Insurance Commission’s Guidance Hints on the Temporary Nature of SI 85 of 2020

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The Insurance And Pensions Commission (IPEC Zimbabwe) Has Issued Circular Number 7 of 2020 which provides much-needed guidance to the pension and insurance sector with regards on how they are supposed to operate in light of Statutory Instrument 85 of 2020 which brought back the (legal) use of foreign currency for domestic transactions.

A few gems stand out
A few things stand out here. First, it seems the commission and by extension, the government wants to make it clear to the entire industry and country that the provisions of Statutory instrument 85 are temporary and they have every intention of repealing it once the crisis is over.

The entire document is at pains to make sure that this is very clear. Despite the fact that the whole country is gravitating back to the warm arms of the US dollar, IPEC seems intent on dissuading the industry from doing the same by reiterating that the Zimbabwean dollar should be the primary currency that underlies all transactions.

Last year when the Zimbabwean dollar started to rapidly lose its value quite a number of players in the insurance industry started to introduce US dollar-denominated policies. That was an understandable instinct given the fact that insurance is all about indemnity. This circular was crafted specifically to make sure that the industry does not return to this stance.

It’s all about taking and giving nothing in return
In fact, the entire document reinforces the take all nature of Statutory Instrument 85. While policy holders are allowed to pay their premiums in foreign currency at the ridiculously low rate of 1 USD: 25 ZWL, it doesn’t seem like payouts will be made in foreign currency. Why would anyone pay for a policy in foreign currency just so they can be insured in an unstable currency that is the Zimbabwean dollar?

By the time the crisis is over the government will have a nice pot of foreign currency waiting for it in various bank accounts as the circular strenuously charges those who receive foreign currency to follow the letter of the law.

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The Lingo


The ‘Old Mutual Implied Rate’ is a comparison between the Old Mutual share price on the London stock exchange / the Johannesburg stock exchange and the Zimbabwe stock exchange. Effectively RTGS is valued at 1:1 with the USD, but this difference in share price gives us the implied countries exchange rate.


Real-time gross settlement systems (RTGS) is a funds transfer system where money transfer takes place from one bank to another on a “real time” basis and “gross” basis. Settlement in the “real time” means that the transaction happens almost immediately.


The Zimbabwe Bond Note is a surrogate currency issued by the Reserve Bank of Zimbabwe. This was originally issued against a loan facility from the African Export-Import Bank. The Bond Note is officially 1:1 however the market seems to have significantly discounted the value of the Bond Note.


The symbol ZAR is the currency abbreviation for the South African rand.