US-dollar revenues, sustained remittances and the VFEX migration are improving the conditions that have kept Zimbabwe outside Old Mutual’s key Group performance measures since 2019

• Zimbabwe has been ring-fenced from Old Mutual’s key Group performance measures since 2019
• About 85% of local revenue is generated in US dollars, with US$5 million remitted in the first half
• Old Mutual is assessing cash generation, fungibility and the macro environment for potential future inclusion

Harare - Old Mutual has begun assessing whether improving cash generation and currency conditions in Zimbabwe are sufficient to eventually return the local business to its Group earnings perimeter, seven years after fungibility constraints and local-currency volatility pushed the operation into ring-fenced treatment.

The group’s first-half 2026 results describe Zimbabwe as being positioned for a future contribution to Group earnings and shareholder value. The operation has been ring-fenced since 2019 and excluded from key Group performance indicators because of historic constraints around the movement of capital and currency volatility. 

The ring-fence remains in place. Zimbabwe continues to be excluded from adjusted headline earnings, leaving Old Mutual’s treatment to separate earnings generated locally from earnings the Group regards as economically accessible for its underlying performance measures.

Several conditions behind that treatment have improved. About 85% of Old Mutual Zimbabwe’s revenue is now generated in hard currency and the operation transitioned to the US dollar as its functional currency from 1 July 2024. Old Mutual also migrated its Zimbabwe listing from the ZSE to VFEX, where trading resumed on 13 August 2026. 

Cash movement provides another measure of progress. Old Mutual reports sustained remittances from Zimbabwe since 2022, including US$5 million during the first half of 2026, which management identifies as evidence of improving cash generation and fungibility. 

This brings the economics of the ring-fence into sharper focus.

Ring-fenced operations, which comprise Zimbabwe under Old Mutual’s current treatment, contributed R897 million to the reconciliation from adjusted headline earnings to headline earnings in the first half of 2026, compared with R258 million in the corresponding period. The increase was primarily driven by higher investment returns in Zimbabwe as local equity markets strengthened. 

Old Mutual therefore has a Zimbabwe operation capable of producing meaningful accounting earnings while access to the capital remains constrained enough for the business to stay outside its preferred underlying earnings measure.

The balance sheet carries the same issue. Old Mutual reported R5.53 billion of equity relating to ring-fenced operations at June 2026, up from R4.00 billion at December 2025. Under the Group’s current treatment, that equity is removed in calculating adjusted IFRS equity and receives no value in Group equity value because of the restrictions surrounding access to capital.

The route back into Group measures consequently runs through fungibility rather than earnings generation alone. The parent needs sustained evidence that cash generated in Zimbabwe can be moved through dividends with sufficient consistency to become available for wider Group capital allocation.

The increasing dollarisation of the Zimbabwe operation strengthens that position. Generating 85% of revenue in hard currency reduces exposure within the business to the local-currency volatility that contributed to the 2019 ring-fence. The US-dollar functional currency adopted in 2024 also brings the accounting base closer to the currency in which capital can be remitted.

The VFEX migration adds to that alignment. Old Mutual shares now trade on a US-dollar exchange, bringing the listed security closer to the increasingly hard-currency economics of the local operation, while dividend access remains the decisive constraint.

There is also growth occurring within the franchise. O’mari Zimbabwe has surpassed 2.2 million customers, supported by higher transaction activity and average revenue per user, while revenue-generating users increased 270% year on year. The platform adds a growing digital financial-services channel to a Zimbabwe business already generating most of its revenue in hard currency.

The broader Old Mutual Africa Regions operation delivered results from operations of R947 million in the first half, up 65%, alongside stronger Life sales and gross flows. Zimbabwe remains outside those key regional performance indicators while its ring-fenced treatment continues.

Its potential inclusion therefore has implications beyond presentation of the accounts. A change in treatment would recognise a greater portion of Old Mutual’s African earnings and equity within the measures management uses to assess underlying Group performance and capital.

Management has provided no timetable for removing the ring-fence. Its first-half results instead establish three variables under continuing assessment: cash generation, fungibility and the macroeconomic environment. 

Those variables provide a measurable forward test. Continued US-dollar earnings strengthen the operating base, while recurring remittances establish whether locally generated capital is becoming consistently accessible to the parent. The macro environment determines whether those improvements can persist without recreating the currency constraints that produced the original separation.

Zimbabwe has already moved from the conditions Old Mutual faced in 2019. Most revenue is now generated in hard currency, remittances have continued since 2022 and the listed security has migrated to VFEX.

The remaining test is whether those changes become durable enough for Old Mutual to remove the ring-fence. Until then, Zimbabwe remains a business capable of generating earnings and equity that the Group still treats as constrained for underlying performance and capital allocation purposes.

- Equity Axis News