Published: 07 May 2014

Foreign companies operating in Zimbabwe have been accused of externalising risk as they prefer to insure their businesses with companies operating from other countries.

Speaking at the ground-breaking ceremony of Fidelity Life Assurance's Southview Park residential stands, Finance and Economic Development Minister Patrick Chinamasa said the externalisation of risk was affecting the country's economic development.

"I have learnt that companies coming as investors are not insuring risk with Zimbabwean companies. They instead prefer to insure with companies from their parent countries or other countries," he said.

He said his ministry will engage the companies so that they understand that they have to factor in a portion of risk that can be insured locally in their business plans.

Minister Chinamasa said this would help the local insurance industry to grow and be able to mobilise resources that can be used for national projects.

"It is important for our economic development to build institutions that are robust. But it is unfortunate that our banking and insurance sector has no local institutions which can make decisions on economic development projects quickly without consulting with their parent companies outside the country," he said.

Speaking at the same event, acting commissioner of the Insurance and Pensions Commission (IPEC) Pupurai Togarepi said local insurers would benefit from doing business for the foreign companies in terms of revenue and expertise.

"Most of these conglomerates when they come they are already insured from outside the country, but it is critical for us to get such accounts as a source of revenue as well as the expertise to deal with such huge risks," he said.

He said government should negotiate to have local companies insure any company that wants to do business in Zimbabwe.

The official commissioning of the Fidelity South View Park will see the insurance giant begin servicing 5300 residential stands measuring 240 square metres each, 8 primary schools, 5 churches, a police station and 4 flats. More than 2000 stands have already been sold.

Approximately $30 million to the fund the project is being raised from the domestic market while an additional $110 million will be needed for the actual construction of the houses.

The Southview Park project was granted a prescribed asset status by the Ministry of Finance.

Apart from the low cost housing scheme at Southview park, Fidelity has also invested in the development of 317 medium to low-density residential stands in Manresa Fidelity Park in Arcturus to help ease the housing backlog in the country.
- BH24

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