The new leadership of Rwanda Social Security Board (RSSB) has been challenged to embrace the highest standards of financial management in order to turn around the institution’s fortunes and maximise returns for its subscribers.
In an interview with The New Times, the Auditor General, Obadiah Biraro, indicated that the public pension body needs more proper financial management.
The Fund is the subject of public criticism for its poor investment decisions, failure to recover some social security contributions, and irregularities in declaring and collection of medical insurance.
RSSB has been faulted for undertaking unprofitable equity investments, which have also shrunk in value.
According to the 2017 Auditor General’s report, for instance, six entities in which RSSB invested a staggering Rwf21 billion had not generated any dividends from the time of initial acquisition or establishment.
In addition, the investments continued to lose value.
As at June 30, 2016 the value of these investments stood at slightly over Rwf11 billion, reflecting an overall reduction in value (cost of acquisition) of over Rwf9.4 billion, according to the 2016/2017 Auditor General’s report.
Some of the investments where RSSB has not yet earned returns include KT Rwanda Networks Limited where the pension body invested Rwf3.7 billion and New Forest Company Rwanda in which it holds preferential shares worth Rwf438 million, the report states.
Equity investments account for 25 per cent of RSSB’s total investment portfolio of Rwf655 billion, according to the Fund’s official figures.
Most of the Fund’s investments, accounting for 33 per cent, are in commercial bank deposits while investments in real estate, the third largest, account for 14.4 per cent.
RSSB also currently manages five schemes, including pensions, occupational hazards, community-based health insurance (CBHI) and maternity leave benefits.
The new RSSB Director General, Richard Tusabe, has promised to improve its performance, mainly in areas related to project implementation.
Tusabe, who presided over some reforms in Rwanda Revenue Authority where he was the Commissioner General until barely two weeks ago when he was appointed to lead the public pension body, said: “I will consult and engage and you shouldn’t expect any shocks and things will get better.”
Biraro challenged the new leadership of RSSB to maximise returns on members’ contributions.
This, he says, will require re-assessing the body’s investments and accounting practices, and ensure that appropriate decisions are taken.
“They have to uphold the highest standards of financial management; mainly accountability and accounting which lead to transparency. Just like an investment bank, they have to practise the highest standards of financial management,” he said.
The Minister for Finance and Economic Planning, Uzziel Ndagijimana, told journalists last week that, overall, the body remains profitable.
Moreover, he appealed to the Board of RSSB to be closer to the new leaders and support them in their vision in order to help them build on what has been achieved in the past.
“Overall RSSB is a profitable institution but it doesn’t mean that all its investments have returns. The new management will continue to be more prudent in investments it makes to ensure that they are profitable and can improve the social life,” the minister said.