Pension Funds in Mozambique: Interview with Aldo Tembe from Moçambique Previdente

Interview with Aldo Tembe, CEO of Moçambique Previdente

Could you give us your assessment of the pension fund sector? What are the key factors?

The pension fund sector is embedded with the insurance and financial sectors. The sector itself is growing but there is more growth in terms of the non-life sector in the insurance business. Being part of the life sector, I can say it is constantly increasing year by year and it has huge potential. We are the first Mozambican company to solely manage pension funds that aren’t part of any insurance company or any bank, which gives us a pioneer status and a very huge market to play with.

What are the reasons why you could be of interest for an investor?

Mozambique is one of the fastest growing emerging economies in the world. According to the World Bank, we are expected to have a 7% growth rate, which gives us enormous potential. We have gas, coal and an amazing coastline. Tourism is one the major things in Mozambique and we have innumerous reasons, that I could stay here all day talking about why to invest in Mozambique.

We are the first Mozambican company to solely manage pension funds that aren’t part of any insurance company or any bank, which gives us a pioneer status and a very huge market to play with.

As for Moçambique Previdente, our goal is to invest in Mozambique for the Mozambican and to be a true Mozambican company. So we are one of the greatest partners that a foreign investor can find. We know the market and we are present here. We want, not only, to make Mozambique prosperous and provide good returns to investors, but we have a social mandate as well. We want to have something that will be there for the long run, something that’s there permanently and that will bring returns to the companies.

Who are your shareholders?

Our shareholders are Mozambican companies, as well as the State. The State’s institute for the management of State holdings, IGEPE (Instituto de Gestão de Participações do Estado), is our direct shareholder, with 20%. This shows the trust, faith and commitment the government has in us as a business and as an investor in the country. We also have state-owned EMOSE (Empresa Moçambicana de Seguros), which is Mozambique’s largest insurance company, as well as a Mozambican/South African partner who manages the operations. That being said, we are a local company with government shareholding and expertise from our direct South African neighbors. Therefore, we can be a potential and a great company to invest in the country. Around 90% of our investments are made here. You can see that the idea is to have a pension fund company like us, or pension funds in Mozambique, investing in more projects in the country, to make it a better place to be.

What can be the return for an international investor when he comes to the project? What can you say as to why it is better to come here than somewhere else?

First and foremost, we have an amazing country and amazing people. The weather is incredible and the investment opportunities are endless. We are a young country growing quickly and the returns that we have in terms of projects are great: almost everything needs to be done here. The opportunities are around every corner. We have enormous possibilities in gas, coal and infrastructure. Everything is growing. We now have a lot of investment. Foreign aid is increasing. Even the EU is investing a lot. So the possibilities for the next 20 to 50 years are enormous: we are in the forefront of the emerging countries in terms of investments.

How would you define your educational function?

The pension fund is a new reality in Mozambique. We are in a country where the level of literacy is generally low and financial literacy is even lower. We currently have huge campaigns to develop general literacy. In order to move forward, we have to try to get people to save more and to understand the concept of saving, as well as the concept of savings banks. We took a next step with the concept of pension funds. The country already has a national social security system in which everyone who is employed has to contribute to social security. Some don’t understand why. They don’t understand what the benefits are. After that, we came up with Moçambique Previdente’s pension set stating that there is an additional complementary system to what is already being done and what still needs to be done. People realized what social security advantages and benefits they had, and that you don’t only look at retirement or the time of old age but there are benefits that are immediate. Pension funds are also a vehicle for savings in general, as well as to creating better conditions in the country, because we are also investors in the economy and the town’s welfare infrastructure in general.

Will the customers have more benefits?

I believe so, because we don’t only bring monetary elements to the equation. We have savings and the ultimate goal is to have a comfortable retirement and maintain a sustainable way of life during retirement, when we don’t have the same energy and the same performance. But we also bring coupled insurance benefits, life insurance, funeral expenses and have partnerships to increasingly bring other benefits to the contribution or the savings that is made in the pension fund. One of the innovations that we have in our law is that up to 80% of the balance of each person’s individual pension fund is used as a collateral for a mortgage to buy a house. So with normal savings we have money in the bank earning interest but it doesn’t give us more than that and we also have all the financial hazards such as the currency appreciation among others. With the pension funds we are saving directly for our pension, for our well being to reach the age of retirement but also since the start buying other products or benefiting of other products that we have directly with life insurance and other insurances.

What would be your message to companies?

Companies have to take care of their active employees. We all want better conditions and benefits for workers, of course, but in a way that is economically viable for the company. Companies should not only pay employees well but the latter should also to be eligible for benefits over a time frame. And what happens unfortunately in our society, is that many of the people reaching the retirement age do not comply with the main objective when retiring, which is to effectively rest while maintaining a certain standard of living. With pension funds, companies can give the employee an additional benefit, a benefit that will not be immediately visible but that will last throughout time. I believe that nothing is better than the employer who had someone working for him during 20 or 30 years, and upon reaching retirement age, the employee can say: “I worked for that company and today I can have a decent retirement and I can keep my lifestyle because my employer was able to think about the pension fund that I have subscribed to during all this time.”

What would you want to achieve in the next two years?

We have as a goal and that is also our motto, to be pioneers in the management of pension funds investments in Mozambique. But we don’t have a merely economical vision that is to increase the scale of pension fund clients. We also have a dual vision that is to ensure that our members or people in general can have a decent pension while maintaining their standard of living or at least not so low. Secondly, we want to be a force in the economy. We want to be one of the main investors in all aspects and at all socio-economic levels. So we want to have more customers, but having more customers directly gives us the opportunity to ensure that more people who achieve retirement have a decent standard of living and can invest directly in the economy.

What would be your final message about the country and Moçambique Previdente?

Once again, Mozambique is an excellent country with great opportunities, not only the ones communicated before but also those that are hidden in the market and are more easily seen from the inside, by the locals. We as Moçambique Previdente want to be one of the important forces in our economy. We want to be one of the main investors, yes, but we want to provide the people that are retiring and of old age, good conditions that get better and better throughout the years. We want more clients of course, but these clients are not to just have more numbers or more money. These clients will represent us doing all that I have said before: being a pioneer investor in the economy and having a social position to help the elderly.

Mozambique and Angola are in the SADC (Southern African Development Community) region and are the countries that are growing at the fastest rate. In all the emerging countries we are in a forefront position, which gives us an extremely good place to invest not only in the medium term, but also in the long run. Besides, investors have the possibility to come to Mozambique and tap the whole region too.