THE Reserve Bank of Zimbabwe (RBZ) says it will collaborate with actuaries, as it works to improve savings.
There have been general concerns in Zimbabwe that consumers lack a savings culture.
This is seen through high levels of transitory deposits in banks, where salaries are all withdrawn as soon as they are deposited.
“Collaboration and cooperation among financial sector players and regulators through the multidisciplinary financial stability committee are essential for the continued stability and resilience of the financial sector,” RBZ deputy governor Innocent Matshe said in a speech read on his behalf during the just ended Actuarial Society of Zimbabwe (ASZ)’s two-day convention.
“The Reserve Bank looks forward to a fruitful collaboration with the ASZ in rebuilding confidence in the insurance and long term savings market.”
Deep uncertainties triggered by policy flip flops and changes to currencies have sparked this mistrust between policymakers and the public.
Savings have also been affected by massive firm closures that have pushed millions out of jobs and into the informal sector, where funds are generally kept in homes and markets.
When the Mbare market was razed by fires last year, reports of stall owners losing up to US$10 000 surfaced, demonstrating the mistrust in a financial system that has failed to recover public confidence since a spat of bank failures rattled markets between 2004 and 2015.
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Actuaries are professional who rely on mathematics, statistics, and data analysis to assess and manage risk, especially in industries like insurance, pensions, and finance.
They predict the likelihood and financial impact of future events.
The RBZ sees opportunities to leverage on their expertise.
Matshe said an innovative approach to attracting long term savings and insurance would be critical in rebuilding the savings culture.
Digital technologies and fintech will be a key part of this initiative, according to the RBZ chief.
Still, he hinted that hurdles might not be avoided in such collaborations.
The RBZ deputy government cited the unpredictable economic environment as a potential hurdle.
Zimbabwean markets have generally been unsettled by volatile inflation and exchange rates, as the one year -old Zimbabwe Gold (ZiG) tries to find its feet.
Of late, however, the exchange rate has been showing signs of stability.
The RBZ predicted last week that annual inflation – at 92% - will remain high until the end of the third quarter, before dropping to about 30% by the end of December.
That will place Zimbabwe within the range of other regional economies.
“The Reserve Bank is fully aware that the role of actuaries would be made difficult by an uncertain and unpredictable macroeconomic environment,” the deputy governor said.
“It is against this background that the RBZ has continued to put in place measures to support and entrench lasting macroeconomic stability.”
He said the Zimbabwe has recently been experiencing stability with low month on month inflation and stable exchange rates.
Month-on-month inflation averaged 0,5% during the first half of the year. Month-on-month inflation for June stood at 0,3%, according to the RBZ’s second quarter report released Wednesday.
He commended ASZ for playing a critical role in the insurance and pensions sectors.
With regard to low savings, analysts say they create liquidity risks as depositors can withdraw funds without notice, making it difficult for banks to plan or make long term savings.
Matshe acknowledged that the annual inflation figure for ZiG was high but said it was not indicative of current pricing dynamics.
“The Reserve Bank has continued to refine the foreign exchange market to enhance price discovery and minimise exchange rate misalignments,” Matshe said.
“In the medium term, to underpin lasting stability on the exchange rate, the Reserve Bank is also building foreign currency reserves with the view to maintaining a minimum of three months’ import cover.”
Money supply stood at about ZiG87 billion in April, of which, 82,16% was foreign currency deposits, 17,72% local currency deposits, and 0,12% local currency in circulation.
The ASZ said it was seeking to influence policy.
In an interview with Standardbusiness, on the sidelines of the convention, ASZ president- Livingstone Magorimbo said the society wants to be at the forefront of policy debates on issues such as insurance, pensions, banking, healthcare, and investments.
“The starting point for me is, as actuaries in Zimbabwe, we need to be at the table where policy discussions are happening,” he said.
“That affects our ordinary Zimbabweans as far as insurance, pensions, banking, healthcare, and investments are concerned,” he said.
“We can present our views so that they can be taken on board with policy development and policy formulation.
“I think over the years we have not taken that responsibility more seriously.
“And for me, I want a society that will have to be called to the table when such discussions are happening and for us to be recognised in that sense.”
