In 2008, Zimbabwe’s pensioners and insurance policyholders watched helplessly as more than US$5 billion in savings was wiped out by a devastating currency crash. The scars of that catastrophe still run deep, leaving confidence in long term savings instruments badly shaken. Nearly two decades later, the question of how to protect pensions from another collapse remains urgent, with no durable solution in sight. Against this backdrop, actuaries — professionals trained to measure and manage risk — are stepping forward with new ideas to shield savings from inflation and financial instability. In this exclusive conversation, the Zimbabwe Independent business reporter Belinda Chiroodza (BC) sat down with outgoing Actuarial Society of Zimbabwe president Prosper Matiashe to discuss how bold innovations, particularly in infrastructure financing and inflation-linked instruments, could safeguard pensioners, while boosting national development. Below are excerpts from the interview:
BC: What specific measures do you believe are critical in improving confidence in Zimbabwe’s pensions industry?
PM: In terms of restoring confidence, there are several key pillars to consider. Firstly, we need to establish a framework that enables us to move forward and fulfil the promise that pensions provide. The major challenge lies in ensuring investments yield adequate returns.
BC: How then can we ensure that pension funds are protected and provide adequate returns in the future?
PM: To move forward, we need to create instruments that hedge against inflation. For instance, loans could be linked to inflation rates, allowing pension funds to be repaid in line with changes in inflation. This would help protect the value of pensioners’ savings. Another crucial aspect is enabling pension funds to invest in assets that yield appropriate returns. Given the need to revamp our infrastructure — roads, public health, and education — pension funds could syndicate and provide financing for these projects. This would allow them to generate returns linked to inflation, such as toll fees that increase with inflation. To achieve this, we require a public-private partnership approach, where government and stakeholders work together to create instruments that provide pension funds with access and governance. We also need to learn from past experiences and establish a framework to address potential future hyperinflation scenarios.
BC: Do we have any further solutions?
PM: One possible solution is to treat pension protection as a social welfare issue. Similar to the Aids levy, we could establish a social welfare fund for pensioners, providing means tested support to those who need it most. This approach would ensure resources are targeted effectively, rather than providing blanket compensation that may not benefit those who need it most. By means testing the support, we can ensure that resources are allocated efficiently and have the greatest impact.
BC: What steps are being taken to facilitate technological adoption and digitalisation for the future of the pension industry?
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PM: I think digitalisation is not limited to pensions. As actuaries we work in a broad range of fields beyond pensions, including insurance, general insurance, life insurance, banking, and other financial services. We also apply our expertise in industries such as mining, agriculture, and gaming, wherever data driven insights can inform business decisions. With the adoption of better tools and technology, we have significantly improved our efficiency. Tasks that previously took two weeks can now be completed in just two days.
BC: Do you think artificial intelligence (AI) will replace human judgment?
PM: While AI and technology enhance our work, they do not replace human judgment, intuition, and decision-making. While it can introduce biases, the role of actuaries remains crucial in making informed decisions. One area we are keenly interested in is incorporating African specific data and knowledge into AI models. By doing so, we can ensure that AI solutions are tailored to the African context and effectively serve the continent’s needs.
BC: Why is it important?
PM: Most AI models currently available are built on Western data. If you use them, they will recommend solutions based on Western perspectives. We have even seen cases where AI models made racially biased recommendations due to the data they were trained on. This highlights an incredible opportunity for African companies and data firms to develop AI models that incorporate contextualised data. By doing so, they will be able to deliver better progress. Our challenge to other professions and to Zimbabwe in general is that we should not view AI as something that takes jobs from us, but rather as a collaborator that complements our work, makes it faster, and allows us to concentrate on the things that matter.
BC: What role do you think actuaries can play in addressing climate change and climate-related risks in Zimbabwe?
PM: One of the key areas is pricing products related to climate finance. There is a need to strike a balance between what shareholders expect as returns and what borrowers can afford to pay. Other areas include pricing agriculture insurance, rent for indexed insurance, and more. More broadly, we see opportunities in determining the expected impact of climate change on Africa. When it comes to conservation, we need to balance global interests with local needs. As actuaries, we need to study how to value forests, water bodies, and other natural assets so that communities can be rewarded for conservation efforts. The government’s pilot carbon credit market is an area we are keen to participate in going forward.
BC: Does the role of actuaries in product design and pricing (in insurance) also apply to healthcare?
PM: Yes, there is scope for actuaries to be more involved in healthcare, particularly in pricing and product design. Our goal should be to achieve universal healthcare access that is comprehensive and affordable for everyone. Currently, medical aid and health insurance can be elitist, catering only to those who can afford it. We need to design products that are suitable for the economic context of our country, including the informal market. This requires innovative solutions to make healthcare accessible and affordable for all.
BC: What are some of the challenges you are facing?
PM: One of the challenges is lack of data, particularly in the informal sector, which accounts for a significant portion of our economy. We would like to work with various bodies, such as the Reserve Bank of Zimbabwe, Zimbabwe National Statistics Agency, the Ministry of Health, and industry bodies to access and capture informal data. With better data, we can influence policy and provide more accurate predictions. In the long term, a stable economy would enable us to work on pricing, reserving, and financial capital adequacy for our companies. However, we also recognise the potential of public-private partnerships that can reduce fiscal spending and inflation. We believe the challenges we face can also be opportunities for us to influence policy and drive positive change.
BC: How has Reserve Bank of Zimbabwe (RBZ)-induced stability improved the reliability of your actuarial data?
PM: The progress made by the RBZ over the past 12 to 15 months is welcome, particularly in terms of economic stability, which is crucial for our projections and work as actuaries. We are also collaborating with the RBZ on research, leveraging their competent policy research and economic modelling department. One potential project is developing a reference yield curve for the country, which would provide a benchmark for interest rates on assets like bonds. This would significantly influence asset and liability valuation in the financial services sector. We see ourselves as partners with the RBZ in delivering economic stability.
BC: What are your thoughts on the current state of the insurance and long term savings market in Zimbabwe?
PM: We are not where we want to be, as the proportion of the population with insurance coverage, beyond motor insurance, is very low. There is a significant opportunity for growth. As actuaries, our role is to design relevant and affordably priced products that address the problems people face, such as the lack of protection against critical illnesses. When families are forced to sell assets to cover medical expenses, it can undermine wealth transfer to future generations. By creating demand for insurance products, we can mobilise liquidity, which can then be channelled into supporting national projects, such as road construction, creating a positive cycle.
BC: What are the key challenges you foresee as actuaries in designing and implementing a road accident fund?
PM: I think there are several components to consider, including third party damage and medical compensation. To make the initiative successful, we need more stakeholder collaboration, particularly with insurance companies, which are experts in risk transfer. They could play a role in covering damage to property, while the health side could be funded through a levy, allowing injured individuals to receive treatment. We should also learn from other countries’ experiences, where road accident funds have become prone to litigation, resulting in significant losses. We need to design a system that minimises opportunities for litigation and ensures resources are used efficiently.
BC: What does the future hold for the actuarial profession in Zimbabwe?
PM: The future looks bright. We have grown from having fewer than three actuaries in the market to over 30 practicing professionals, with more being produced. However, many actuaries tend to leave the country. We are evolving into more impact driven professionals, focused on shaping a better tomorrow and influencing national growth. We are working on projects with a national perspective, and we believe actuaries can contribute to various sectors, including government, banking, health insurance, mining, and manufacturing. We envision more actuaries in executive positions, where they can influence company strategy and contribute to economic growth.
