eBusiness Weekly
Michael Tome
Business Writer
INSURANCE and Pensions Commission (IPEC) has implored industry players to consider prioritising investments into strategic sectors of the economy to retain profits that are being repatriated offshore by foreign investors.
Lately, there has been a growing drive to attract foreign direct investment into the country, but IPEC lamented the position saying the insurance sector has the capacity to invest in some of the major projects which are being undertaken mainly by foreign entities.
Foreign investors have long been known for repatriating profits to their home countries, which is detrimental to the country as it does not benefit from resource extraction by foreign firms.
The insurance and pensions industry is one of the largest local investment blocks in most countries as funds from the sector increase capital supply to financial markets and wide-ranging areas of the economy.
In the same regard, some indigenous businesses have demonstrated the capacity to buy and operate big firms.
Zimbabwe has lately seen the signing of major deals, particularly in the mining sector.
Among the major deals struck in the sector recently is the acquisition of a controlling 87 percent stake in Arcadia Lithium mine by Zhejiang Huayou Cobalt Limited through a US$422 million deal while Bikita Minerals was last year acquired by Sinomine Resource Group.
While speaking during a joint webinar with ZIDA on investment opportunities for the insurance and pensions industry in Zimbabwe, IPEC Commissioner Dr Grace Muradzikwa said although foreign direct investment comes with a number of benefits it did not outrightly benefit locals.
She acknowledged that foreign direct investment came with employment creation, resource transfer, exchange of knowledge technology, skills, and increased productivity but stagnated growth (development wise) of the hosting countries.
“It is a fact that foreign investors repatriate their profits back to their home countries where the money is used to develop those countries more than where their investments are.
“From the foregoing, it is evident that inward-looking when it comes to investments is more critical than ever.
‘‘Local investors reinvest their profits in the local economy, they remain loyal to their country even when things go wrong, and essentially they also understand the business operating environment better than foreign investors,” Dr Muradzikwa said.
The insurance and pensions industry is mandated to develop through identifying growth opportunities for the benefit of policyholders and fund members thereby making an impact to the economy.
As such Dr Muradzikwa indicated that the industry has shown its appetite to invest in the country evidenced by its investment in various sectors among them the Zimbabwe Stock Exchange.
She called for the facilitation of large-scale local investment in strategic sectors of the economy by the insurance and pensions industry.
“History has shown us that foreign investors easily exit markets after they have exhausted the resource or when they feel the environment is no longer favorable for their operations.”
ZIDA Acting Chief Executive Officer, Duduzile Shinya highlighted some of the key sectors that local investors could venture into encompassing infrastructure, transport (including rail), tourism, manufacturing, mining, health, student accommodation, agriculture, and food processing as well as the ICT sector.
