Government is also planning to implement compulsory pension for all employed and a provident fund within the Rwanda Social Security Board.

Government is planning to set up at least one Savings and Credit Co-operative (SACCO) per sector (Umurenge) this year.

The move is aimed at attaining the Gross National Savings (GNS) target of 18.4 percent by 2012. Presently Rwanda’s GNS stands at 12.6 percent.

John Rwangombwa, Permanent Secretary in the Ministry of Finance and Economic Planning said last week that these SACCOs are set to mobilise 10 percent of rural production of savings, which would stand at Rfw60 billion by the end of the year alone.

Rwangombwa who is also Rwanda’s Secretary to the Treasury said that the legal structure will be reformed and that the broader national education campaign programs will be necessary for the success of these saving cooperatives.

Government is also planning to implement compulsory pension for all employed and a provident fund within the Rwanda Social Security Board.

According to the permanent Secretary, with a contribution rate of 20 percent gross salary, this is likely to mobilise a potential Rwf50 billion every year.

He said that of the 20 percent, 10 percent will be contributed by the employee and another 10 percent by government as a substation of Pay as You Earn (PAYE).

The third pillar aimed at increasing the savings level in the country is the private pension and Collective Investment Schemes (CIS).

The ministry says that the CIS will raise direct savings from the public and will be a major intermediary between the savings vehicles like SACCOs, Social Security Funds and the investors.

While government targets Rwf20 billion every year, the move comes at a time when only 14 percent of the population is banked with a mere three percent saving with Micro Finance Institutions (MFIs).

Official statistics show that 52 percent of the population are financially excluded given that public pension is only limited to formal employees and yet there is a very little development of private pension.

Government is also targeting to mobilising an additional five percent of the GDP every year starting from 2009, in order to reach the required level of 18 percent GDS.

"Attaining the savings target will require maximum political commitment and public education for mentality change, in order to implement a new strategy based on innovative savings products and on the role of SACCOs and Social Security,” Rwangombwa said.

Ends