dyton mupawaenda
Business Reporter
GROWING informalisation of the economy, limited geographical presence to potential unserved markets and inadequate investor education, are factors hindering the growth of Zimbabwe’s investment industry, market analysts have said.
Presenting a topic on the current state of the country’s investment industry during the annual conference of the Association of Investment Managers of Zimbabwe (AIMZ) in Cape Town, South Africa last week, Intellego Investment Consultants Mr Welcome Mavingire said the informalisation of the economy had significantly reduced the pool of potential investors with many individuals opting for informal investment avenues, such as Ponzi schemes, due to a lack of trust in formal investment products.
Mr Mavingire noted the proliferation of Ponzi schemes, which has surged in recent years highlights the public’s appetite for investment opportunities, but also underscores the need for greater financial literacy.
“The regulator has done a lot in terms of investor education and awareness initiatives, but much more needs to be done to tap into the potential of the underserved market,” he said.
“Despite low investor confidence, the proliferation of Ponzi schemes shows that there are people willing to invest. However, they lack the necessary education and knowledge to make informed investment decisions.
“There is significant potential to grow the market by expanding our geographical reach to capture new markets, such as tobacco farmers and informal miners, who currently have limited access to our services.
“We must take proactive steps to protect our market share.” Another major challenge facing the industry was the reluctance of pension funds to outsource a portion of their portfolios to asset management companies.
Mr Mavingire proposed a series of measures to revitalise the asset management industry. These include encouraging large funds like NSSA and standalone pension funds to outsource part of their investment management to professional firms.
The practice is common in South Africa, where a significant portion of civil service retirement savings is managed by investment companies.
“We need to collectively lobby when it comes to actively participating in the management of public funds,” he said.
Mr Mavingire also suggested re-designing products to better meet investor needs, particularly focusing on member benefits. Additionally, he proposed offering tailored wealth planning solutions for high-net-worth individuals and retirement savings and investment products for company executives.
To boost investor confidence and market reach, Mr Mavingire emphasised the importance of investor education.
He advocated for collaboration with regulators to implement comprehensive programmes. Furthermore, he highlighted the need to expand the retail market and develop cost-effective strategies to tap into the diaspora market.
Total funds under management (FUM) as at 30 September 2024 stood at ZiG92,84 billion, representing a 99,64 percent increase from ZiG46,50 billion recorded in the previous quarter. The total FUM as of September 30, 2024 includes US dollar-denominated FUM of US$1,76 billion, which were translated to local currency at the prevailing exchange rate.
The industry average FUM for the period ended 30 September 2024 stood at ZiG3,2 billion. The sector’s exposure to the stock market increased to 40,53 percent from 37,21 percent recorded in the prior quarter.
This was attributable to the general increase in stock prices during the quarter as evidenced by a 90,25 percent increase in the Zimbabwe Stock Exchange (ZSE) All-Share Index. There was a slight decline in the sector’s property investment exposures from 45,91 percent reported as of June 30, 2024 to 43,64 percent recorded as of September 30, 2024.
Money market investments marginally increased from 4,71 percent recorded in June 2024, to 4,72 percent reported on September 30, 2024. Investment in unquoted equities declined marginally to 3,68 percent from 3,91 percent recorded as of June 30, 2024.
Exposure to bonds declined from 5.38 percent recorded in the prior quarter to 4,97 percent.
Cash or call deposits and other investments all account for the remaining 2,47 percent investment exposures for the asset management industry.
Online Reporter
