By Tendai Makaripe
In September 2024, Zimbabwe unveiled the Renewable Energy Fund (REF), a collaborative initiative between the government, the private sector, and the United Nations, aimed at overhauling the nation’s energy infrastructure and addressing climate change challenges.
This fund, managed by Old Mutual, is designed to finance and develop local renewable energy projects, aligning with Zimbabwe’s goals to meet its Sustainable Development Goals (SDGs).
Zimbabwe’s Vision 2030 sets an ambitious target of becoming an upper-middle-income economy by the end of the decade.
Central to this vision is the goal of universal energy access, recognising that reliable power is essential for economic and social development.
The National Renewable Energy Policy, introduced in 2019, has catalysed this shift by encouraging investments in solar, wind, and hydro projects through tax incentives and feed-in tariffs.
These measures have made renewable energy an attractive sector for investors, with pension funds emerging as key players.
Since 2018, Zimbabwean pension funds have invested over US$57.3 million in renewable energy, focusing on projects like solar mini-grids and small hydroelectric plants.
Recently, Old Mutual Zimbabwe added significant momentum with a US$100 million Renewable Energy Fund to support local projects.
Addressing journalists at a recently held insurance and pensions reporting mentorship program sponsored by the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA), director of pensions and life assurance supervision at IPEC Cuthbert Munjoma said: “These investments can stimulate economic growth through capital investment in business and infrastructure. Increased investment from pensions’ savings can lead to job creation and economic expansion.”
Zimbabwe’s renewable energy investments align with global goals, particularly the United Nations Sustainable Development Goal (SDG) 7, which advocates for universal access to affordable, reliable, sustainable, and modern energy.
Solar and hydroelectric projects are not only empowering rural communities but also contributing to Zimbabwe’s commitments under the Paris Agreement and SDG 13 on climate action.
By reducing reliance on fossil fuels and lowering carbon emissions, the country is making strides in climate resilience.
Economist Mike Zvandasara said: “Investment in renewable energy is crucial for Zimbabwe’s climate resilience. Pension funds play an essential role in making this future possible, especially for vulnerable rural communities.”
Zimbabwe’s National Renewable Energy Policy of 2019 has created an attractive environment for renewable energy investors, particularly through incentives such as tax breaks, feed-in tariffs, and a streamlined regulatory framework.
The Zimbabwe Energy Regulatory Authority (ZERA) ensures that projects align with national standards, and the Southern African Power Pool (SAPP) allows Zimbabwe to trade energy with neighboring countries.
This trade arrangement provides a safety net against energy shortages and opens opportunities to export surplus renewable energy to the region.
Despite these policies, challenges remain.
Regulatory delays—particularly around Environmental Impact Assessments (EIAs) and power purchase agreements—can create uncertainties for investors.
Additionally, infrastructure limitations, such as the national grid’s capacity to distribute power from renewable sources, pose hurdles.
Without substantial investment in grid infrastructure, the full potential of these renewable projects may not be realised.
Governance expert Tanaka Mandizvidza said the socioeconomic impact of pension fund investments in renewable energy is already evident in rural communities.
“Solar power projects are providing electricity to schools, clinics, and homes that were once off the grid. In farming areas, solar-powered irrigation systems are enabling year-round crop cultivation, enhancing food security and income levels,” he said.
Research has shown that on a national scale, renewable energy projects are creating jobs in construction, maintenance, and engineering.
The Centragrid solar plant, located in Nyabira, expanded its capacity from 2.5 MW to 25 MW.
This expansion was fully funded by local capital, with significant investments from Old Mutual Zimbabwe, the National Social Security Authority (NSSA), and various pension funds.
Old Mutual, through its Old Mutual Investment Group Zimbabwe (OMIGZ), invested US$21.5 million into the project as part of its broader impact investment strategy.
The National Railways of Zimbabwe (NRZ) Contributory Pension Fund partnered with Distributed Power Africa (DPA) to install rooftop solar systems across its properties nationwide.
