Zb Reinsurance, a wholly-owned subsidiary of ZB Financial Holdings, is still pursuing its Mozambican Reinsurance unit project despite foreign currency shortages which continue to stall the project.
The development comes following reports that ZB is mulling to close down shop in Mozambique after being frustrated by the failure to underwrite meaningful business as well as the instability of the Southern African nation.
ZB instead says it remains buoyant with the Mozambican project after regional operations registered a 10 percentage point increase in the 2017 half year results.
The IMF forecasts Mozambique’s economy to grow by 5,5 percent this year spurred by growth in FDI to $9 billion. It is this growth that ZB Reinsurance wanted to tap into.
ZBFH group CEO Ron Mutandagayi, told Business Weekly last week that forex shortages are affecting its operations rather than political instability in Mozambique as risk management is their line of duty.
“It’s very disheartening to hear from some quarters that ZB is contemplating closing shop in Mozambique due to political instability in Mozambique but the issue is that foreign currency shortages locally have stalled the establishment of a physical presence in that country. “We can’t close shop in Mozambique because of political risk as this risk is our type of business without it we won’t be underwriting claims so we will continue to write from home until such a time we get the required amounts of money to establish office in Mozambique.
“We require between $750 000 and $1 million to set up office in Mozambique but that kind of money is difficult to get in these times of forex shortages and what’s more problematic is that we are not on the foreign currency allocation priority list.
“We can’t abandon any regional operations as in our 2017 half year results we witnessed a 10 percentage point growth in premiums to 29 percent from 19 percent the same period last year,” said Mutandagayi.
ZB’s expansion will help it grow revenues and spread risk. Optimum returns are expected within the usual reinsurance cycle.
Despite challenges that have been faced by Zimbabwean businesses in Mozambique, ZB is optimistic its model is feasible.
Its competitor Nicoz Diamond’s Mozambican Reinsurance outlet Diamond Seguros, has been racking up losses since inception though the company remains optimistic.
Zimre Holdings Limited which has been struggling regionally also plans to reinvest the proceeds in its Mozambique Reinsurance unit. The group holds a controlling 51 percent shareholding in the Mozambican firm, which it says is very profitable.