Tuesday, June 18, 2024

NAPSA 20% Beneficiaries: Here are Investments Options for Wealth Creation


By Mwansa Chalwe Snr

The government’s core rationale for the 20% partial pension withdrawal is to encourage beneficiaries to invest part of their pension themselves, while still in employment. There is a general agreement among Pension Contributors that the NAPSA pension in its current form is not sufficient to sustain someone after retirement because they believe that the monthly payments are too small.
“We have signed into law, the National Pension Scheme Amendment Bill 2023.The new law will give citizens the opportunity to reinvest the funds into various ventures and assets of their choice. As a result, more jobs will be created, contributing to our economic development agenda”, President HH said when signing the bill, clearly spelling out the objective of the new law.

It is an open question whether the beneficiaries are well equipped with what is expected of them. This piece is meant to educate beneficiaries about the different types of investments available on the Zambian market, in order to help them make informed decisions. The article will try to walk them through the different investment options. It will avoid the technical investment jargon, to make it easy to understand.
First and foremost, it is important for beneficiaries to know the two golden rules of investment. The number one rule in investment planning is that, you need to diversify your investments. In simple terms, you should never put all your eggs in one basket. This is meant to reduce your risk of losses.

The number two rule is that, when you are making investment decisions, you should always consider the following variables: return or income you will earn (interest, rent, dividend, director’s remuneration or salary), risk (chance of losing money), liquidity (ease of conversion of investment into cash for use when required) and capital growth (increase in the value of the original money you invested).

In Zambia, we have the following seven main types of investments that Napsa 20% pension beneficiaries should consider: Bank Savings accounts; Government bonds and treasury bills; Shares, Unit trusts; Real estate; Insurance policies and Starting own business.

Bank Savings and Fixed deposits accounts

Bank Savings and fixed deposits are among the safest investment options available to NAPSA beneficiaries in terms protecting your original investment amount and offering high level of liquidity. However, in Zambia, it is not advisable to invest the bulk of your pension money in a regular savings or fixed deposit account, because it will result in your money’s purchasing power declining over time due to inflation, and there will be no growth to your money. One of the objective of a rational investment strategy is to beat inflation. At the moment, Zambian inflation is at 10.2%, and Zambian banks are paying between 5% to 7% interest to savers. This means that a saver is earning negative interest between 3% to 5%.You are basically losing money. The Banks on the other hand, are using your money, and lending it to government and the public between 25% to 35%. The advice is do not keep too much of your pension money in your bank savings or fixed deposit, as it will be losing value. You should explore investment avenues that have the potential to fetch significantly higher returns and grow your capital.

Real estate Investment

Napsa beneficiaries have the option to invest in commercial or residential properties. But it is highly unlikely that the majority will receive funds sufficient to invest in the real estate market. Investment in real estate requires huge sums of money. There is, however, a possibility that one can acquire a piece of land. But the majority should consider investment options like bonds or shares, unit trusts etc as a starting point to build capital for investment in real estate in future, in say five or ten years’ time. There are reports of some beneficiaries getting amounts ranging from K30, 000 to K140, 000 which is good base.

Lusaka Stock Exchange Shares

The third investment option are stocks or shares or equities. In developed countries, investment by individuals in a stock exchange like Lusaka stock exchange, is among the most popular investment options because of the potential growth of shares. By purchasing a share, you become part-owner of publicly-traded companies like ZANACO, Airtel, Zambeef, First Quantum Minerals, Zambia Breweries, Shoprite Holdings and many others. Shares, like real estate, tend to increase in value over time. These investments are long term. This is a highly recommended investment option to all the demographics of NAPSA beneficiaries, as the amount of investment required to buy shares on the stock market is minimal.

Mutual Fund investment in Unit Trusts

The Zambian capital market has asset management companies. These are investment professionals who can invest your lump sum pension fund in a diversified portfolio of a unit trust of your choice, so that your money can grow. The Securities Exchange Commission (SEC) regulates the Zambian capital market including asset management companies. One can obtain a list of licenced asset management companies from the SEC website.

Government Securities (Bonds and Treasury bills)

The fifth investment option is to lend money to the government of Zambia. This is referred to as risk free because governments are not expected to default. And so it is smart for you to lend to the government as it is highly profitable. The last government auction was on 27th April, 2023. For the 5 year bond interest was 24% and the 10 year bond was paying 27.75% but bank fixed deposits were paying below 10%.

Insurance Policies
Insurance companies have a variety of financial products that Napsa beneficiaries should explore. Insurance products are developed to meet particular objectives and so it is worth enquiring from these companies on what they are offering and ensure you can choose products with growth potential.

Business start-ups

The last investment option is for beneficiaries to start their own business. This is the riskiest option in the absence of having acquired necessary management and entrepreneurship skills. Empowerment of people with financial capital without intellectual capital has, in the majority of cases, ended up in failure. There is overwhelming empirical evidence that 90% of micro and small businesses fail due to lack of basic management skills like financial management, marketing and business planning.
In a bid to help beneficiaries of NAPSA, and any other Zambians who want to start a business, I have designed a simple, practical and affordable mobile App, to teach them the basics about starting and running a small business. This is meant to bridge the knowledge gap. There is a lack of technology based intellectual capital in the market place. The App contains simple guidelines on the following: on how to prepare a start-up budget, simple one page business plan, one page marketing plan, interactive preparation of cash flow budget, basic small business management tools, and many more tips. This simple e-learning tool can reduce the risk of start-up business failure drastically. You can access it on Google Playstore: https://play.google.com/store/apps/details?id=com.yeca

It was not within the scope of this article to go into details about the investment options that I have described. I have highly summarised and simplified them for ease understanding. You will need to get further advice from experts, on how you could proceed with taking advantage of above lucrative investment options. The investment options in this article are not for any exclusive class of Zambians, but for all Zambians as long there are able to read and write. In developed countries, ordinary citizens in grow their wealth, and become financially secure through knowledge acquisition, and using professionals to help them. You just need to get a properly qualified financial advisor. You should, however, be careful, and be conscious of the many conmen in Zambia, who may pose as advisors so as to scam you.
It is hoped that this limited basic financial literacy lesson, as it relates to investment; will be helpful to NAPSA beneficiaries. It is advisable that you print the article for reference purposes. The partial Pension pay-out is meant to provide you with future financial security, and therefore, it should not be wasted or gambled. It is prudent that you do not consume it all. Invest the largest percentage of it in medium to long term investments for wealth accumulation and income generation.

The writer is a Chartered Accountant and Author. He is a semi-retired international MSMEs Consultant. He is also an Op-Ed Contributor to the Hong Kong based, Alibaba owned South China Morning Post (SCMP).Contact:[email protected]


  1. There was a sudden influx of shoppers in malls yet it wasn’t that time when those on monthly stipends get their dues. I concluded that the only source of income is NAPSA. The reality on the ground is different. Many of those queuing to access the partial withdrawals aren’t for investment. Besides, for some it’s even better not to claim their entitlements now. What would a Zambian do with amounts as low as K40,000?

  2. Just looking at the options listed by the author by scanning through the article I would pick Real Estate top of the list as the saying goes “safe as houses” and then Government Securities (Bonds and Treasury bills) you will get your return in investment. Just stay well clear of Bank Savings and Fixed deposits accounts unless you have no idea what to do with your money …they offer pathetic interest rates given the amount of money you are putting in their accounts for a long periods.

  3. If you want a higher return just import a used Freezer truck from Jap for $10,000 and start importing fish from Malawi or locally it will practically pay for itself and is exempt from Customs duty.

  4. Broke people are good at providing financial advice on money that they don’t even have.


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