These installations, totaling 5.3 MW, aim to provide reliable and uninterrupted power supply to tenants, thereby reducing reliance on the national grid.
By investing in these projects, pension funds are not only generating returns but also contributing to job creation and economic development.
These benefits align with Vision 2030’s goal of reducing poverty and improving livelihoods through sustainable development.
Environmental governance analyst Hensley Jesman said environmentally, the shift to renewable energy is helping Zimbabwe reduce its carbon footprint.
“Solar and mini-hydro projects offer cleaner alternatives to coal and diesel, which have historically dominated the energy sector,” he said.
“According to the International Renewable Energy Agency (IRENA), countries that invest in renewable energy, such as Zimbabwe, are more resilient to climate change and better positioned to meet global environmental standards.”
Despite the clear benefits, investing in renewable energy comes with challenges.
One significant barrier is regulatory uncertainty.
Pension fund managers often face delays in project approvals due to complex regulatory requirements, particularly around Environmental Impact Assessments (EIAs) and power purchase agreements with the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).
Said economist Benedict Marufu: “Infrastructure is another challenge. While renewable energy projects are generating power, the national grid’s capacity to distribute it is limited. This bottleneck means that energy produced in rural areas may not reach urban centers where demand is higher. Without significant investment in grid infrastructure, the potential of these projects remains underutilised.”
Moreover, Zimbabwe’s economic instability, including hyperinflation and currency fluctuations, poses risks to the financial performance of pension funds.
These economic challenges could impact the sustainability of renewable energy investments if not managed carefully.
Zimbabwe is not alone in leveraging pension funds to finance renewable energy.
In South Africa, the Government Employees Pension Fund (GEPF) has invested in several large-scale wind and solar projects, helping the country reduce its reliance on coal.
Namibia’s Social Security Commission has also invested in solar energy to provide clean power to rural communities.
Globally, pension funds are becoming critical players in the renewable energy sector.
Research has shown that Denmark and Norway are leading the way, with their pension funds heavily invested in offshore wind farms.
These investments contribute to meeting global climate targets.
Zimbabwe can learn from these examples by improving its regulatory environment and expanding its grid capacity.
By following these regional and global best practices, the country can unlock the full potential of its renewable energy investments.
Zimbabwe’s pension funds are uniquely positioned to drive the nation’s renewable energy ambitions forward.
To overcome some of the existing challenges, pension fund managers are advocating for more streamlined regulatory processes and improvements to Zimbabwe’s energy infrastructure.
“With better grid capacity and quicker regulatory approvals, pension funds could take on larger, more impactful projects,” said a senior official at one pension scheme based in Harare who requested anonymity.
“If infrastructure limitations are addressed, the potential for these funds to substantially contribute to the nation’s energy security and economic growth could be fully realised.”
Additionally, Zimbabwe could benefit from regional energy partnerships and innovative financing mechanisms.
With support from institutions such as the African Development Bank, which has financed renewable energy projects across Africa, pension funds may gain more resources and technical expertise to tackle larger-scale energy initiatives.
Collaborative efforts with global development banks could provide stability and mitigate some economic risks posed by hyperinflation and currency fluctuations.
Zimbabwe’s pension funds are emerging as agents of change in the renewable energy sector. Through significant investments in solar and hydroelectric projects, they are actively contributing to Vision 2030’s objectives, creating sustainable energy access and driving economic growth.
However, to maximize the impact of these investments, Zimbabwe’s government needs to address regulatory delays, expand grid infrastructure, and foster a more stable economic environment.
By learning from regional and global examples and leveraging Zimbabwe’s existing policies, the country’s pension funds can play an even greater role in creating a sustainable, resilient future.
These investments represent Zimbabwe’s commitment to environmental stewardship, energy independence, and socioeconomic development.
As pension funds continue to lead the way, Zimbabwe is well on its path toward a cleaner, greener tomorrow.
