Hyperinflation affecting infrastructure financing: IPEC 

Source: Hyperinflation affecting infrastructure financing: IPEC –Newsday Zimbabwe

PENSIONS supervisor director at the Insurance and Pensions Commission (IPEC), Cuthbert Munjoma

PENSIONS supervisor director at the Insurance and Pensions Commission (IPEC), Cuthbert Munjoma says the development of smart cities is being hamstrung by hyperinflation challenges which are making fixed income instruments unattractive.

Munjoma made the remarks on the sidelines of a financing smart cities and rural connect engagement meeting at the Zimbabwe International Trade Fair last week.

He said the informalisation of the economy is negatively impacting on savings mobilisation through insurance and pensions.

“Savings in the informal sector largely remain untapped, low confidence impacting adversely on savings mobilisation through insurance and pensions and pension contribution arrears are opportunity costs to investment. Hyperinflation makes fixed income instruments unattractive, calling for innovative capital-raising approaches and the  uncertainty over future currency regime resulting in short-termism in investment,’’ Munjoma said.

He said there should be engagements between employers and labour organisations on non-pensionable cushioning allowances.

“Enhanced regulation and supervision of the industry is needed to protect pension scheme members and policyholders,” he said.

Munjoma called for holistic pension reforms and a “re-design of the national pension systems to ensure delivery and unleash the potential in long-term savings mobilisation”.

The pensions expert added that the Insurance and pensions industry remains a significant source of infrastructure financing, hence there is need to unleash the potential contribution of the sector to infrastructure financing through macroeconomic stabilisation and growth and holistic pension reforms critical to harness savings from private and public pension schemes.