Golden Sibanda Senior Business Reporter
THE National Social Security Authority is tightening the screws on its investee companies by demanding greater transparency, good investment returns and reconstitution of the boards of poor performers.
NSSA has since recalled its executives from the boards of its investee companies to foster accountability, better operational performance and meaningful returns where it invested taxpayers’ money.
Chairman Mr Robin Vela told a media briefing yesterday that his board appointed in July, is cognisant that the investment performance of NSSA is a function of the performance of firms it invested in.
As such, the new board hit the ground running and has already started working on restructuring the authority to transform its operations with five directors, including the general manager, booted out.
“In looking to hold investee companies’ boards fully accountable for their decisions, the board has resolved and withdrawn executives of NSSA from all boards of investee companies,” he said.
Mr Vela said NSSA will take the lead as an active shareholder and change the culture of investee boards and management with a history of diluting its shareholding at the first promise of fresh and cheap capital.
He said this normally took the form of rights offers issued at huge discounts to market value and net asset value. To curb such practice, he said NSSA will call for change of boards and management.
NSSA, a statutory State pensions authority set up by an Act of Parliament, is the single largest institutional investor in Zimbabwe with investments in the equities, listed companies, banks and properties. The authority manages in excess of $1 billion worth of assets.
But its investment choices have recently come under spotlight amid concerns it has not done much to ensure good returns on investments to guarantee contributors a living pension when the need arises.
Among its shoddy investment decisions have been investment in the volatile equities market and collapsed Capital Bank where the authority is said to have lost money running into several millions of dollars.
As well, the pittance the authority pays out to beneficiaries whose income is taxed over long periods, citing limited finances, has prompted Government to call for review of its investment policy to focus on developmental areas with profound socio-economic impact.
“It is every citizen’s right to have a reasonable nest egg to fall back on when they retire, unfortunately, this has not been the case, but we are now working to turn things around and this means managing contributions better so that we can deliver a decent pension.
“Contributions and capital must never be lost, but be protected and invested appropriately to generate acceptable investment income.
“Investment income should be utilised to fund liabilities such as pensions; cost of operations need to be minimised and fixed at single digit percentage of contributions received,” the chairman said.
Mr Vela said the performance of the board should be measured against the standard of living of millions of contributors and pensioners who entrusted the authority with their hard earned income.
NSSA has since briefly suspended all investment activities, as the new board works at understanding the architecture of the authority, its inner workings as well as its present and future needs.
This forms part of drastic action NSSA is taking to ensure it drives performance of companies in which it invested to earn returns that will bring meaningful returns to the authority and its beneficiaries. The board is also working to change the way business is done at NSSA.
The new NSSA board chairman said the board is concerned about the performance of investments the authority made in the past in terms of capital lost and lack of market related investment income.