Public Service, Labour and Social Services Minister, Prisca Mupfumira
THE National Social Security Authority (NSSA) has not yet secured a licence for a building society it had planned to open in August, the Financial Gazette’s Companies & Markets (C&M) has learnt.
This is despite reports last month that the planned building society had been licenced and ready to spearhead governmental plans to develop residential accommodation in support of its economic turnaround blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), with plans to construct 125 000 housing units by 2018.
When government appointed a board for the proposed building society in June, official reports had suggested that the licence had already been secured and that the project would start running in August.
NSSA applied for a licence for the building society, to be known as Social Security Building Society Bank of Zimbabwe, to the Reserve Bank of Zimbabwe (RBZ) last year.
Sources said the pay-as-go pension scheme had initially planned to open the bank in August before pushing the plan to last month.
Now that the pension authority has not been granted the operating licence, the proposed opening of the bank has been moved again to next year.
Executives at NSSA, as well as the building society’s board, were no longer planning for an opening this year.
Although board members are normally first vetted and approved by the RBZ before appointment, it is thought government had proceeded with the appointments without first engaging the RBZ.
Sources within the banking sector said it was unlikely that recruitment for executives and other staff would take place before the licence was issued.
“The assumption is that the licence may not be issued, although this is unlikely.
“The Reserve Bank of Zimbabwe may want to study NSSA’s proposal before granting the licence considering that NSSA recently gave up a banking licence on the understanding that it did not have the capacity to fund the business,” said a source who declined to be named.
NSSA had an 84 percent shareholding in Capital Bank, formerly Renaissance Merchant Bank which it acquired through a debt to equity snap.
The pension scheme surrendered Capital Bank’s operating licence after it indicated that it was no longer in a position to financially support the troubled institution.
There have been reports that an injection of about US$5 million in seed capital would be committed to the building society, but it is not clear if this would be availed by NSSA or government.
Government is battling to meet its monthly salary commitment and may not have the capacity to fund the project.
It would appear NSSA is under pressure from government, through the line ministry, to start the building society and fund it. The dismissal of NSSA’s general manager, James Matiza, this week, together with at least five other directors, is likely to throw the planning process for the building society into disarray.
Indeed all announcements related to the planned building society have come from the Ministry of Public Service, Labour and Social Services, which is the line ministry for NSSA.
NSSA has hardly issued any statement related to the planned project, suggesting it may have embarked on the project without any due diligence.
Public Service, Labour and Social Services Minister, Prisca Mupfumira, confirmed to C&M last week that the proposed bank was indeed yet to be granted a licence.
She said there had been delays in issuing the licence by the RBZ, indicating that this was stalling progress.
She indicated that the building society was now expected to commence operations next year.
“We’re still waiting for the licence from the Reserve Bank of Zimbabwe, which is taking it’s time to process our application to set up the bank. But we expect it to be operational by next year,” said Mupfumira.
The proposed new building society is expected to strengthen the authority’s portfolio by offering affordable housing loans for civil servants and low income earners who often struggle to access affordable loans, according to government.
The statutory body established in terms of the NSSA Act of 1989 to provide social security, financed housing projects through building societies’ paid-up-permanent-shares between 1994 and 2000.
It developed houses in Chegutu, Shamva, Norton, Kuwadzana in Harare and Cowdray Park in Bulawayo, as well as low-density Woodlands town houses in Bulawayo.
NSSA was mandated to provide housing under the government’s current economic blueprint, Zim-Asset.
This would be attained through the provision of housing stands, strengthening of public, private sector partnerships and recapitalisation of the National Housing and National Guarantee Fund, among others.
Apart from having a shareholding in FBC Holdings, which owns FBC Building Society, NSSA has a 37,79 percent stake in ZB Financial Holdings that wholly owns ZB Bank and ZB Building Society, and has a 10 percent in CBZ Holdings, which is also involved in mortgage lending after amalgamating its banking business with that of Beverley Building Society, which no longer exists.
It also has controlling shareholding in Rainbow Tourism Group and First Mutual Holdings.
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