The Rwanda Social Security Board (RSSB) top managers have promised to do everything within their abilities to avoid recurrence of mistakes that sowed doubts about the institution’s governance style. 

The new pledge was heard Friday as RSSB board chair Faustin Nteziryayo and Director-General Daniel Ufitikirezi were appearing before members of the parliamentary Public Accounts Committee (PAC) to explain failures in the management of public funds as highlighted in the 2013/14 Auditor-General’s report.

The duo admitted that corporate governance mistakes happened when billions of Rwanda Franc were invested in business ventures without approval of the RSSB board of directors.

They also admitted that it was a mistake by the body’s management to invest nearly Rwf100 billion in business ventures without approval of the board of directors.

"There are no explanations why investments were made without consulting the board. We would like to take responsibility for the mistakes and promise you that they will never happen again,” Ufitikirezi told the legislators, responding to tough questions on why RSSB’s management would ignore the board while taking investment decisions.

According to the Auditor-General’s report, issues were found in 22 equity investments totaling Rwf99 billion, which were made without involvement and authorisation of the Board of Directors, contrary to the investment policy statement of RSSB.

The investments made without the approval of the Board of Directors include acquisition of shares in the country’s major banks of Bank of Kigali, Cogebanque, and Development Bank of Rwanda as well as shareholdings in real estate companies such as Ultimate Concept, Hostels 2020, Prime Economic Zone, Gaculiro Property Development Ltd, and Ultimate Developers.

Among others, the investments were also made in companies such as New Forest Rwanda, New Forest UK, Broll Rwanda Ltd, Rwanda Stock Exchange, Cimerwa Limited, Rwanda Investment Group, Safaricom Ltd, Akagera Game Lodge, Soyco, and Bralirwa.

Out of the 22 equity investments, 17 investments have never paid any dividends to RSSB, which raises questions whether they are profitable or not.

Investments on track

Ufitikirezi and Nteziryayo said some of the investments made by RSSB have been profitable despite some that are yet to give returns.

"Not being able to make expected profits doesn’t mean that you are losing money. We actually have plans for exit strategies on investments which are not making profits,” Ufitikirezi said.

However, the majority of the committee members said the RSSB management could have ended up investing in unprofitable business ventures because they didn’t consult the Board of Directors.

"In order to get returns on investments you need to have first gotten good appraisals before investing,” said PAC deputy chairperson Theoneste Karenzi.

The 2013/14 Auditor-General report said the persistent lack of board direction and supervision of management investment decisions at RSSB is a serious governance lapse that may result in loss of funds emanating from investing in non-profitable ventures.

The loss of funds may result in serious consequences for contributors as RSSB may not meet its future obligation as and when they fall due, the Auditor General said.

Dr Nteziryayo said measures have been taken to ensure that mistakes of not informing his office on investment plans don’t happen again.

"We are building capacities within the institution to ensure that mistakes don’t happen again. We can give assurances to Rwandans that their money saved with RSSB is being well managed,” Dr Nteziryayo said.

No repeating mistakes

Ufitikirezi said officials at the institution have welcomed the Auditor-General’s report because it highlighted some of the mistakes that happened. He vowed that the same mistakes will never be repeated.

"We can’t change the mistakes that were made but we have plans to avoid any recurrence of mistakes. Even the smallest of investments made by RSSB will now have to go through the approval by the Board of Directors. Even one million of investment will require consultations with the board,” Ufitikirezi told journalists shortly after appearing before the MPs on Friday.

PAC chairperson Juvenal Nkusi said the explanations given by officials at RSSB will help the committee members to understand accountability issues at the institution.

"RSSB is not a small institution and what happens there concerns us all. The funds that are managed by the body are crucial for people’s retirement and they have to be well managed,” Nkusi said.

After hearing from different officials whose institutions’ poor management of public funds was cited in the Auditor-General’s report, PAC members will produce a report of their analysis of the 2013/14 audit report, which will be tabled in Parliament for consideration.

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