Prescribed assets and the pension capital wall

The prescribed asset framework is now closing that gap from both ends at once, by raising the regulatory cost of non-compliance, and by admitting renewable energy projects into the qualifying universe. The result is a demand overhang of institutional money looking for qualifying paper, in a country with a generation deficit of 800 to 1,000 megawatts. Those two facts belong in the same sentence, and until recently they were not.

The framework, stated plainly

A prescribed asset is an instrument designated by government as serving a national development priority. Zimbabwean institutional investors are required by law to hold a minimum proportion of their assets in them:

Institution · Minimum prescribed asset allocation

Pension funds · 20 per cent

Life assurance companies · 15 per cent

Short-term insurers · 10 per cent

The mechanism is a directed-investment rule. Its purpose is to channel long-dated domestic savings into infrastructure and development priorities that would otherwise struggle to attract private capital.

The compliance gap, and its size

None of the three sectors was meeting its threshold as at June 2025, according to the Insurance and Pensions Commission’s second-quarter reporting.

The life assurance position is the starkest. Total prescribed asset holdings across the sector stood at ZiG 1.38 billion, approximately US$51 million, representing average compliance of 8.66 per cent against a 15 per cent requirement. Only four of twelve life insurers met the regulatory minimum.

The pensions position is larger in absolute terms. Zimbabwe’s pension sector assets stood at approximately US$2.6 billion in 2025. A 20 per cent requirement implies a prescribed asset holding of roughly US$520 million. Sector-wide compliance is broadly in the region of half that requirement.

The arithmetic is uncomfortable and it is the point of this article: the shortfall in the pensions sector alone is in the order of a quarter of a billion United States dollars. That is capital which is legally required to be deployed, is not currently deployed, and has to go somewhere.

Where it currently goes instead

Into property, overwhelmingly.

Zimbabwean pension funds allocate somewhere between 45 and 65 per cent of assets under management to real estate. The international norm for a defined benefit pension fund is 10 to 20 per cent. Zimbabwean funds are running property weightings roughly fifteen times the South African average.

This is not a preference; it is a symptom. Chronic currency instability and restricted offshore diversification have left funds with very few places to store value in real terms. Bricks hold value when the unit of account does not. The Commission has since approved offshore investment of up to 15 per cent of fund values, which will relieve some of that pressure, but a fund that is 60 per cent weighted to a single illiquid domestic asset class has a concentration problem, and everyone involved knows it.

Renewable energy offers something property does not: contracted, United States dollar-denominated, inflation-resilient cash flow from an asset with a twenty-five-year design life. It is a better liability match for a pension fund than an office block, and it diversifies a portfolio that badly needs diversifying.

What has actually been done

The precedent is established, and it is not theoretical.

As at September 2025, Zimbabwe’s insurance and pension sector had channelled approximately US$57.3 million into renewable energy projects. The list is instructive:

• Centragrid’s 25 megawatt Nyabira solar park, co-funded by the National Social Security Authority and Old Mutual, the first utility-scale solar project in Zimbabwe funded wholly by domestic capital. It is commissioned, operating, and has exported some 36.5 gigawatt-hours to the national grid.

• The 10 megawatt Guruve solar project.

• The 1 megawatt Mater Dei Hospital plant in Bulawayo, a distributed, behind-the-meter installation serving a single institutional consumer.

• The Renewable Energy Fund (REF Zimbabwe), managed by Old Mutual and granted prescribed asset status, seeded with US$8 million from the UN Joint SDG Fund matched by US$8 million from Old Mutual, targeting US$50 million by the end of 2026 and US$100 million over three years.

• Eagle REIT, granted prescribed asset status for up to US$60 million, drawing pension fund capital into a USD-denominated development vehicle.

And the direction of travel is clear. The Public Service Pension Fund’s stated 2026 priorities include commissioning 20 megawatts of mini-hydro and 150 megawatts of solar generation. A single fund is planning more solar capacity than the country has built to date.

Why policy is pushing the same way

Three policy instruments now point in the same direction.

The National Renewable Energy Policy targets 26.5 per cent of generation capacity from renewables, excluding large hydro, by 2030, and specifically recommends that renewable energy projects be advanced for prescribed asset status.

The National Energy Compact, launched in 2025 under the World Bank and African Development Bank Mission 300 programme, sets a US$9.1 billion investment framework, of which US$3.81 billion is for generation, 90 per cent of it expected from private investment.

National Development Strategy 2 (2026–2030) names climate-smart infrastructure a national priority.

The reason so much of the Energy Compact must come from private sources is worth stating: Zimbabwe has been in arrears to multilateral lenders for more than twenty-five years and cannot borrow directly from the World Bank or the African Development Bank. There is no concessional balance sheet available. Domestic institutional savings are, in a meaningful sense, the only pool of capital of the right size and duration in the country.

