ZB cautious about Mozambique reinsurance venture

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Group chief executive officer Ron Mutandagayi said recent developments relating to the economy and security threats in that country have prompted ZB to be cautious.Mr Mutandagayi said the financial services group is ready to roll out its tentacles in Mozambique and is already recruiting.

A Zimbabwean will head the Mozambican unit.

ZB has previously indicated that about $10 million will be spent on starting the reinsurance business in Mozambique.

The financial services group wants to tap into exciting opportunities presented by the fast economic growth in Mozambique while seizing the opportunity to expand its business.

“We have now received all the regulatory approvals from the Ministry of Finance, Reserve Bank and insurance commission (Mozambique).

“We are good to go and we have already started the recruitment process,” he said.

Mr Mutandagayi said that while it is now “all systems go”, the group is taking a more cautious look at its foray into Mozambique in view of the now prevailing macro-economic situation as well as the security risks in that country.

Mozambique’s economy expanded at the slowest pace in six years in 2015 amid a series of external and domestic headwinds.

The economy is suffering negative effects of a financial scandal, which has led to the suspension of international financial assistance, economists Focus Economics latest report says.

ZB Group chief executive officer Ron Mutandagayi
ZB Group chief executive officer Ron Mutandagayi

The undisclosed loans of over $1 billion cast a shadow over Mozambique’s ability to meet its liability commitments and the economic growth has slowed down.

In light of recent developments, the IMF, the World Bank and the UK government have suspended their aid to the country.

Complicating matters, the El Niño induced dry spell triggered weather phenomenon impairing the already poor water resources and causing food shortages in the country.

According to the United Kingdom’s travel advisory, there have been armed attacks on vehicles on main roads in Manica Province, Sofala and Zambezia Provinces recently.

The UK said if travelling by road travellers must have relevant documents with them at all times and monitor local media.

The US embassy in Maputo’s recent travel advisory for US citizens cited the continued unrest in the central region of the country, including the deadly clashes between government of Mozambique forces and armed elements of leading opposition party Renamo in the provinces of Sofala, Manica, and the southern portion of Zambezia.

The advisory said there have been confirmed unattributed shooting incidents involving government and civilian vehicles in the region, most recently along the EN7 in Manica and EN1 in southern Zambezia provinces.

The resettlement of refugees after 16 years of civil war and successful economic reform has led to a high growth rate.

Mozambique enjoyed a remarkable recovery, achieving an average annual rate of economic growth of 8 percent between 1996 and 2006 and between 6–7 percent from 2006 to 2011.

Rapid expansion in the future hinged on foreign investment projects, continued economic reforms, and revival of the agriculture, transportation, and tourism sectors.

Source: The Herald