Rwanda: Why RSSB is Pushing to Become Autonomous

23 November 2020

The Rwanda Social Security Board (RSSB) will soon gain more autonomy from the state in terms of governance, following the approval of a draft cabinet paper that provides the legal framework paving way for the move.

The process is subject to parliament's approval and if all goes according to plan, will be complete by the end of 2020, according to top officials at the pension body.

Currently, RSSB's activities are overseen by the Ministry of Finance and Economic Planning, in close collaboration with the Ministry of Public Service and Labour and subject to public sector procedures by Parliament and Office of Auditor-General.

Once the move is given a parliamentary nod, it will see the entity independent and decision making will be led by the Board of Directors, which officials said will speed up the process.

In September, Cabinet appointed a nine-member Board of Directors led by Christopher John Wales who has previously been involved in designing economic and fiscal policies, fiscal institutions, revenue administration among others in different countries.

According to RSSB Director-General Regis Rugemanshuro, autonomy is aimed at improving operational efficiency and performance as well as allow competitiveness on local and regional markets.

With growing investments, growing competitiveness and fast pace in equity markets, autonomy is expected to enable swift decisions at RSSB.

Rugemanshuro said that autonomy is necessary especially as they move from passive investments to more agile and fast investments.

"Gone are the days when we were passive investors, we are now a deal-making driver seat type of investor, following up on every penny, that is our new DNA. It involves being aggressive, hands on, fast and creating and capturing opportunity," he said.

The firm is seeking to be more involved in equity investment, investing in companies and being involved in making them profitable as opposed to overreliance on fixed income investment such as bonds and shares that are low risk but have relatively lower returns.

By cutting down the red tape that came with multiple stakeholder consultations, officials say that the management and board will be able to have agility to see investments flourish.

This is also expected to come in handy in RSSB's new 5-year strategic plan which the entity defined as 'high performance, members' first orientation and operational excellence.'

With the autonomy, RSSB will not be required to use traditional public service recruitment processes allowing them to attract and retain top talents in the financial sector competing with local financial industry players in aspects such as remuneration.

According to Regis Hitimana, the Deputy Director in charge of Benefits, the autonomy will morph the entity into a modern financial institution.

The procurement process will also not be under the Rwanda Public Procurement Authority to allow efficiency.

The development comes at a time when members of the public and parliamentarians have expressed concern that RSSB has often made investments in sectors that are outside the affordability range of majority of the contributors.

Examples of investments such as Vision City Estate have been cited.

Rugemanshuro said that multiple lessons have been learnt from previous and current projects including Vision City Estate and will be applied in their new strategy.

He said that the first orientation will see them work for the interest of their members to get returns for their savings as well as invest in projects that will be relevant and answer to societal needs such as affordable housing.

"We will be more analytical, data-driven in deciding on nature and approach of investments," he said.

As part of the preparatory activities for the new approach and expectations, RSSB will also be undergoing a staff restructuring exercise to make it more fit for purpose. This, they said seeks to place staff in departments and agencies.

According to Hitimana, the process will be complete by May involves reviewing the skills available, current placements as well as identifying required capacities and placement.

For instance, it has emerged that there is a need for data scientists in line with plans for their approach for performance optimization and data-informed decisions.

Industry experts contacted expressed mixed feelings over the development with majority saying that while the autonomy will speed up decision making, it carries risks.

Teddy Kaberuka, an economic analyst, told The New Times, the autonomous status will improve agility to invest when opportunities emerge, but also expressed concerns in the event of wrong decisions or choices.

He said that with the emergence of the Kigali International Finance Centre, agility is a positive step added that given that the fund holds life savings and pensions of Rwandans, an investment agency will have to exercise a lot of caution.

The pension body is arguably the wealthiest in the country in assets with the total investment portfolio valued at Rwf1.2 trillion as of the end of the first quarter of 2020/21.

In the same period RSSB recorded a Rwf 14.2 billion net return on its investments, which the firm says was 78.9 per cent of their targets, with Covid-19's effect on the economy said to have held back performance.

More From: New Times

Don't Miss

AllAfrica publishes around 600 reports a day from more than 130 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.