The honest counter-argument

We would be doing readers a disservice if we presented this only as an opportunity.

Prescribed asset status is not a credit assessment. It confirms that an instrument serves a national priority. It says nothing about whether the project will generate the returns modelled, whether the off-taker will pay, or whether the plant will perform. A compliance-driven allocation is precisely the circumstance in which capital gets deployed into poorly-structured assets, because the alternative, a regulatory breach, is also costly. Trustees should be at their most sceptical when the regulator is at its most encouraging.

The instrument supply problem is real. The reason funds are non-compliant is not indifference. It is that qualifying instruments of appropriate size, duration and credit quality have been genuinely scarce. Solving that requires developers to produce bankable projects, not merely licensed ones, and, as we discuss elsewhere, Zimbabwe has 174 licensed independent power producers and 68 operating ones.

Counterparty risk has not been abolished. Where a project depends on a power purchase agreement with the national utility, the fundamental question, can ZETDC pay, in hard currency, for twenty-five years, remains. The Government Project Support Agreement introduced in 2024 improves that position materially. It does not eliminate it.

What this means for structuring

The projects that will absorb this capital successfully will share three characteristics.

They will be anchored on creditworthy private off-take rather than on the national utility, a captive property portfolio, a mining operation, an industrial consumer, with the grid as buyer of last resort rather than sole buyer.

They will be phased, allowing an institution to commit in instalments against demonstrated performance rather than in a single lump sum against a model.

And they will be honestly underwritten, with sensitivity across a genuine downside case, an explicit statement of the hurdle rate, and a disclosed account of what combination of adverse outcomes would breach it.

The capital is there. The regulation now compels its deployment. What remains scarce is the well-structured, appropriately-scaled, honestly-documented project, and that is a supply-side problem, which is to say a developer’s problem.

*This article is provided for general information and does not constitute investment, legal or actuarial advice. Regulatory positions should be confirmed with IPEC. Intela Land & Property is not a licensed financial adviser.*

Sources: Insurance and Pensions Commission quarterly reporting, Q2 2025; The Zimbabwe Independent and The Herald reporting on IPEC sector compliance, September 2025; Insurance and Pensions Commission Amendment Act, 2026; Zimbabwe National Renewable Energy Policy; National Energy Compact for the Republic of Zimbabwe; Intela, *Capital Deployment in Zimbabwe’s Real Estate & Renewable Energy Sectors* (2024–2026).

The binding constraint on Zimbabwean renewable energy has not been the tariff, the resource, or the technology. It has been the absence of instruments that institutional capital is permitted to buy and willing to hold.

The prescribed asset framework is now closing that gap from both ends at once, by raising the regulatory cost of non-compliance, and by admitting renewable energy projects into the qualifying universe. The result is a demand overhang of institutional money looking for qualifying paper, in a country with a generation deficit of 800 to 1,000 megawatts. Those two facts belong in the same sentence, and until recently they were not.

The framework, stated plainly

A prescribed asset is an instrument designated by government as serving a national development priority. Zimbabwean institutional investors are required by law to hold a minimum proportion of their assets in them:

Institution · Minimum prescribed asset allocation

Pension funds · 20 per cent

Life assurance companies · 15 per cent

Short-term insurers · 10 per cent

The mechanism is a directed-investment rule. Its purpose is to channel long-dated domestic savings into infrastructure and development priorities that would otherwise struggle to attract private capital.

The compliance gap, and its size

None of the three sectors was meeting its threshold as at June 2025, according to the Insurance and Pensions Commission’s second-quarter reporting.

The life assurance position is the starkest. Total prescribed asset holdings across the sector stood at ZiG 1.38 billion, approximately US$51 million, representing average compliance of 8.66 per cent against a 15 per cent requirement. Only four of twelve life insurers met the regulatory minimum.

The pensions position is larger in absolute terms. Zimbabwe’s pension sector assets stood at approximately US$2.6 billion in 2025. A 20 per cent requirement implies a prescribed asset holding of roughly US$520 million. Sector-wide compliance is broadly in the region of half that requirement.

The arithmetic is uncomfortable and it is the point of this article: the shortfall in the pensions sector alone is in the order of a quarter of a billion United States dollars. That is capital which is legally required to be deployed, is not currently deployed, and has to go somewhere.

Where it currently goes instead

Into property, overwhelmingly.

Zimbabwean pension funds allocate somewhere between 45 and 65 per cent of assets under management to real estate. The international norm for a defined benefit pension fund is 10 to 20 per cent. Zimbabwean funds are running property weightings roughly fifteen times the South African average.

This is not a preference; it is a symptom. Chronic currency instability and restricted offshore diversification have left funds with very few places to store value in real terms. Bricks hold value when the unit of account does not. The Commission has since approved offshore investment of up to 15 per cent of fund values, which will relieve some of that pressure, but a fund that is 60 per cent weighted to a single illiquid domestic asset class has a concentration problem, and everyone involved knows it.

