With Rwanda’s rate of employment at around 66% (2008) among males and females aged 15-24 years, the government has placed emphasis on social security remittances from companies and employees, as well ensuring a timely and accurate disbursal of payments to registered users. In a worldwide comparison of compensation of employees in relation to expenses by nationmaster.com, Rwanda came 40th out of 135 countries. Uganda came 122nd. Compensation of employees consists of all payments in cash, as well as in kind (such as food and housing), to employees in return for services rendered, and government contributions to social insurance schemes such as social security and pensions that provide benefits to employees. During the course of the quarter, Rwf 1.6bn was paid to over 23,000 files with 26,400 beneficiaries- out of which 6.2% were new files.
Old age pensions payouts topped the list at 64% of remittances paid, with over Rwf1 billion paid out to 10,130 beneficiaries. Survivors’ pensions are next on the list at 16% with over Rwf260 million to 13,101 beneficiaries. Other types of payments include invalidity pensions, Old age lump sums and survivors of beneficiaries’ lump sum. Occupational hazards compensations are also taken care of. The Pensions branch accounts for 97% of payouts and occupational hazards accounts for 3%.
According to the Rwandan Chamber of Commerce the Ministry of Public Service and Labour plans to create 1.5 million jobs in seven years. The government is putting in place strategies to see that over 140,000 jobs, excluding farm jobs, are created per year with the aim of creating employment for at least 1.5 million. The Director General of Employment and Labour in the ministry, Anna Mugabo says, “These jobs will be created through small and medium enterprises that will be created, whereby each SME will create at least eight jobs”. Therefore there is a major drive by the RSS to capture employment data and register new employers and their employees.
The number of new employers registered in the third quarter of 2010/2011 is 2,037 with 12,074 new employees in mandatory insurance and 29 in voluntary insurance. The new registered members are from both public and private sectors but in terms of employer registration, private sector is the biggest contributor where out of 2,037 new employers, 1,982 (97.3%) were from private sector. In terms of employee registration, public sector is the biggest contributor where out of 12,102 new employees, 6,280 (52%) were from public sector. Total active employers are 13,152.
In the area of investments, The Rwanda Social Security Fund investment portfolio is mainly composed of Real Estate projects, Equity, Term deposits and Bonds. The total portfolio as of 31st March 2011 stood at Rwf 179.9bn, translating into a 3.9% growth compared to the last Quarter. The major contributor to this growth is real estate that increased by Rwf 5.1bn. District branches accounted for the highest income from real-estate investment with assets totaling Rwf18billion. With at least one investment opportunity identified monthly, the portfolio grew by 3.9% from December 2010 in order to reach Rwf 179.9bn. The scheme also brought 8,404,100 shares worth Rwf 1.1bn from BRALIRWA IPO. Bralirwa is a subsidiary of Heineken International and is Rwanda’s leading brewery. It made the news recently for proposing a 100% net income dividend payout as an incentive to investors. They intend to pay Rwf20.09 per share to shareholders, compared to the Rwf12.34 shareholders paid per share.
The Fund is in the process of taking serious measures to ensure compliance of tenants under mortgage scheme. Strict control and monitoring of employer compliance is being undertaken with 100% compliance in public sector and 65% in private sector. Out of 13,152 active employers, 7,917 (60%) have so far paid contributions for the third quarter. 5,235 employers did not comply for the third quarter 2011, with 60% of non compliant employers located in Kigali City, the capital.
In summary, the performance of the Fund during the Quarter is generally inspiring despite the constraints encountered like delays in merging RAMA and CSR and high staff turnover. The major issues to be addressed if the action plan for 2010/2011 is to be successfully implemented include inaccuracies in the database and compliance in areas of investment and contributions collection.
Cumulatively since July 2010, 5,669 (119.7%) new employers and 53,398 new employees have been registered.
Recommendations:
The Rwanda Social Security Fund is enacting the following changes in order to make it more inclusive and effective. It intends to follow up the enactment of various laws to make the reforms operational. Those finalized include: Law on maternity benefits, and the Law on pension scheme. Those still in progress include: Law on occupational hazards, Law on health insurance in Rwanda, and the Law on social security procedures.
Improvements on customer service are also underway with plans to respond to customer request within the specified time limit. Customer correspondences are usually responded to within 2 working days. The fund has so far received 15,000 requests out of which only 72 requests or 0.5% are pending. And finally they aim to improve the help desk system with online services. New online services like e-registration, e-declaration were introduced in January 2011, however online declaration responder and registration services are still under development. Quick processing and payment of benefits are a priority, with Rwf 1.65bn (compared to Rwf 1.7bn targeted) already paid to 26,343 rightful beneficiaries. There are no pending files.
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