Old Mutual bullish about Zim economic growth prospects

Nelson Gahadza

DIVERSIFIED financial services group Old Mutual Zimbabwe says the economy still presents significant opportunities and shows potential growth in the long term, a situation that will cause the group continue to make alternative investments in key economic sectors.

This comes as the economy has witnessed sustained stability, with economic recovery largely being led by the rebound in agriculture, tourism and impressive mineral commodity prices.

Old Mutual Zimbabwe chief executive Mr Samuel Matsekete said the country holds potential opportunities that need to be seized for the benefit of communities.

“We have seen that potential showing in investments that we have seen in new places that we have invested.

“Therefore, if we take a long-term view of the economy, we see there are still significant potential opportunities to be extracted that will benefit the economy and the communities,” he said during a presentation of the group’s interim financials for the period to June 30, 2023.

Mr Matsekete said the group has established partnerships to support the mobilisation of resources for lending and investment in client ventures and key sectors of the economy.

He said, during the period under review, the group deployed US$13,7 million into alternative investments in renewable energy, agriculture and manufacturing sectors.

“We made an investment in real estate in Ngezi that houses equipment that processes gold and platinum, and that is part of the US$13,7 million we have deployed, and this plant was for US$2,5 million,” he said.

Old Mutual Zimbabwe has previously committed to continuing to invest in more solar energy projects in order to bridge the gaps in the country’s power supply.

In 2021, the group and its partner SolGas commissioned the US$7,3 million SolGas Energy 5 megawatt (MW) solar plant at Cross Mabale in Hwange district.

However, Mr Matsekete said, in addition to investments in the Zim campus students’ accommodation project in Bulawayo, there are also ongoing Centragrid and Great Zimbabwe hydropower projects.

The chief executive said the group’s increased exposure to alternative investments such as energy and real estate will also see less exposure to traditional assets.

“This will ensure we are able to access cash flows that are generated from those investments in the alternative investment portfolio, and cash flow if this environment becomes one key source of the ways that we can protect value,” he said.

He said the group also invested in assets that are able to close some gaps seen in the group’s proposition, such as pension funds or insurance funds.

“For instance, you will start to see us explore some of the initiatives that are in the early stages around how much exposure we can take within real estate, for example, in the retail space,” he said.

Mr Matsekete said the company deployed funds into the value chains of key sectors of the economy.

“So, you know that in this market, we have sub-sectors that are performing better than others, so we are beginning to sway in that direction in a significant way in our investment allocations,” he said.

Banking subsidiary CABS foreign currency loans accounted for over 90 percent of the total loan book, said Mr Matsekete.

Agriculture and energy sectors’ lending contributions increased to 46 percent compared to 39 percent in the financial year 2022, and 20 percent, respectively.

The non-performing loan ratio of 0,2 percent was well within the regulatory and internal limits. The bank’s foreign currency deposits closed at 92 percent of total deposits, up from 59 percent.

Total deposits increased by 77
percent, driven by an increase in US dollar deposits.

Mr Matsekete said the shift of the balance sheet weight to USD also reflected in the reduced interest margins to 16,9 percent, from 22,8 percent in the prior year.

He said the bank strengthened partnerships with foreign lenders, mobilising and deploying US$110,9 million of credit lines to customers in key sectors, up from US$108 million in December 2022.

According to the group’s investment unit, Old Mutual Investments, the authorities need to continue implementing measures to build foreign reserves, improve market confidence and reduce external debt levels for sustained stability and growth.

The stable economic environment has been a result of a series of policy interventions put in place to mop up excess local currency liquidity and has resulted in the strengthening of the Zimbabwe dollar against the US dollar.