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Minister Chinamasa

Martin Tarusenga
Finance Minister Patrick Chinamasa’s recent decision to act and get the pensions and insurance industries operating more transparently to achieve the industries’ objectives of harnessing disposable income through pension and insurance service provision in a way to instil public confidence, has raised both a sense of hope and mistrust among pensioners, insurance policyholders and other subscribers of the services.
The Finance Minister made the decision last month to institute a Cabinet approved commission of inquiry into the correctness of benefits entitled to subscribers of pension and insurance services, and to review all legislation adversely affecting the efficient provision of pension and insurance services in Zimbabwe.

Public hope in the decision is hinged on the commitment demonstrated by the minister to date, not least in the speed with which he put together a draft Terms of Reference for the commission of inquiry and a draft document of those principles to underpin the review of relevant pension and insurance legislation – all of which are to be agreed upon by all stakeholders.

A stakeholder workshop in which the minister attended throughout the day has since been held to discuss the latter draft document – great start to reinvigorating the intermediary role of the industries to harness disposable income domestically.

To be sure, the minister’s efforts of raising funds to grow the economy and avert current liquidity problems, can only be a resounding success if the minister sets correct fundamentals for domestic investment in pensions and insurance service provision, and financial services sector overall, and in other economic sectors – yes, charity begins at home.

His strategies as reported in the media, to raise such funds through Diaspora Bonds, through attracting Foreign Direct Investment, through lines of credit from institutions such as the International Monetary Fund, and the World Bank, all work in a “conducive business environment” that the minister himself wants to create in Zimbabwe.

That conducive business climate stands on nothing, but fundamentally on trust from lenders (herein the investors), both domestic and foreign investors.
The minister can generate that trust and hence business climate by ensuring that investments in pension/insurance services (pension arrangements, endowment insurance policies, etc), issued by insurance companies and related service providers are honoured in full and gracefully.

This demands nothing short of engaging correct governance procedures including establishing the correct benefits when pensioners complain against insurance companies, ensuring that errant insurance companies are brought to account in a manner that the insurance companies understand that there are consequences, and demands that strategies/policies are in place to prevent same in the future – the public will no doubt be confident of the business/investment climate, and so will the foreign investors. This is the solid foundation of so called “deepened” financial services recognised by progressive economies of the world – hence the elaborate set up of “best practices” such as Solvency II and other regulatory frameworks.

It is therefore the lingering, underlying public mistrust arising from the cowboy behaviour showing to date in financial institutions, insurance companies included, that the minister must set out to dispel resolutely – and demonstrably so.

Such undesirable institutional conduct is on the face of it aided by apparent shortcomings in the justice system as applied to those that are financially vulnerable.
Evidence of such undesirable institutional conduct becomes apparent in the pension and insurance industries when information from pensioner organisations reveals that almost all insurance companies have to date taken advantage of loopholes in the justice system, and abused the ill-gotten financial power at their disposal, to spitefully dismiss pensioners.

Insurance companies have for instance refused to disclose the methods that they used to calculate benefits that subscribers are now unhappy with, and they have refused to consider counter benefit propositions from subscribers, worst of all, evidence abounds of situations where pensioners have over the years lost out on their full rightful benefits, as insurance companies make endless appeals to higher courts, against clear-cut lower court rulings in favour of pensioners.

One of the prominent insurance companies has for instance been appealing a very clear-cut magistrate court ruling in favour of pensioners since 2003.
The insurance companies use the flimsiest appeal grounds they can bump into, as long as it serves to set aside the pensioner favourable court ruling, and in the process inflict significant legal expenses to the pensioner.

The often financially weak pensioner invariably and eventually gives up, losing their investment to the insurance company, considering there will always be a very long waiting list at the only two High Courts in Harare and Bulawayo, and at the only Supreme Court of Zimbabwe.

The pensioner investor gets to realise they have no chance when the scarcity of higher courts is coupled with the total lack of incentives to win the case in the shortest time possible on the part of the lawyers acting for the pensioner.

Pensioners and other such vulnerable members of the public are essentially disenfranchised! And foreign investors figure out what their chances are if the minister can allow “the business climate” to trample on financial property rights of their own!

More such irresponsible institutional conduct working against the investor abounds. Such irregularities in the business/investment environment are certainly apparent to the more savvy large scale foreign investor.

The Honourable Minister can be rest assured they will among other things, do their research to establish the effectiveness of justice systems, and to check if “best practices” are engaged to safeguard any planned foreign investment.

They will rationally not place their funds if there are indications of irregularities such as highlighted.
It is advisable to prioritise reining in insurance companies and other financial institutions if there is the slightest evidence they are acting irresponsibly, and undermining the much needed trust.

Martin Tarusenga is General Manager of Zimbabwe Pensions & Insurance Rights, email, [email protected] ; telephone; +263 (0)4 883057; Mobile; +263 (0)772 889 716

Opinions expressed herein are those of the author and do not represent those of the organisations that the author represents.