HARARE – The pay-as-you-go pension scheme, the National Social Security Authority (Nssa), received $7 million from government in the second quarter of the year for facilitating the acquisition of Telecel Zimbabwe (TZ) by the State-run Internet access provider, Zarnet.
All in all, Nssa will receive $43,3 million from government, which will be paid in quarterly instalments, over a period of three years.
The State-run pension fund made the decision to exit TZ following negotiations to restructure the financing deal that saw Zarnet acquire 100 percent equity in Telecel International — which owns 60 percent of TZ — through a transfer of rights and buy-back agreement.
Nssa chairperson, Robin Vela yesterday, said the exit structure would see the authority, on a secured basis, being paid $43,3 million in quarterly instalments over a three-year period with a resultant internal rate of return of approximately 16 percent.
“The first payment of $7 million was received in the second quarter of 2017,” the Nssa boss said in a statement accompanying the statutory fund’s financials for the year to December 31, 2016.
Nssa earlier this year announced its intention to relinquish its controlling stake in TZ to Zarnet after three years.
Zarnet’s acquisition of the TZ stake was achieved through a mezzanine structure valued at $30 million, provided by Nssa, after government came up with a $10 million deposit in the $40 million deal.
Marred in controversy, the transaction gives government controlling stake in the country’s third largest mobile network operator to the little know government Internet provider, Zarnet.
Reports last year indicated that Nssa was not “entirely happy” about the prospect of losing out on an equity holding in TZ — or just playing the role of a financier and — where it sees huge opportunities for rich pickings, and acquiring an asset that can add value to its policy holders.
Meanwhile, in the full year to December 2016, Nssa recorded a profit surge to $105,9 million from $32,1 million recorded in 2015 with general manager Elizabeth Chitiga attributing this to less write downs and improved contributions.
Contributions and premiums also increased by 12 percent from $292,9 million to $327,7 million in 2016.
Contributions alone increased by 14 percent from $242,8 million to $276,5 million while premiums increased by two percent from $50,2 million to $51,2 million.
“The increase in contributions is attributable to improved collections arising from stakeholder engagement. This has resulted in voluntary compliance despite the decline in the number of registered employees from 28 739 to 28 162 due to company closures,” Chitiga said.
In the year under review, investment income increased three percent to $23,5 million from $22,8 million, attributable to the increased amount invested in the money market which partly offset the decline in interest rates.
Total claims and benefits were up five percent from $136 million in 2015 to $142,7 million with an aggregate of 187 666 beneficiaries receiving pensions.
However despite several cost-cutting measures, the pension fund’s operating expenses were up 21 percent from $87,6 million to $105,8 million.
“The increase arose from the high credit losses provision of $40,9 million and bad debts written off of $23,4 million. Excluding these provisions, impairment losses and unusual items, operating expenses decreased by eight percent from $39,8 million to $36,3 million in 2016,” Chitiga said.
A loss on valuation of investment properties of $11 million was recorded down from $87,9 million in 2015 on the back of a $1,7 million loss from an associate company as Nssa’s assets grew 15 percent to slightly over $1 billion buoyed by improved profits.