As the year comes to an end, the Social Security Fund of Rwanda  is  witnessing its third year of reforms aimed at revamping the institution and re-focusing it to achieve its core mission. Mr.Henry Gaperi, the Managing Director of the fund talked to The New Time’s Fred Oluoch-Ojiwah about this journey the fund has taken.

There have been reports of non-compliance by some institutions in remitting their contributions. How is this affecting your institution.

Actually it is not a serious issue at all. This is mainly attributed to the fact that some of these cases are known to be new entrants within the social security net.

Just to clarify I am talking about companies that should remit contributed funds by members but staff choose not to do so quite deliberately.

I think within social security industry generally, that will always be a permanent challenge. So the main issue should always be the magnitude. Meaning, that we should ask ourselves the question of how big it is. Is it decreasing or is it increasing for instance within Rwanda?

So what is the situation?

It is decreasing. One thing you should note is that there are different levels of compliance. There are those who delay for a few days but remit. There are those who delay for months but remit.

There are those who delay but remit without being coerced. There are those extreme cases that have to be really coerced and only pay after taking in equally extreme measures.

Much concern would be regarding those who say they are remitting yet they have never done that.

Those are very few. One thing you should note is that we are establishing different levels of enforcement. And the most important level is the employees themselves.

Meaning those with the knowledge that when deductions are made from their salary, it is their money and it is their  primary responsibility to know where that money is going. After all this deduction will become very handy when such a person retires. That is on one hand.
On the other hand it is the responsibility of the Social Security Fund to ensure that such contributions indeed reach us. We do that. But as you can appreciate we are not able to do it 100 percent. So the two levels must complement each other.

So what is the level of compliance across board?

Within the public sector it is almost 100 percent though there are those institutions with arrears in which they are working towards having them sorted out. In the private sector there some institutions which are more organized than others. We have a real challenge within the small enterprises.

Within this sector we are working on a programme of bringing them on board. The picture is such that those brought into the net by the law, we are able to say that compliance is more than 95 percent.

What are the major milestones  your institution has recorded since you embarked on reforms.

The reforms commenced in 2006. If you look at our asset base at that time and now you will notice a more than double growth. Right now, our assets stand at Rwf 143 billion compared to approx Rwf 60  billion at that time.
Secondly the total benefits that we are giving right now  has increased tremendously.

We used to dish out Rwf 3.2 billion now we are giving out Rwf 4.2 billion annually. In this, there is a 31 percent increment in benefits given out. All these are attributed to a better customer service we have instituted as part of these reforms.

Meaning that we don’t have many people waiting. We are serving more. Contributions have also more than doubled. In 2005 the contributions stood at slightly less than Rwf 10 Billion. Last year we got about Rwf 21 billion. These are very significant gains.

Also, if you look at our remittances  verses contributions ratio this has also decreased.

This means that given our current population demographics, we have young people  in their 30’s and 20’s  making up the bulk of our contributions in a situation whereby they will make such contributions for quite some time before coming back for benefits.

If that ratio was going up it would mean that much as contributions are coming in,  most of them end up being taken by those already in retirement. That situation would be a precarious one for us.

The ratio in our case has reduced from 35.4  percent down to  20.4 percent and it continues to slow down.Another thing I want to point out is the level of service delivery.

So what is the yardstick that is worth talking about in the level of service delivery?

We have decentralized our services. We have opened a branch in each district to take services closer to the people. People don’t have to travel long distances to access services.

Something else I would like to mention is that quality of our staff has improved too. When we started reforms we had less than 70 people with degrees. I think we only had at that time only less than 20 people with relevant degrees.

Right now we have only about eight people with no degrees. But my understanding is that when you talk to them they say that they are pursuing them. That is reflected in the quality of service that comes out.

Within your organization how many actuarians do you have?

