The Zimbabwe economy is estimated to have contracted by 7% in 2019 (2018:+4% growth) due to subdued performance in the key sectors of agriculture, mining and manufacturing. Agricultural output shrank due to the drought in the 2018-2019 season and Cyclone Idai in March 2019. Despite recovery in global mineral prices, mining was negatively affected by power shortages and a drop in production volumes compared to 2018. The drought was a key factor in diminished national power output at the Kariba hydro-electric power station. The economy was also negatively affected by continuing shortages of foreign currency and fuel.

Subsequent to the floating of the Real Time Gross Settlement dollar (“RTGS$”) against international currencies in February 2019, the Zimbabwe Dollar (“ZWL or $”) was introduced as a mono-currency in June 2019. The migration from a multiple currency environment to the mono-currency environment, which commenced with the introduction of the RTGS dollar in October 2018, coincided with a spike in year-on-year inflation to 42% in December 2018. The inflation rate continued to rise and closed the year at 521% in December 2019.

The mainstream equities market on the Zimbabwe Stock Exchange (“ZSE”) all share index increased by 57% (2018: 51%) for the year. The sub-inflationary performance was mainly due to diminished foreign investor interest as well as declining production volume performance by some major listed entities. Notwithstanding the difficult operating environment, the Group invested in future growth across the business units and also expanded into new areas such as microfinance and funeral services which are closely aligned to its current operations.


At the beginning of the year Zimbabwe was using a multi-currency system with RTGS bank balances and bond notes at an exchange rate of 1:1 with the United States of America Dollar (“USD”). On 22 February 2019, the Reserve Bank of Zimbabwe (“RBZ”) floated the local currency at an introductory rate of USD1:RTGS$2.5 through Statutory Instrument (“SI”) 33 of 2019. On 24 June 2019 the multi-currency system was abolished in favour of the ZWL as a mono-currency, through SI 142 of 2019.

These developments had various impacts on the Group with insurance subsidiaries precluded from writing local USD denominated policies with effect from 24 June 2019.

The Group was also exposed to foreign obligations relating to periods prior to 22 February 2019 (“legacy debts”) when the USD and RTGS$ were segregated.

The legacy debts amounting to USD1.9 million which arose from retrocession premiums, regional claims and information technology costs were submitted to the RBZ for approval. These liabilities have been recorded in the financial statements at the interbank rate.


On 11 October 2019 the Public Accountants and Auditors Board (“PAAB”) issued pronouncement 01/2019 which advised that there was broad market consensus within the accounting and auditing professions that the factors and characteristics to apply International Accounting Standard (“IAS”) 29 – Financial Reporting in Hyperinflationary Economies in Zimbabwe had been met effective 1 July 2019.

As a result, the financial statements show both inflation adjusted and historical cost information.


During the period under review, the Group achieved significant revenue growth but also faced increased operating expenses due to inflationary pressures.

Statement of comprehensive income
Gross Premium Written (“GPW”) decreased by 11% from prior year and increased in historical terms by 213% due to revision of sums insured in sympathy with the movement in the USD: ZWL exchange rate and the prevailing high inflation.

Rental income for the year amounted to $52.5 million and was ahead of prior year by 3% and by 203% in historical terms. The growth, relative to prior year, is due to quarterly rental reviews and increases in occupancy rates in retail and residential properties.

The Group had an investment loss of $392.8 million for the period under review compared to investment income of $207 million in 2018. The loss was driven by decline in value on ZSE listed equities as the market index grew at a slower rate than inflation.

Statement of financial position
The Group’s total assets declined by 2% as at 31 December 2019 compared to 31 December 2018. The decline is mainly attributable to the loss of value on listed equities, the Zimbabwe dollar denominated bank balances and accounts receivables.


Sustainability is a core value of First Mutual Group. Sustainability provides considerable integrated thinking on how to manage economic, environmental and social impact through shared values with stakeholders. The Group produced its first report containing sustainability information using the Global Reporting Initiatives (“GRI”) standards in 2018, which has since been made mandatory for listed companies through the new listing requirements by the ZSE. The Group will continue to take constructive steps of aligning business values with sustainability while building shared values with stakeholders for long term business success.


First Mutual Holdings Limited continues to contribute to the community in which it operates in various ways including offering educational assistance to selected children in need from primary school to tertiary level through the First Mutual Foundation and First Mutual Reformed Church University Scholarship based on humanitarian need and academic merit. In addition, the Group is playing a key role in equipping university students with financial literacy education through its Future First programme. First Mutual Holdings Limited is also contributing to the health sector through its support for cancer awareness programmes, and in the year under review contributed to Cyclone Idai relief efforts financially as well as donating non-perishable goods and clothing through the Employee Corporate Social Responsibility initiative.


A number of significant new pieces of legislation have been enacted recently, not least of which are the Companies and Other Business Entities Act [Chapter 24:31] and the new ZSE Listing Rules [SI 134 of 2019]. In addition, various directives have been issued by the regulators, particularly the Insurance and Pensions Commission (“IPEC”). The Group is rigorously assessing the implications of these enactments and taking steps to comply.


According to the Ministry of Finance and Economic Development, the economy is expected to recover with GDP growth of 3.0% in 2020 and 6.4% in 2021 on the back of improved performance in agriculture and mining. In spite of the challenging economic environment, the Group will continue to leverage off its strong financial position to enhance its position in the market. The stated focus by the monetary authorities on stabilising the Zimbabwe dollar and reducing inflation will enhance growth prospects for the country.


Mr J Sekeso resigned from the Board on 7 February 2019.