The investment landscape of Zambia is quite diverse, with several pension schemes, and there are plans to establish a SWF. NAPSA is the largest pension scheme and is a mandatory scheme covering both the public and private sector, except security personnel. We were delighted to speak with the fund’s Director General, Mr. Muyangwa Muyangwa, about NAPSA’s background, portfolio, and future plans.
[GSWF] How does Zambia’s pension system work and what are the main schemes?
[NAPSA] Zambia’s social security system includes a Treasury backed social cash transfer system (Tier 0), a mandatory universal scheme (Tier 1, including NAPSA) and voluntary occupational schemes (Tier 2). NAPSA was established in 2000 to replace the Zambia National Provident Fund (ZNPF) and became a Defined Benefit plan. It is the largest scheme, as it is mandatory for both the public and private sectors, except for those covered by the Public Service Pensions Fund (PSPF) and the Local Authority Superannuation Fund (LASF). The contribution to NAPSA is 10%, split evenly between employer and employee, and the beneficiaries receive an annuity for life, once they have reached the vesting period.
[GSWF] Zambia has an existing quasi-SWF, IDC, and is planning another one – how do or will these interact with NAPSA?
[NAPSA] IDC has its own board and we are independent, but we do conduct business with each other. IDC does and can acquire debt instruments with NAPSA, and we can hold co-investments with IDC such as Zambia Consolidated Copper Mines – Investment Holdings (ZCCM- IH). In terms of the new SWF, I cannot speak much about it as we have not yet been invited to the discussion. As a key player in the social security system in Zambia, I am sure we will be invited to participate in the discussions for the establishment on such a Fund.
[GSWF] NAPSA manages around US$ 3.3 billion. Can you explain the current allocation, and do you expect any shifts?
[NAPSA] Currently, all NAPSA investments are domestic. We are, however, working on revisions which when approved will enable us to invest some of the funds overseas. Our portfolio is liquid, with 42% invested in government paper, 31% in term deposits with commercial banks, 5% in listed equities, and the rest in other asset classes including real estate, private equity and greenfield investments. We see greater opportunities to diversify into alternative investments, other geographies and areas of the economy, particularly infrastructure. To help us realize these goals, we hope to appoint and work with investment advisors and/or asset managers by Q1 2025.
[GSWF] What are your views about the appeal of Zambia for foreign investors?
[NAPSA] Zambia is open for business. The default in 2020 created some complications with debtors, but the current government has worked hard to reassure all lenders to meet obligations. The key concerns of investors are transparency and property rights, but the government is working to address these, while we at NAPSA can de-risk opportunities, as the largest domestic investor.
[GSWF] What can you share about the impact of investing in strategic domestic assets, on job creation and GDP growth?
[NAPSA] We try to align our investments with the country’s domestic development agenda, e.g., we have four hotels in our portfolio, including the Radisson Blu in Livingstone, and we recently completed our largest investment in infrastructure (a toll road between Lusaka and the Copperbelt). Zambia is very green, with roughly 80% of our energy generated from hydropower, and we are supporting our country’s energy security. Additionally, we are clued in on the job reaction agenda of government and are exploring opportunities to have a direct influence in the creation of jobs in the economy, which it assures us of our continued growth.
[GSWF] How many people does NAPSA employ, and do you expect this to change as your portfolio grows?
[NAPSA] We have 660 employees at the moment, and we expect this number to stay fairly stable as we leverage digitalization. Our staff compliment is 100 percent Zambian, and we continue to benefit from capacity building support from renowned institutions such as the World Bank, the African Development Bank, and Frankfurt School of Business, among others.
[GSWF] How do you compare your role at NAPSA with your previous career, and what are your goals for the next 3-5 years?
[NAPSA] All aspects of my experience have proven to be vital in my current role. My years at the Zambia Revenue Authority in its formative years taught me about establishing systems and organizational cultures. My years at the IMF exposed me to good practices, and what may work well for Zambia. My business studies and my early days as a banker provided me with a foundation in finance. All these experiences are helping me to contribute to building a stronger NAPSA.
In terms of main goals for NAPSA, we are trying to ensure a sustainable growth of the fund by having a creative approach. We expect to reach 100 bn Kwacha by 2026 and aspire to be a US$ 10 billion fund within the next ten years. We can play an instrumental role in the development of Zambia and in lifting the standards of living of all Zambians.
