RSSB can reform to perform better

In a 2010 paper titled “Options to improve the Governance and Investment of Japan’s Government Pension Investment Fund” the Organization for Economic Co-operation and Development (OECD) which promotes policies that improve the economic and social well-being of people globally, made as a major recommendation, granting both administrative and financial autonomy to the Japanese Government Pension Investment Fund (GPIF). The GPIF is the biggest pool of long term savings globally and thus a good one to emulate in the case of a country such as Rwanda that is striving to build a strong social security system that will allow for sustainable development and equitable sharing of resources. Several countries in the region and beyond have made similar developments in the past and according to reports in the post-autonomy period, there has been better management and investment of pension funds. In Rwanda’s case however, where the pension fund is not as big as in Japan’s case, there is no separate entity to carry out and manage pension investments. Both the social and business aspects of the social security system are embedded in one institution, the Rwanda Social Security Board (RSSB). The merging of former Social Security Fund of Rwanda and Rwanda Medical Insurance was done in the spirit of harmonizing and consolidating resources to make management and execution of mandate more efficient. From the 1st July, 2015 the management of the Medical Insurance Scheme, Community- Based Health Insurance (CBHI) was moved from the Ministry of Health to Rwanda Social Security Board (RSSB). The move aimed at improving the fund’s financial accountability and ensure quality health care for subscribers. Delivering on this mandate means that RSSB has to make prudent investments that guarantee sustainability of managed funds; making it both a social protection and financial institution. It is only by undertaking smart investments that a person who contributed for, say, 20 years (contributing only 6% of gross salary) is able to receive monthly pension benefits of 40% of their average gross salary in the last five years of their career. As a financial institution, RSSB is supervised by the National Bank of Rwanda under the guidance of the Ministry of Finance and Economic Planning (MINECOFIN). Human resource and administrative and procurement procedures also adhere to the general statutes for Rwanda public service and the Public Procurement law respectively. As a big financial institution, it is important that RSSB operates just like any other business entity if it is to compete favorably in present day cut-throat competition, but of course adhering to the necessary checks and balances to ensure ethical operations and protection of public funds. Currently, the regulatory framework in which RSSB operates is limiting in a number of ways including the incapability to attract and retain quality staff as is necessary for a financial institution of its caliber. Bureaucracy and vulnerability to business predation Again looking at investment efficiency in the current management style, RSSB has, on several occasions, been preyed on unsuspectingly by predator-minded businesspeople. Given that all procedures have to go through the usual public tendering process, which though classic, does not, in several cases, meet the needs of an institution with RSSB logistical and investment transactions. Imagine a construction site on which activities commence a year later than scheduled time. This means that the final project will be completed late, released on the market equally late, costing the developer unnecessary expenditures and eating into the profit margin. And yet, from experience, this has often times been as a result of fighting so hard to keep in alignment with tender procedures that were unrealistic to situations at hand on particular projects. Good investments require swift decisions and timely execution, and once this is not respected, then there is a stream of unnecessary costs that are incurred by the investor. What next Taking for instance recommendation number two of the OECD paper on how best to improve the GPIF of Japan, the organization advised that the fund be “granted budgetary and administrative autonomy –including control over pay grades and personnel policy (separate from the civil service). The GPIF‘s Board should establish its annual business plan and budget and submit it for approval by the government.” No doubt as a country pursuing an ambitious development goal, we need to learn from the best in each sector and considering the size of the fund managed by the GPIF Japan, there is no better to emulate. Thus as we progress, it is recommendable (and has been recommended on several occasions) that RSSB be granted budgetary and administrative autonomy if it is to achieve set goals. To ensure efficient management, governments in Australia, New Zealand, and Canada have either given full investment autonomy or a quasi-private status to public pension reserve funds. Closer to home, the National Social Security Fund (NSSF) Uganda is regulated as an autonomous body corporate since 1985. Moses Kazoora is the Director of Communication at RSSB Views expressed in this article do not necessarily reflect RSSB’s views but rather those of the author

Opinions

RSSB can reform to perform better