Restructuring NSSA to divest from failing firms, bans related party transactions

Restructuring NSSA to divest from failing firms, bans related party transactions

HARARE, October 21 (The Source) – Zimbabwe’s pension fund National Social Security Authority (NSSA) on Wednesday said it would pull out from under performing companies and invest in long- term capital projects with sustainable returns, a move likely to cause tremors on the Zimbabwe Stock Exchange.

NSSA, one of the country’s largest institutional investors, has 70 percent of its investments in the equities market with interests in 53 of the 59 companies listed on the Zimbabwe Stock Exchange where it holds at least 10 percent shareholding in 12 counters. It has in the past come under the spotlight for its questionable investment choices.

Board chair Robin Vela told a press conference on Wednesday that the pension fund had plans to diversify its current portfolio in line with changing market trends.

“The board is concerned about this historic investment performance, both in terms of capital loss and the lack of market related investment income,” said Vela.

“Freeing up funds locked up in non-performing equity and money markets and redirecting these to longer term capital projects will help support strategic national goals while securing sustainable returns.”

Vera said the dismissal of chief executive James Matiza alongside four other directors on Monday was part of a restructuring exercise aimed at improving corporate governance which was lacking at the institution.

“For years, NSSA has been dogged by governance deficiencies that have negatively impacted its capital base and eroded public and investor perception and confidence in the Authority. The Board understands that resetting the relationship with all stakeholders and earning back the trust requires urgency, transparency and a clean slate”.

In addition, Vela said the board had barred its members, executives and management connected persons from doing business directly or indirectly with the Authority to curb related party transactions which have prejudiced NSSA in the past

He said the fund would undergo a forensic audit following which tighter controls and closer oversight mechanisms will be instituted to improve investment performance.