Covid-19 underscores need to increase savings, says Speaker of Parliament

The Speaker of the Chamber of Deputies, Donatille Mukabalisa, has said that the Covid-19 pandemic has increased the need to embrace the savings culture. She made the observation on Monday, November 2, at a press briefing where she flagged off a countrywide tour of parliamentarians. The field visits, which run till November 8, aim to inspect government activities under the socioeconomic sectors amid Covid-19 pandemic, among other issues. MPs will discuss engage citizens on savings initiatives such as EjoHeza, the Speaker disclosed, adding that MPs will assess the budget use by the local government. EjoHeza is a pension scheme for informal sector workers. Increasing savings, Mukabalisa emphasised, is necessary to cushion citizens against adverse effects of emergencies. “The Covid-19 caused us major problems, but also provided lessons to us. We will talk to the people so that we establish whether they are using the savings initiatives that were established because you know that those who managed to save were not much affected [by the pandemic],” she said. “It [the Covid-19] thought us a lesson that requires us to find out whether residents are embracing the available [savings] initiatives.” Under EjoHeza, she said, there are categories of people that are entitled to savings support from the Government. Information from Rwanda Social Security Board (RSSB) – which administers EjoHeza— shows people in the first and second category of Ubudehe, the economically disadvantaged, must save a minimum of Rwf15,000 per year to qualify for the Government contribution equivalent to 100 per cent of their savings. For those in the third Ubudehe category, they must save a minimum of Rwf18,000 for the Government to offer them a contribution of 50 per cent. But, this Government contribution does not exceed Rwf18,000. In addition to that, in the event of the death of a member who had fulfilled all the required conditions, will benefit from life insurance of Rwf1,250,000 subdivided into two parts which are Rwf1 million to assist the bereaved family and Rwf250,000 as funeral expenses. However, these benefits are only available for 3 years from the official launch of the EjoHeza savings plan – December 2018. Less than 10 per cent of Rwanda’s 5.4 million working population currently save for their pension, meaning that the largest percentage of them do not save for their retirement and they are likely to face or live in old-age poverty, indicate estimates from RSSB. Most of these people mainly work in the informal sector. The initiative is projected to cater to 2 million people and combined savings of Rwf195 billion by 2023. As of May 21, 2020, more than 200,000 people had contributed over Rwf2 billion to EjoHeza, according to information from the Ministry of Finance and Economic Planning.

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Covid-19 underscores need to increase savings, says Speaker of Parliament