we have investments in to also perform better. We are more concerned with transparency by listed companies we are invested in. This includes a fair remuneration policy and packages,” he said.
Vela said investors were more comfortable with companies that were transparent about their investments, debt structures, how they spent their resources, profiles of their managers and directors and issuance of cautionary statements when a transaction was in progress.
“In some of these companies, we were attracted by their dividend policies and strategies to remain profitable. Not all companies are following these obligations and it has become of concern to us. We will re re-arranging some of our shareholding in some (listed) counters,” said Vela.
NSSA has a strong exposure on the ZSE. About 72 percent of its investments are on the local bourse.
It has a 43 percent stake in NicozDiamond, 27 percent in Fidelity Life Assurance, 51 percent in First Mutual Life Holdings and 20 percent in OK Zimbabwe.
The authority also has a 36 percent shareholding in Rainbow Tourism Group, 10 percent in Seed Co, 17,7 percent in starafricacorporation, 35 percent in Turnall Holdings, 17 percent in ZimRe Holdings, 9,3 percent in Ariston Holdings and 6,5 percent in Bindura Nickel.
On Tuesday, NSSA sold its 12,9 percent stake in CFI Holdings as part of the re-organisation of its shareholding in listed counters.
ZimRe, through its investment vehicle, Stalap, owned by the Rudland brothers — Simon and Hamish – is now the largest shareholder in CFI Holdings with a 43 percent stake.
Some of the companies NSSA is invested in have not been declaring dividends for years, citing the need to preserve cash for either re-capitalisation or servicing of debts.
Interestingly, their directors have been pocketing hefty allowances and directors fees.
Some of the companies have declined to declare dividends despite passing resolutions to buy their own shares using internal resources.
NSSA is currently pushing for an extraordinary general meeting to remove the existing CBZ Holdings’ board over non-disclosure of “vital” information on hefty packages to directors.
The authority has a 10,7 percent shareholding in CBZ.
Board fees for CBZ directors, at US$1 010 402 in 2016, were the highest among listed companies.
The second highest paid board on the bourse was that of FBC Holdings, which paid out US$703 782 to its directors after approval at its annual general meeting last year.
NSSA has a 34,5 percent shareholding in FBC Holdings.
There has been speculation in the market that NSSA would pursue the FBC Holdings’ board in the same manner it had done with that of CBZ Holdings.
But Vela said they were happy with FBC Holdings’ operations and policies, which he described as transparent.
“FBC has been consistent in their operations and profit. We are happy with their operations,” he said.
NSSA also has shareholding of less than four percent apiece in Art Corporation, Colcom, Axia Corporation, BAT Zimbabwe, Edgars, Cafca Limited, Willdale, Padenga, Nampak and Falcon Gold Zimbabwe.
Government wants NSSA to reduce its exposure on the capital markets and balance its investment portfolio with infrastructure projects and employment creation to help revive an underperforming economy.