Fidelity Life acknowledges Zimbabwe’s ZiG currency faces uncertain future

Despite reporting positive growth in a difficult economic climate, Fidelity Life Assurance of Zimbabwe Limited (Fidelity Life) has shed light on the challenges surrounding the recently introduced Zimbabwe Gold (ZiG) currency.

The company acknowledged “market uncertainties and lack of confidence” as hurdles ZiG needs to overcome, while also mentioning ongoing regulatory hurdles like Statutory Instrument 60 of 2024 not being fully in place.

The company reported positive growth in its first quarter 2024 results, despite a challenging economic environment characterised by high inflation and a depreciating local currency.

“The local currency depreciated by 70% on the official interbank market, while on the parallel market, the depreciation was even more pronounced,” the company stated in an update.

This depreciation led to a surge in annual year-on-year blended inflation, which reached 55.34% in March 2024.

Fidelity Life, however, highlighted its optimism regarding the recently introduced Zimbabwe Gold (ZIG) currency.

“In the short term, there is an expectation that the structured currency, Zimbabwe Gold (ZIG), will slow down the decline, albeit under pressure due to prevailing market uncertainties and lack of confidence,” the company said.

Fidelity Life acknowledged the challenges ZIG faces, including “market uncertainties and lack of confidence.”

Authorities are actively implementing policies to support ZiG, promote its acceptance, and increase its use. Despite these efforts, the company expects the usage of foreign currency for local transactions to remain prominent in the short to medium term.

“Business Operations Review shall be in ZWL as Statutory Instrument 60 of 2024 had not been promulgated to law as at the reporting date,” Fidelity Life noted, highlighting the ongoing regulatory hurdles surrounding ZiG.

Despite the economic difficulties, Fidelity Life’s life and pensions business performed well.

“The life and pensions business posted insurance contract revenue growth of 20% from ZWL65.7 billion to ZWL79.0 billion on inflation adjusted terms for the first quarter ending 31 March 2024 compared to the same period prior year,” the company reported.

The Group’s profit after tax for the period also grew significantly.

“The Group’s profit after tax for the period to 31 March 2024 grew by 118% on inflation adjusted terms to ZWL99.0 billion from ZWL45.5 billion,” Fidelity Life stated.

The company attributed this success to strategic acquisitions of new business and innovative product development. The Individual Life division was a standout performer, with new retail business surging 45%.