Informal sector savings scheme to be rolled out this month

The long-term savings scheme will mostly target those with no structured regular salary to help them save for future pension benefits as well as help finance other investments.
Workers at a construction site in Kigali. Sam Ngendahimana.

The government will, this month, roll out a new savings scheme with special incentives targeting Rwandans who work in the informal sector, which will effectively ensure that all citizens have pension savings.

The new development is a culmination of a pilot phase implemented in Gasabo district, which the Minister for Finance and Economic Planning, Uzziel Ndagijimana, says showed impressive results.


The long-term savings scheme will mostly target those with no structured regular salary to help them save for future pension benefits as well as help finance other investments.


The scheme, the minister said, was established after realising that existing pension schemes favoured salaried workers who account for only 10 per cent of all Rwandans.


“We had a problem of few people saving for pension but now we are targeting all Rwandans in all categories; both poor and rich and those in formal and informal sectors,” he said.

He explained that this will be made possible by special incentives that will be added to what people save meaning that those from 1st and 2nd Ubudehe categories will receive incentives double their savings.

“The pilot phase of the scheme is being finalised in Gasabo District and we expect it to be launched at the end of this month although the exact date is yet to be established.

“If a person from first Ubudehe stratification can save up to Rwf12,000 per year, they will get another top up of Rwf12,000 for free because their contributions are not enough to help them during retirement,” he said.

He said that the uniqueness of this facility is that there will not be a set date to remit the savings, adding that one’s savings will be aggregated every after one year.

“Some are farmers and can save after harvest.”

Another incentive is that the money saved under this scheme will be exempt from tax.

“Those in second category of Ubudehe will be required to save a minimum of Rwf15,000 per year and the top up on their saving will also be Rwf12,000.

He also said that 3rd and 4th Ubudehe categories have also incentives once they save.

“Those in 3rd Ubudehe category will also get incentives but they should at least save Rwf18, 000 per year and the incentives will include a top up amounting to 50 per cent of what they save,” said Ndagijimana.

Those in the fourth category of Ubudehe, the only incentive will be the exemption of taxes on their savings, according to the minister.

The Ministry of Local Government shows that there are 376,192 households with 1,480,167 people in first ubudehe category which constitutes 16 per cent of the population.

The second Ubudehe category has 703,461 households, composed of 3,077,816 people, which is 29.8 per cent of the population, while the third and fourth categories have 53 per cent and 0.5 per cent of the population, respectively.

The management

The savings scheme, the minister said, will be managed by Rwanda Social Security Board (RSSB) which will register those interested but noted that there will be another institution that will be in charge of managing the fund.

“The laws that will govern the fund have already been passed, guidelines have been developed and we developed an ICT-based system through which people will be able to get related information using their mobile phones. We are training people to operate that system,” he noted.

Ndagijimana said the scheme will have other provisions besides pension, where those who will save enough money will be able to benefit from other investment kits.

“Besides pension, if you save enough money you can use part of that amount as collateral and get a residential house, you can pay school fees for children but ensuring that there are savings for pension fees so that these additional benefits come after,” he said.

He added that when the person who has saved dies, the scheme provides indemnity to their family worth Rwf1 million and Rwf250,000 for funeral.

The minister said that lack of long-term savings affects economy, particularly making it difficult for banks to invest in long-term projects.

Residents react

Vincent Masengesho, 30, has worked as a mason since 2013 but said he has never considered saving for pension due to various reasons.

“Ours is casual work where we do not expect pay at every end of month and that is why I thought only permanent salaried people can save for pension,” he said, adding that everyone is happy to have a way of cushioning themselves against bad days during old age.

“It would be easy for me to save a certain amount off my wages if there is no daily or monthly schedule for paying which often attracts fines for delayed remittances. Some of us get money once a month, others after three months or even longer,” he said.

Jacqueline Nyirambabazi is a member of ABIRWI Cooperative based in Kayonza District, which grows and processes maize.

She said that the scheme should also consider working with farmers’ cooperatives since they can save part of the harvest with the scheme on behalf of every member.

“I am able to till today but when I become older I will have no physical strength to do that. The scheme could come in handy during retirement”.

She added that most people do have knowledge of how pension scheme works and, therefore, there is need of more awareness campaigns on benefits and introducing an easier way to embrace savings culture.

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