Fred M’membe, the President of the Socialist Party, has expressed concern over the cash flow situation of the National Pension Scheme Authority (NAPSA) in Zambia. Dr M’membe highlighted that NAPSA’s absence from the last few Bank of Zambia Government Bond auctions, coupled with its significant contributions to under-subscribed auctions, have raised questions about the organization’s financial health.
According to Dr M’membe, NAPSA has disbursed approximately K5.8 billion (approximately $300 million) through partial pension withdrawals since the implementation of President Hakainde Hichilema’s policy. However, reports suggest that NAPSA had anticipated a total partial pension payout of K11 billion, leaving an outstanding amount of K5.2 billion (approximately $290 million). This brings the cumulative payout projection to an astounding $590 million.
Additionally, it was revealed that NAPSA is expected to provide debt financing of $300 million for the Lusaka/Ndola dual carriage project. When combined with the partial pension withdrawals, NAPSA’s cash outflow in 2023 alone is projected to reach $890 million, raising concerns about potential funding constraints for the organization’s future operations.
Addressing these concerns, Dr M’membe urged the Pensions and Insurance Authority to closely monitor NAPSA’s future cash flow profiles to mitigate any risks of failure. While emphasizing that there is no definitive prediction of failure, Dr M’membe stressed the importance of prudently managing NAPSA’s commitments to ensure the organization can sustain these substantial financial obligations.
The President of the Socialist Party also drew attention to the recent default on Zambia’s Eurobond payments, highlighting that the majority of these bondholders are pensioners. Dr M’membe appealed for a debt restructuring that would include a “haircut” on the Eurobond, potentially resulting in losses for pensioners who invested their hard-earned money in these bonds. He cautioned that a similar scenario could unfold if NAPSA’s financial situation worsens, potentially jeopardizing the retirement savings of workers who contribute to the pension scheme monthly.