Government Grants 11 Projects Prescribed Asset Status to Mobilise Local Capital

Zimbabwe’s Finance Ministry has approved 11 projects worth US$248.56 million as prescribed assets to attract pension and insurance fund capital (image source)

The Ministry of Finance has granted prescribed asset status to 11 projects worth approximately US$248.56 million for the half-year ending June 30, 2025, in a move designed to mobilise pension and insurance fund capital toward national development.

The designation compels institutional investors—pension funds and insurers—to allocate a set portion of their portfolios into state-approved investment instruments, a mechanism intended to plug Zimbabwe’s infrastructure financing gap and stimulate long-term domestic investment in priority sectors.

Policy Mechanism and Scope

Under current regulations, pension funds and insurers must invest at least 20 percent of their portfolios in prescribed assets. Authorities argue that such measures channel local savings into projects aligned with the National Development Strategy 1 (NDS1), ensuring consistent funding for key infrastructure, energy, and industrial initiatives.

Although official summaries of the newly approved projects remain limited, they span sectors deemed strategic to the national economy, including transport, power generation, and housing.

Implementation Challenges and Investor Reluctance

Despite policy intent, execution has lagged behind approvals. Independent data indicate that some previously approved prescribed asset projects—valued around US$86 million—failed to secure full funding from institutional investors.

Fund managers cite several deterrents:

• High risk exposure due to limited credit enhancement.

• Insufficient transparency on project progress and financial structure.

• Liquidity constraints, with concerns that long-term capital lock-ups could undermine pensioner security.

“Compelling investment without addressing credit risk and performance guarantees could destabilise portfolios,” said one pension industry source.

Expert Recommendations: Building Investor Confidence

Policy analysts have proposed a two-track solution to bridge the trust gap between regulators and investors:

1. Enhanced project disclosure and due diligence, ensuring that feasibility studies and audits are publicly available.

2. Risk-mitigation tools such as partial credit guarantees, escrowed revenue flows, and independent performance monitoring.

These measures, experts argue, would align prescribed asset obligations with prudent investment practice while preserving member returns.

Outlook: Mobilisation vs. Sustainability

The Ministry of Finance insists the scheme reflects progress in crowding-in domestic capital to fund the national development agenda. However, the policy’s credibility now rests on voluntary uptake by investors and the state’s ability to enforce transparent governance and accountability mechanisms.

Without improved safeguards and reporting, prescribed asset status may remain a regulatory formality rather than a sustainable financing solution for Zimbabwe’s infrastructure revival.