Some existing pension firms were established outside the legal framework while others are managed without uniform standards.
The National Bank of Rwanda (BNR) has stepped closer to the liberalisation of the pension sector for development, according to the bank’s top official.
François Kanimba, the Central Bank Governor, said that the designing of a legal framework is at the advanced stages and ready for approval processes.
“We expect in the next five months to have a framework in place regulating the industry for both private and government pension scheme,”
“This will help them (pension firms) to contribute to long term domestic savings needed to get investment funding for both public and private in future.”
It is expected that liberalisation will create competition within the sector which is currently dominated by state-wned Social Security Fund of Rwanda (SSFR).
“Both local citizens and foreigners who wish to operate private pension schemes business will be authorised to do so within the legal framework set in the laws and regulations,” a document on Rwanda’s Financial Sector for May 2009 explains.
This is part of the Central Bank’s ongoing reforms in the financial system to stimulate long term domestic saving to facilitate the accumulation of investment capital.
The Central Bank is currently carrying out a survey on pension firms that are already operational. Rwanda has one public pension body and 10 growing private pension funds, all of which provide benefits to the citizens working in the formal sector.
According to Kanimba, some existing pension firms were established outside the legal framework while others are being managed without uniform standards.
The Central Bank is also considering establishment of the Rwanda Social Security Board (RSSB).
The move follows government’s decision to extend the Central Bank mandate to cover non–banking financial institutions including insurance and pension firms.
Kanimba said the legal framework for governing insurance companies is ready for implementation.
“We are discussing with the industry (insurers) the implementing regulations by the Central Bank board to start regulating the industry,” he disclosed.
Rwanda has eight Insurance companies some of which include Société Nationale d’Assurances du Rwanda (SONARWA) and Compagnie Générale d’Assurances et de Réassurances au Rwanda (COGEAR).
However, the Central Bank is trying to encourage insurance companies to promote long term insurance products.