Monopoly of the Rwanda’s pension player is ending in a couple of days when licensing of private competitors take effect.
“We expect that licensing of private pension players will boost savings mobilization in the country and access to finance,” John Rwangombwa, Governor of Central Bank told KT Press.
Next month, Rwanda will begin issuing licenses to private companies in the fragile pension sector – ending monopoly of government’s Rwanda Social Security Board-RSSB.
The number of employees under the scheme increased to 398,987 in the first half of 2016 up from 397,664 in the same period under review.
Central Bank, sector’s regulator says private companies entering the pension market will create competitiveness and boost savings and accessibility to pension services in the country.
According to Central bank statistics indicate the sector provides a warm outlook for investors with its assets growing by 7 percent to Rwf 567 billion up from Rwf 529 billion between June 2015 and June 2016.
It also recorded an increase by 6 percent in total benefits to Rwf 15.9 billion up from Rwf 15 billion in the same period, while investment income increased by 36 percent from Rwf 25 billion to Rwf 34billion mainly due to income earned from investments in fixed term deposits and treasury bill bonds.
The increase, Rwangombwa says is “Mainly attributed to additional investments made from pension contributions that increased from Rwf61 billion to Rwf 68 billion.”
The issuance of licenses to privates comes after enactment of the pension law by parliament in 2015 which also saw Central Bank putting in place pension regulations this month.
The pension sector together with the stock market and digital banking have been highlighted by government as some of the channels to help boost savings and domestic resource mobilization.
Under its Rwanda financial sector strategy 2013-2018, the government underlined key priorities to support financial sector growth mainly focusing on mobilizing savings and investments through licensing of private pension companies, strengthening capital market, access to finance, and financial inclusion.
“This will meet the social objective of facilitating retirement savings, as well as playing an important role in mobilizing long term savings and contributing to capital market development, “said Amb. Claver Gatete, Minister of Finance and Economic planning.
RSSB is a government body established in 2010 by law after the merger of Social Security Fund of Rwanda and Rwanda health Insurance Fund-RAMA, providing both pension and insurance services.