The National Social Security Authority (Nssa) says about US$600 million has been eroded from its balance sheet over the past two years as the economy remains under pressure from a prolonged crisis.
The economic crisis has translated into subdued job creation – where the fund derives its income.
The manufacturing sector retrenched about 8% of its staff last year alone, it has emerged.
A Nssa executive said the write–downs prompted it to redirect investments to offshore projects, to earn foreign currency returns.
The volatilities have impacted on Nssa’s ability to invest in new projects, expand operations, or even sustain current activities.
Speaking to financial journalists during an Insurance and Pensions Commission-Nssa mentorship programme on Tuesday, the authority’s acting general manager Charles Shava said his team was taking proactive measures to defend the fund.
“What we collect certainly over the past five years has been differing from one year to another because of the macroeconomic situation that is in the country,” Shava said.
“It has always not been easy to do that. At some point, our balance sheet was up to US$1,2 billion but that has since gone down to about half of that.
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“So, it is all because of things that are happening in the economy. First of all, I want all of you to understand that we are operating in a difficult and unpredictable macroeconomic environment.
“What Nssa can do can never be divorced from the general performance of the economy.”
Zimbabwe’s crisis has resulted in the extensive battering of the domestic currency, which depreciated by about 700% last year, according to some estimates.
The fragilities forced the government to introduce the Zimbabwe Gold (ZiG) as the new currency on April 5.
It has generally stood its ground depreciating at a much slower pace than the Zimbabwe dollar since its launch.
But there have been volatilities across markets, including power and foreign currency shortages, which government has struggled to stem.
Shava said Nssa was not isolated as it operated within a wider economy.
“So, whatever we collect depends on how the economy is performing, how many people are in employment, and how much they are earning,” the Nssa boss noted.
“But, from our side as management, we are taking certain measures to make sure we strengthen our balance sheet. We want to harden our balance sheet by making sure that we invest as much as possible in those assets that will give us hard currency returns.”
Nssa is the largest public sector investor in the market with significant stakes in several of the top listed firms, real estate projects and infrastructure development portfolios.
“We are also doing investments offshore,” Shava said. “We believe that where we invest part of our investments offshore, it will hedge us against any local vagaries that may happen in our economy.
“So basically, that is what we are doing — investing in projects that give us returns in hard currency and it is actually working very well.
“To prove that this is working for us, our balance sheet is strengthening, and our value is strengthening. Two years ago, our investment income was only contributing between 4% and 6% of the total income Nssa gets. But we are currently sitting at between 13% and 15%. So, that is how our investment has been going up.
“In hard currency, we are talking about growth from about US$1,7 million two years ago to the current, which is around US$25 million, US$27 million income per annum. So these are some of the things that we are doing to strengthen our balance sheet.”
According to the United Nations Trade and Development World Investment Report 2024, foreign direct inflows into Zimbabwe rose by nearly 49% to US$588 million last year from the prior period.
While that is a decent rise, this falls far below Zimbabwe’s capital requirement needs of US$40 billion, based on figures from the Treasury.
Thus, the limited amount of foreign currency makes Zimbabwe a poor destination in attracting forex capital.
“But, again, look at this in the context of the general economy. We can only do so much. If the economy is failing, Nssa is likely to fail as well,” Shava said.
“If the economy strengthens, we will try and make sure that we are ahead of the performance because we mobilise public funds and we want to make sure that we do the best with those funds.”