At the moment we don’t have any but we are training one who is doing his masters now in Geneva Switzerland. So we are building up capabilities. We have  also embraced ICT within our working sites while our payment systems have been revamped. I think all in all the quality of customer service has improved.

Shed light on those new investments you have made recently.

You must be aware of our new investment in the Ultimate Concept Ltd, in which we are putting up a piece of real estate that will take contractors  over two years to construct. On that we own 40 percent of the project.

We have another real estate project this time on housing at Gaculiro in which we will put up 2,600 units of various typologies complete with facilities. We have a new local venture capital firm  the Rwanda Investment Enterprise Co Ltd (RIEC) whose purposes is to enable the growth of small and medium sized firms to access capital in which US$8 Million is available.

In all these initiatives does it mean that you have revised your investment policies?

Actually that is the very first thing we started with during the onset of reforms. Governance and transparency dictated that we had to come up with new approaches. That was the one thing we did in our reforms.

So what are the major pillars of these reforms within  your investment policies.

We have two categories. The first is fixed income investment and the other is non-fixed income investments. Fixed income investments includes instruments like Treasury bonds and bills as these are determined in a way that are easily discernable  every other set period which type of income is known.

The other  one is  managing equity. Like our investments in RIEC or Bank De Kigali or Rwanda Investment Group for instance. In this we have a fifty-fifty position as policy.

As an equity investor within real estate what do you have to say about the perception within real estate that developers are coming up with houses whose prices are beyond the means of a vast majority of workers?

You know I really don’t know where that myth comes from. That Social Security Fund of Rwanda only invests in high end housing units. We have constructed houses for as low as Rwf 3.5 Million. Which means that we have  always  been closer to the people.

My point here is that statistics on demand of houses are such that we need over 35,000 units to cater for the needs of the lower middle class but it seems as if supply is premised on offering those slightly those within the upper clusters of the population. Hence a market distortion of sorts.

The Social Security Fund of Rwanda is neither for the rich nor the poor. It is for everyone. I think it is only fair that when you are coming out with an assessment you have to consider all these classes of people.

This is reflected in the new estate we are building in which we have different typologies.

It is known that less than 10 percent of the active work force have social security in a situation in which the ideal would be much higher. So what is being done to reverse this situation?

The social security we are managing here are for those in formal employment. But if you are talking about social security as a whole and the population as a whole then you will have to bring in aspects such as the grassroots medical insurance (mutuelle de santé) which is a social security product.

So to make the statistics right it is also known that it is only approx 10 to 15 percent of the population who are in formal employment. That is how it is in Rwanda. That happens to be  the portion of the population within the social security net. However for those outside this net, we are keen to intervene.

For instance those within the informal sector, it is our objective to have them organized for the purposes of bringing them  on board.

This is because we recognize the fact that social security is a basic right of every citizen. So for us in order to actualize this aspiration we have started organizing them through cooperatives and associations. These are part of the reforms currently still underway.

What are the changes in terms of figures now that we are pursuing the medium term framework of the economic recovery strategy?

I think in the next two years we should expect that 70 or 80 percent of people who are in such situations meaning those whom we have managed to organize into such groups to be able to be within the social security net.

Lets talk about the merger between Social Security Fund and RAMA.

I guess  we are ready for it. We have been waiting since February this year for it. We are prepared for it as we wait for the regulatory regime to be finalized.

To what extend has the global financial crisis affected your investments.

Actually our investments offshore have not really suffered much due to the global financial crisis. We have two major investments. One is a cancer research in the USA.

This is actually doing well as the products are yet to get to the market as research continues. The other is an investment in a telecom company in East Africa.

That must be your investment in Safaricom Ltd. What is the situation?

For us the situation is OK. It was an opportunity to get into a very reputable telecom company. We are in for a long term. We have already received our first dividend .We are already seeing signs that last year’s profitability is going to be surpassed.

So it is a good company by all standards. For us it was a good investment to make. Safaricom shares have been gaining.

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