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Raymond Rusinga, [email protected]

In recent years, Zimbabwe has embarked on an ambitious journey to transform its energy infrastructure, primarily through the strategic involvement of pension funds in the renewable energy sector. 

The establishment of the Renewable Energy Fund (REF) in September 2024 marks a significant milestone in this initiative, showcasing the collaboration between the Government, private sector, and international organisations. 

This article delves into the role of pension funds in driving renewable energy projects, examines their investment strategies, and discusses the broader implications for Zimbabwe’s economic and environmental goals. Additionally, it draws parallels with regional and global experiences to propose a recommended course of action for further progress.

The role of pension funds in energy transformation

Pension funds in Zimbabwe have emerged as pivotal players in the renewable energy realm. Since 2018, they have collectively invested over US$57,3 million in various renewable projects, including solar mini-grids and small hydroelectric plants. Notably, Old Mutual Zimbabwe has spearheaded this movement with a substantial US$100 million investment through its Renewable Energy Fund. These investments are not merely financial; they are transformative, aimed at enhancing energy access and sustainability across the nation.

Pension funds have the capacity to mobilise significant capital, which is crucial for funding large-scale energy projects that require substantial upfront investment. The director of pensions and life assurance supervision at the Insurance and Pensions Commission (Ipec), Mr Cuthbert Munjoma, emphasised that these investments stimulate economic growth, create jobs, and enhance infrastructure. By channelling savings into renewable energy, pension funds are positioning themselves as agents of change in Zimbabwe’s quest for energy independence and sustainability.

Investment strategies and broader implications

The investment strategies employed by Zimbabwean pension funds reflect a commitment to aligning financial returns with societal and environmental benefits. By focusing on renewable energy projects, these funds are addressing critical issues such as energy poverty, climate change, and economic instability. 

The National Renewable Energy Policy of 2019 has provided a conducive environment for such investments, offering tax incentives and a regulatory framework that encourages private sector participation.

The broader implications of these investments are profound. Firstly, they contribute to Zimbabwe’s Sustainable Development Goals (SDGs), particularly Goal 7, which advocates for universal access to affordable and reliable energy. 

By investing in renewable energy, pension funds are not only generating financial returns but also fostering social equity by bringing electricity to under-served rural communities. This access is crucial for improving living standards, enhancing educational opportunities, and boosting agricultural productivity through technologies like solar-powered irrigation systems.

Secondly, the commitment to renewable energy aligns with global environmental goals, particularly the Paris Agreement. By reducing reliance on fossil fuels, Zimbabwe is taking concrete steps towards mitigating climate change and enhancing its resilience against environmental challenges. The shift to cleaner energy sources is vital for lowering carbon emissions and reducing the country’s carbon footprint.

Lessons from regional and 

global experiences

Zimbabwe is not alone in leveraging pension funds for renewable energy investment. Countries such as South Africa and Namibia have successfully integrated pension funds into their energy strategies. South Africa’s Government Employees Pension Fund (GEPF) has invested in large-scale wind and solar projects, significantly contributing to the country’s transition away from coal. Similarly, Namibia’s Social Security Commission has focused on solar energy projects that provide clean power to rural communities, thereby enhancing energy access and promoting sustainable development.

Globally, countries such as Denmark and Norway have set exemplary standards by directing pension fund investments into offshore wind farms, supporting both local economies and climate goals. These nations illustrate how pension funds can play a crucial role in financing renewable energy initiatives while ensuring sustainable returns for their stakeholders. The experiences of these countries highlight the importance of a supportive regulatory environment and strategic partnerships to maximise the impact of pension fund investments.

Recommended course of action

To further harness the potential of pension funds in shaping Zimbabwe’s renewable energy landscape, several actions are recommended.

Streamline regulatory processes: The government should prioritise simplifying and expediting regulatory approvals, particularly for Environmental Impact Assessments (EIAs) and power purchase agreements. A clear and efficient regulatory framework will instil confidence among investors and encourage more substantial investments.

Invest in grid infrastructure: Addressing the limitations of the national grid is essential for enabling the distribution of renewable energy. Investments in grid infrastructure will ensure that power generated from rural renewable projects can reach urban centres where demand is highest.

Foster regional partnerships: Zimbabwe should explore regional collaborations, similar to the Southern African Power Pool arrangements, to enhance energy trading capabilities. This would not only provide a safety net against energy shortages but also create opportunities for exporting surplus renewable energy to neighbouring countries.

Leverage international expertise: Engaging with global development banks and institutions, such as the African Development Bank, can provide Zimbabwean pension funds with the necessary resources and technical expertise to undertake larger-scale projects. Collaborating with international partners can mitigate some of the economic risks associated with hyperinflation and currency fluctuations.

Promote public awareness and education: Raising awareness about the benefits of renewable energy and the role of pension funds can galvanise public support and encourage further investment. Educational initiatives can also empower communities to engage with renewable energy projects actively.

In this vein, Zimbabwe’s pension funds are at the forefront of a transformative shift towards renewable energy, embodying a sustainable approach to economic development. Through strategic investments, these funds are not only addressing energy poverty but also contributing to broader environmental and economic goals. 

By learning from regional and global best practices, and implementing recommended strategies to streamline regulations and enhance infrastructure, Zimbabwe can unlock the full potential of its renewable energy investments. 

As the nation strives for a cleaner, greener future, the role of pension funds will be pivotal in achieving energy independence and promoting sustainable development for all Zimbabweans.

Raymond Tendai Rusinga is a researcher. He can be contacted on +263776206227 or email: [email protected]