Renewable energy offers something property does not: contracted, United States dollar-denominated, inflation-resilient cash flow from an asset with a twenty-five-year design life. It is a better liability match for a pension fund than an office block, and it diversifies a portfolio that badly needs diversifying.

What has actually been done

The precedent is established, and it is not theoretical.

As at September 2025, Zimbabwe’s insurance and pension sector had channelled approximately US$57.3 million into renewable energy projects. The list is instructive:

• Centragrid’s 25 megawatt Nyabira solar park, co-funded by the National Social Security Authority and Old Mutual, the first utility-scale solar project in Zimbabwe funded wholly by domestic capital. It is commissioned, operating, and has exported some 36.5 gigawatt-hours to the national grid.

• The 10 megawatt Guruve solar project.

• The 1 megawatt Mater Dei Hospital plant in Bulawayo, a distributed, behind-the-meter installation serving a single institutional consumer.

• The Renewable Energy Fund (REF Zimbabwe), managed by Old Mutual and granted prescribed asset status, seeded with US$8 million from the UN Joint SDG Fund matched by US$8 million from Old Mutual, targeting US$50 million by the end of 2026 and US$100 million over three years.

• Eagle REIT, granted prescribed asset status for up to US$60 million, drawing pension fund capital into a USD-denominated development vehicle.

And the direction of travel is clear. The Public Service Pension Fund’s stated 2026 priorities include commissioning 20 megawatts of mini-hydro and 150 megawatts of solar generation. A single fund is planning more solar capacity than the country has built to date.

Why policy is pushing the same way

Three policy instruments now point in the same direction.

The National Renewable Energy Policy targets 26.5 per cent of generation capacity from renewables, excluding large hydro, by 2030, and specifically recommends that renewable energy projects be advanced for prescribed asset status.

The National Energy Compact, launched in 2025 under the World Bank and African Development Bank Mission 300 programme, sets a US$9.1 billion investment framework, of which US$3.81 billion is for generation, 90 per cent of it expected from private investment.

National Development Strategy 2 (2026–2030) names climate-smart infrastructure a national priority.

The reason so much of the Energy Compact must come from private sources is worth stating: Zimbabwe has been in arrears to multilateral lenders for more than twenty-five years and cannot borrow directly from the World Bank or the African Development Bank. There is no concessional balance sheet available. Domestic institutional savings are, in a meaningful sense, the only pool of capital of the right size and duration in the country.

The honest counter-argument

We would be doing readers a disservice if we presented this only as an opportunity.

Prescribed asset status is not a credit assessment. It confirms that an instrument serves a national priority. It says nothing about whether the project will generate the returns modelled, whether the off-taker will pay, or whether the plant will perform. A compliance-driven allocation is precisely the circumstance in which capital gets deployed into poorly-structured assets, because the alternative, a regulatory breach, is also costly. Trustees should be at their most sceptical when the regulator is at its most encouraging.

The instrument supply problem is real. The reason funds are non-compliant is not indifference. It is that qualifying instruments of appropriate size, duration and credit quality have been genuinely scarce. Solving that requires developers to produce bankable projects, not merely licensed ones, and, as we discuss elsewhere, Zimbabwe has 174 licensed independent power producers and 68 operating ones.

Counterparty risk has not been abolished. Where a project depends on a power purchase agreement with the national utility, the fundamental question, can ZETDC pay, in hard currency, for twenty-five years, remains. The Government Project Support Agreement introduced in 2024 improves that position materially. It does not eliminate it.

What this means for structuring

The projects that will absorb this capital successfully will share three characteristics.

They will be anchored on creditworthy private off-take rather than on the national utility, a captive property portfolio, a mining operation, an industrial consumer, with the grid as buyer of last resort rather than sole buyer.

They will be phased, allowing an institution to commit in instalments against demonstrated performance rather than in a single lump sum against a model.

And they will be honestly underwritten, with sensitivity across a genuine downside case, an explicit statement of the hurdle rate, and a disclosed account of what combination of adverse outcomes would breach it.

The capital is there. The regulation now compels its deployment. What remains scarce is the well-structured, appropriately-scaled, honestly-documented project, and that is a supply-side problem, which is to say a developer’s problem.

*This article is provided for general information and does not constitute investment, legal or actuarial advice. Regulatory positions should be confirmed with IPEC. Intela Land & Property is not a licensed financial adviser.*

Sources: Insurance and Pensions Commission quarterly reporting, Q2 2025; The Zimbabwe Independent and The Herald reporting on IPEC sector compliance, September 2025; Insurance and Pensions Commission Amendment Act, 2026; Zimbabwe National Renewable Energy Policy; National Energy Compact for the Republic of Zimbabwe; Intela, *Capital Deployment in Zimbabwe’s Real Estate & Renewable Energy Sectors* (2024–2026).