Old Mu­tual’s Zim unit taps into power, di­as­pora

The Star Early Edition - - COMPANIES - Tawanda Karombo

OLD Mu­tual’s unit in Zim­babwe is tap­ping into al­ter­na­tive in­vest­ment mar­kets such as power gen­er­a­tion, di­as­pora mar­ket and mi­cro-lend­ing as in­vestors in Zim­babwe rush for cover from trou­bled mon­e­tary as­sets.

The com­pany, which op­er­ates in­sur­ance, banking and prop­erty units in Zim­babwe, is the coun­try’s big­gest fi­nan­cial ser­vices group.

Jonas Mushosho, the group chief ex­ec­u­tive at Old Mu­tual Zim­babwe, said yes­ter­day that “rapid growth in the price of eq­ui­ties” in the liq­uid­ity-strapped coun­try “re­flects fear of mon­e­tary as­sets”.

As a re­sult of cash and for­eign cur­rency short­ages in the coun­try, in­vestors were “now flee­ing” to real as­sets.

As one of the strate­gies to move away from risky in­vest­ment op­tions, Old Mu­tual Zim­babwe is tap­ping into the di­as­pora mar­ket.

“We have tapped into the di­as­pora mar­ket. We have en­tered an ar­range­ment with Zim Pay, who col­lect money from peo­ple’s bank ac­counts from peo­ple out­side the coun­try and for­ward it to us and we have done this on mort­gage re­pay­ment.”

Old Mu­tual Zim­babwe has just com­pleted a 1.6MW power plant in Chipinge, near the bor­der with Mozam­bique. Zim­babwe has power deficits and has signed in­de­pen­dent power pro­ducer agree­ments to ramp up out­put of elec­tric­ity for the coun­try.

Ac­cord­ing to of­fi­cials, the Old Mu­tual Zim­babwe power plant is al­ready op­er­a­tional and will be launched this month.

The com­pany has a power pur­chase agree­ment with the Zim­bab­wean state power util­ity, valid for 20 years, and it is ex­pect­ing an in­ter­nal rate of re­turn of about 17 per­cent af­ter sink­ing $5 mil­lion (R67.42m) into the project.

Rev­enue up

Chief fi­nance of­fi­cer Takura Mudekunye said to­tal rev­enue for the half-year to June was 175 per­cent up at $384.9 mil­lion. Non-banking in­vest­ment in­come amounted to $216 mil­lion, while banking in­ter­est in­come stood at $46 mil­lion.

To­tal as­sets for Old Mu­tual closed the pe­riod 10 per­cent higher at $2.3 bil­lion against to­tal li­a­bil­i­ties of $1.9 bil­lion.

The ad­justed op­er­at­ing profit po­si­tion – made up of op­er­at­ing profit and smoothed re­turns af­ter re­mov­ing hot-term fluc­tu­a­tions on in­vest­ments – was 11 per­cent higher at $36.8 mil­lion.

Mushosho said the two busi­nesses that do “the heavy lift­ing are banking and life in­sur­ance”.

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