The Social Security Fund of Rwanda (SSFR) has recorded significant expansion with its investment portfolio now valued at over Rwf160 billion ($270m).

The Fund’s investments have continued to grow at an average rate of 29.6 per cent since the year 2000.

Since 2006, the Fund has been implementing reforms that have seen it grow its portfolio from approximately Rwf60 billion to Rwf150 billion ($253.1 million) last year, placing it among the leading financial institutions in the country.

According to the 2009 revenue projections, the Fund, also known by its French name Caisse Sociale du Rwanda (CSR) expected to collect Rwf24 billion; as of November 2009, a total of Rwf23.6 billion had been collected, representing 24.3 per cent average growth rate since 2000.

While real estate development takes the lion’s share of the portfolio, the Fund has also invested in bonds, corporate loans, mortgage loans, foreign and local equity. 

“We are growing but mainly that growth is into real estate; we are trying to finish up some of the big properties we started last year,” said Afrique Ramba, acting director general of SSFR.

Mr Ramba noted that the fund’s investment plan implementation is going well, with the majority of investments in real estate due for completion next year.

Ongoing estate projects in advanced stages include completion of a 17-storey commercial building at Kigali’s Grand Pension Plaza, in which the Fund has so far sunk approximately Rfw9 billion.

Though the majority of the Fund’s investments are domestic, it has two equity investments abroad, in Kenya (in Safaricom) and the US (in a pharmaceutical company).

In 2008, the Fund became the third largest shareholder in the Kenyan telecom giant Safaricom after buying shares worth $7.6 million in its initial public offering.

According to Ramba, despite the fact that the value of Safaricom shares has seen a drop, the Fund is still upbeat about the investment.

“It is still a strong company in Kenya, with more than 70 per cent market share; it is still expanding on the data side of the market and also mobile money,” he said.

Mr Ramba said the Fund expects to collect Rwf90 million as dividends.

“As long term investors there is no need for worry; the share price keeps moving up and down. We don’t have any problem with cash; we shall wait until we think the value has really appreciated and then we can sell out,” Mr Ramba said.

The Fund currently has only 300,000 active contributing members out of a total Rwandan population of 11 million.

According to the SSFR boss, the relatively small number of active contributors is explained by the fact that the majority of Rwandans are still largely employed in the informal sector.

“People involved in small businesses are difficult to trace, though according to the law it is the employer who registers,” he said.

However, Rwanda is still in the process of reforming its pension system after the institution suffered from mismanagement before and during the 1994 genocide against the Tutsi. 

For instance, the current government is servicing a Rwf56 billion debt to the Fund in the form of arrears that accumulated before the genocide.

The debt was originally Rfw 66 billion before the government started paying it off in 2006.

It was agreed that the government would pay beginning 2006 and the debt would be cleared by 2018. 

The pension reforms, now at an advanced stage, are expected to liberalise and create competition within the sector.

Both local citizens and foreigners who wish to operate private pension schemes, will be authorised to do so but within the legal framework set by the National Bank of Rwanda.

“If we are to survive, we have to be competitive; the IT systems that we are using are outdated and we need to improve them to be able to offer faster services and improve efficiency of operations,” Mr Ramba said, adding that the institution is aggressively pushing for reforms that include installation of a new IT system and changing the structure of the Fund to a multi-pillar scheme, offering new products under the soon-to-be-created Provident Fund. 

The Provident Fund will be composed of two branches, pensions and special savings.

The special savings branch will enable members to acquire pre-retirement benefits such as housing and education for their children.

The financing will be through mandatory contributions that may be supplemented by voluntary contributions.

Such pre-retirement benefits, the Fund says will also attract workers operating in the informal sector.

However, Mr Ramba also noted that the country is cautiously drafting a new pension system to avert problems arising from the old global pension scheme system of the kind being experienced in Europe, specifically France.

“In France they can’t pay pensioners due to changes in demography. We are trying to look into the future to mitigate the risk that we may face in years to come.”

In 2009, the Rwandan Cabinet decided to merge Rwanda Medical Insurance, known by its French acronym RAMA, and SSFR into one institution to form the Rwanda Social Security Board.

The RSSB is expected to be operational in 2011. It is anticipated that the merger will be convenient for contributors, who will now be dealing with one party, ensuring better service delivery.

The Cabinet also approved the new social security policy and the organic law on social security in Rwanda.

The major features of the new policy are the introduction of the Provident Fund and the housing scheme.