Source: Public sector funds emerge as cornerstones of economic growth – herald
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ZIMBABWE’S long-term savings institutions are increasingly becoming integral to investment, macroeconomic stability and future growth.
The Government Employees Mutual Savings (GEMS) Fund and the Public Service Pension Fund (PSPF) are presently posting strong performances and expanding their developmental footprints.
In the 2026 National Budget, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube underscored the funds growing importance not only to public servants but also the wider economy.
Established in 2021 as a voluntary savings scheme for civil servants, the GEMS Fund has evolved into a significant pool of domestic capital.
During the nine months of the year, the fund generated cumulative revenues of ZiG266 million from premiums and portfolio returns, while total funds under management stood at ZiG440 million.
Of this amount, ZiG330 million has been deployed into investment assets, delivering an inflation-adjusted return of 7,8 percent.
Asset allocation remains closely aligned with the fund’s mandate of financial inclusion and affordable credit.
About 73 percent of the portfolio is allocated to loans, with smaller exposures to real estate (8 percent) and listed equities (4 percent).
Importantly, the loan book remains healthy, with a non-performing loan (NPL) ratio of just 0,6 percent, equivalent to ZiG1,8 million.
Membership growth has been equally impressive, with the fund now boasting more than 120 000 active contributors.
Cumulative loan disbursements have reached ZiG239 million, benefitting over 52 000 members, while a further ZiG116 million is in the pipeline for more than 4 000 applicants.
Looking ahead, the Government expects GEMS to deepen its role in financial empowerment through digital transformation, product innovation and expanded outreach.
Targets include growing market value to ZiG550 million, lifting revenue collections to ZiG350 million and expanding the loan book to ZiG320 million, while keeping NPLs below 1 percent.
Economist Mr Tinevimbo Shava said the GEMS model demonstrates how domestic savings can be mobilised productively when institutions are well-governed.
“GEMS show that even relatively small, voluntary savings can be aggregated into a meaningful investment pool,” said Mr Shava.
“The low NPL ratio is particularly encouraging because it speaks to prudent risk management and sustainability. From a macroeconomic perspective, this reduces pressure on the banking system and supports household resilience.”
Alongside GEMS, the Public Service Pension Fund has undergone a dramatic transformation over the past few years.
The PSPF capitalisation had reached US$700 million as of August 2025, up from US$138 million in 2019, representing compound annual growth of more than 35 percent. PSPF’s capitalisation is approximately 26 percent of the private pension sector, which had an asset base of US$2,6 billion as at the end of June 2025.
The fund has become a major player in property development and infrastructure, with several flagship projects either underway or nearing completion.
These include Masvingo Varsity Heights, Midlands Park, Madokero Mall and the Liberation City Hotel, as well as land developments in Bulawayo and Gwanda.
In the 2026 financial year, the PSPF will prioritise consolidation, project completion and improved capital efficiency.
A key focus will also be energy, where the fund plans to commission 20 megawatts of mini-hydro capacity and 150 megawatts of solar power generation.
Banker Mr Raymond Madziva said the PSPF’s scale and long-term horizon give it a strategic advantage in sectors that require patient capital.
“Pension funds are uniquely positioned to invest in infrastructure and energy because their liabilities are long term,” said Mr Madziva. The PSPF’s move into renewables is especially important, as it supports national energy security while also creating stable, predictable returns for contributors.”
He added that the growth of the PSPF reduces reliance on external funding.
“When domestic institutions finance malls, housing and power projects, that keeps value within the economy and strengthens financial sovereignty,” he said.
Analysts say the combined impact of GEMS and the PSPF goes beyond balance sheets.
By mobilising savings from public sector workers and deploying them into loans, property, energy and other productive assets, the two funds are helping to stabilise financial markets and crowd in broader investment.
Investment analyst Ms Clara Mpedzisi said the funds are increasingly acting as anchors in a shallow capital market.
“In an environment where liquidity can be fragile, having large, predictable institutional investors brings stability,” said Ms Mpedzisi.
“GEMS support consumption smoothing and wealth creation at household level, while the PSPF underpins large-scale projects that have multiplier effects across the economy.”
The diversification into real assets such as property and renewable energy, she said, also provides a hedge against inflation and currency volatility.
As the Government pushes ahead with its broader development agenda, policymakers see strengthened pension and savings funds as central to mobilising domestic resources.
With GEMS targeting wider participation among civil servants and the PSPF accelerating its role in infrastructure and energy, the two institutions are increasingly viewed as cornerstones for Zimbabwe’s investment-led growth strategy.
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