Tag: Partial withdrawals

The Napsa dilemma

The Napsa dilemma Featured

Recent reports indicate that NAPSA, which traditionally has been a key participant in Government Bonds, has not participated in the last 2 or 3 Bank of Zambia Government Bond auctions. And NAPSA’s has greatly contributed to the recently heavily under subscribed auction.

How long is a piece of string? NAPSA, according to recent reports, has paid out K5.8 billion as part of Mr Hakainde Hichilema’s policy of partial pension withdrawals – of approximately $300 million using daily average exchange rates since this programme started.

We are also told that NAPSA expected a total partial pension payout totaling K11 billion to cover all potential partial pension draw downs. In effect, another K5.2 billion remains to be paid which is approximately $290 million. This translates to a cumulative payout of $590 million.

We are also told that NAPSA will provide debt financing to the tune of $300 million for the Lusaka/Ndola dual carriage.

In summary, NAPSA cash outflow on these two events in 2023 alone will be $890 million. This is a very huge amount! And we hope it will not create future funding constraints for NAPSA’s future operations.

As well meaning citizens, we strongly urge the Pensions and Insurance Authority to take keen interest in NAPSA’s future cash flow profiles for any potential risk of failure. We are not saying there will be a failure but just prudently ensuring that NAPSA can sustain these huge commitments.

Zambia defaulted on its Eurobond payments whose investors are mostly pensioners. And in our debt restructuring quest we are appealing for a haircut on the Eurobond. Meaning the pensioners, whose hard earned money was invested in these Eurobonds will lose out. The same can happen to our pensioners who are contributing to NAPSA on a monthly basis should things go wrong. So NAPSA needs to be extremely cautious on its investment profiling to safeguard the interest of our workers at a point of retiring.

Fred M’membe
President of the Socialist Party

NAPSA partial withdrawal

NAPSA partial withdrawal Featured

I again return to NAPSA partial withdrawal. There are fundamental issues on the NAPSA partial withdrawal:

  1. The policy has been implemented without sufficient sensitization of the beneficiaries on the implications of partial withdrawal and more importantly what they should do with the money. Moving funds from an investment account to a consumption account is not a wise decision. No training has been provided or mentorship workshops administered to school the beneficiaries on how to re-invest the funds in higher return investments. Zambia is well known for lacking a savings and entrepreneurship culture, coupled with the existing harsh economic conditions prevailing, it is likely that the benefits will be used for consumption without creating future wealth. Consequently, we risk creating destitutes at retirement.
  2. The NAPSA partial withdraw leaves us confused at a policy level as to what government is trying to achieve. In February this year, the Bank of Zambia increased the statutory reserve ratio to remove liquidity from the market in order to manage the rapid depreciation of the Kwacha and reduce the rate of inflation. We are told that NAPSA will payout K11 billion which means pumping liquidity into the market. The K11 billion liquidity being pushed into the market will more than offset the liquidity taken out by the Bank of Zambia decision. In a nutshell, one policy measure by the Bank of Zambia is being offset by NAPSA pumping additional liquidity in the market. The two policy measures undertaken contradict and cancel each other out.
  3. We are also concerned that NAPSA is being used as a cash cow by government, to participate in government securities subscription, provide loans to foreign entities to construct the Ndola-Lusaka dual carriage way and now partial pension withdrawals. How much milk can you squeeze out of this cow before it collapses?

Fred M’membe
President of Socialist Party [Zambia]