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Senior Business Writer

OLD Mutual Zimbabwe invested US$26 million in Alternative Investments last year supporting projects in sectors such as agriculture, tourism, and renewable energy, Group chief executive Mr Samuel Matsekete has said.

Commenting on the financial results for the year ended December 31, 2023, Mr Matsekete said the investments aim to generate sustainable returns while contributing to the growth of these key sectors.

Beneficiaries include small and medium businesses and some start-ups.

“We continued to increase emphasis on Alternative Investments, within our investment strategies. In 2023, we invested US$26 million into Alternative Investments, supporting projects in sectors such as agriculture, tourism, and renewable energy.”

The country has already made an ambitious commitment to reduce carbon emissions by 40 percent on its Low Emission Development Strategy (LEDS) by 2030 through providing communities with alternative energy and proper waste management.

To complement this effort, more local companies have started using renewable energy such as solar while broader initiatives such as investing in new smaller hydro-power plants, wind and establishment of bio-digesters in rural areas are being worked on.

According to the National Development Strategy 1 (NDS1), energy is a key enabler of the acceleration of the country’s modernisation and industrialisation agenda, as well as sustainable socioeconomic growth.

To address perennial power shortages in the country, the Government is undertaking several electricity generation projects, most of which are financed by extra-budgetary funds, loans and the private sector.

However, the drive towards generating 1 100MW from renewable energy sources by 2025 has been slowed by lack of investment by independent power producers (IPPs) spooked by the country’s currency volatility and uneconomic tariffs.

To address the concern, the Government is giving guarantees to independent power producers, with projects of a combined 1 000MW.

The Government agreed to a Government Implementation Agreement (GIA) for all solar IPPs projects.

Under a GIA, IPPs will be guaranteed an economic tariff, while the Reserve Bank of Zimbabwe will ensure that they can convert their earnings to foreign currency and be able to transfer it.

The GIA also carries a power purchase agreement with Zesa.

Added Mr Matsekete: “Small and Medium businesses and some start-ups among our clients, also benefited from this thrust. These investments aim to generate sustainable returns while contributing to the growth of these key sectors,” said Mr Matsekete.

He noted that within the real estate sector, new investments were mainly in the mining and distribution value chains and student accommodation.

Mr Matsekete said the Group recorded a profit for the year of $911 billion in historical cost terms, up from $92 billion achieved in the prior year.

General Insurance and Life Insurance revenues grew by 1 048 percent, achieving $184 billion for the year ended 31 December 2023 up from $16 billion in the prior period.

“This growth was driven by both new business inflows and premium adjustments in response to inflation. Insurance service expenses, however, grew significantly due to the effect of inflation and the need for prudent reserving to cater for increased costs of meeting policyholder obligations. This adversely affected the insurance service result.

“Investment returns were $5,1 trillion up from $423 billion achieved in the prior year. This was largely due to the performance of ZSE listed equities, translation gains of investments denominated in foreign currencies and gains on investment property.”

Interest income grew by 218 percent to $146 billion driven by growth in loans and advances despite tightening lending margins as the profile of the loan book became skewed to US dollar loans.

Fee and commission income for the Group increased to $209 billion, an increase of 833 percent driven by higher nominal values of transactions in response to inflation.

Total assets increased by 849 percent from $1 trillion as at 31 December 2022 to $9,4 trillion, in nominal terms, driven by investment and exchange gains. Total net equity increased by 703 percent from $167 billion to $1,3 trillion.

Mr Matsekete said the entity will continue to invest in technology and process improvement efforts while focusing on growing customer base for both retail and corporate segments.