NSSA targets efficient investment portfolio


Tawanda Musarurwa
Senior Business Reporter
State-run pension fund, the National Social Security Authority (NSSA), says the move to divest from ZB Financial Holdings (ZBFH) was based on the need to streamline the investment portfolio, particularly with regards to the financial services sector.

On November 13, 2020, NSSA recently completed the disposal of its 37,79 percent in ZBFH.

Earlier in May, the authority’s board approved the disposal of its entire shareholding in the company.

NSSA acting general manager Mr Arthur Manase, said the authority is moving towards making its banking portfolio more efficient.

“The disposal was in line with NSSA’s banking sector consolidation strategy that is designed to create a leaner and more manageable portfolio that enhances stakeholder value and consistently pays sustainable dividends to NSSA for the benefit of pensioners and other vulnerable groups such as orphans, widows and widowers,” he said.


“The authority’s strategic focus is a combination of divesture and consolidation to reduce duplications, improve efficiency and minimise capital requirement while creating a formidable financial sector investment that guarantees shareholder returns, value preservation and a strategic fit into the NSSA’s mandate.”

Mr Manase added that the disposal was also to ensure that its banking portfolio is able to meet minimum capital requirements, without weighing heavy on the pension fund per se.

Earlier in February, the Reserve Bank of Zimbabwe indexed minimum capital requirements for Tier 1 and Tier 2 banks at the equivalent of US$30 million and US$20 million, respectively, a development that required NSSA to help capitalise its bank holdings.

“Management analysed the repercussions of this directive using the December 2019 capital positions, which indicated that NSSA could be called upon to provide an additional capital of up to US$326 million across the banking sector investee companies,” said Mr Manase.

“As NSSA did not have the capacity to meet this potential demand, a recommendation was made to streamline investments in the banking sector by focusing on institutions that were likely to trade themselves into meeting the capital requirements. This recommendation was adopted by the NSSA board, leading to the May resolution.”

The authority said as part of the due diligence process NSSA enlisted a reputable financial advisor to do an independent valuation “to ensure NSSA had derived the correct value from the transaction.”

“The advisor concluded that the deals where the parties agreed to calculate the swap ratio based on a 30-trading day volume-weighted average price (WVAP) to 30 September 2020 after including a 70 percent premium, was favourable.

“Based on the formula, the VWAP prices for both ZB ($11,3183) and CBZ ($43,2858) using 30-trading information from the 20th of August and came up with a fair swap ratio of 225 ZB shares for 1 CBZ share after including the 70 percent premium. Therefore, for the 50 percent consideration, NSSA received 14,341 million new shares valued at $540 041 800 in CBZ representing 2, 15 percent stake,” explained the acting general manager.

“For the other 50 percent NSSA received US$11,646,889, which was equivalent to $947,510,494 after factoring transaction costs.

“This money was invested in an asset that yields foreign currency.”


NSSA’s investment processes are guided by the NSSA Act [17:04], Public Finance Management Act [22:23], Public Entities Corporate Governance Act [10:31], and Investment Policy and Investment Strategy approved by the board from time to time. The authority has strengthened due diligence requirements in its investments.