Our pension system will go broke in 29 years. What should we do?

RSSB this. RSSB that.

It seems like the venerable Rwanda Social Security Board (formerly known as Caisse Sociale du Rwanda) is more often than not in the news for the wrong reasons.

The swanky RSSB headquarters in Kigali:is this where our money goes?

The swanky RSSB headquarters in Kigali:is this where our money goes?

Whether because buildings contractors are suing the body in connection with the multi-storied Pension Plaza or people are complaining that their hard earned monies are being used to build luxury estates that no one can afford (RSSB’s Vision City, where houses will range from $179,000 to $590,000 a pop, is a great example).

I won’t even go into the alleged criminality of its former boss, Harvard-educated Angelique Kantengwa.

However, despite all the negative press, the institution plays a hugely important role. It is often the only thing separating the vast majority of retirees from absolute poverty.

I’m only 34, so the idea of retirement is the furthest thing from my mind. But an article that was published last week in The New Times newspaper got me thinking about the future. My future to be exact.

The article insinuated that unless RSSB and the law governing it was reformed, we’d all be up the proverbial creek without a paddle.

Using Twitter, I reached out to the institution on Friday and, lo behold, its press officer contacted on Sunday and arranged a Monday interview with Emmanuel Kayitare, RSSB Director of Pensions and Pre-Retirement Benefits.

Let me give you a summary of what I learnt in my two-hour long discussion with the gentleman.

I learnt that I was just a few clicks away from knowing my social security information. I assumed that it would be a tedious task, but honestly all I had to do was go to www.rssb.rw and click on the ‘online services’. In fact I did it right there and left with my pension statement safety tucked in my pocket.

Secondly, I learnt that employers had a legal obligation to pay their employee’s social security contributions. That’s right. EVERY EMPLOYEE. So, if you employ a housegirl, you MUST contribute to RSSB. Ditto if you have a herdsman, nanny or farmworker.

I had no idea that this was obligatory; I assumed that the pension system was meant for only people working within the formal sector. I was wrong. So, if you employ someone, and don’t put some money aside for RSSB contributions, know that you are engaged in illegality.

Thirdly, unless something was done and done fast, Rwanda’s social security system would go bust in 2044.

That’s right; in 29 years RSSB will have no money to pay pensioners their retirement benefits.

So, if you are 26 and below, forget about retiring at the age of ripe old age of 55 (which is when you can start collecting retirement benefits according to Rwandan law). There simply won’t be any money to give you.

Those who would have already started receiving their benefits will have to make a plan; perhaps get up from their rocking chairs and enter the job market once again. Walking cane, creaky bones and all.

OR…we can agitate for pension reform before things get out of hand.

Currently, RSSB has Rwf 301.6 Billion in its coffers. That sounds like quite a lot until you see the debit section; the institution owes Rwf 75.7 billion to pensioners (which is okay) and Rwf980.3 billion to non-pensioners i.e. people like me who are paying into the system but haven’t retired yet.

Just last year, in 2013-2014 financial year, RSSB paid Rwf12 billion in retirement benefits. There simply isn’t enough money in the system currently.

The elderly are able to live dignified lives due to the pension system. What will happen when this system fails?

The elderly are able to live dignified lives due to the pension system. What will happen when this system fails?

So, what should be done? Either RSSB can avoid asking people to put more money in the system and use the money it has in its coffers to invest in extremely lucrative business ventures (which are also often risky) or Rwandans can increase their monthly social security contributions.

Currently, we pay 6% of gross income. That is the lowest in the region by quite a distance. An external auditor has recommended that contributions increase from 6% to 10% of gross income. Which is a lot less than Kenya’s 27%. Or Uganda’s 15%.

I found it shocking that nothing has been done so far. Someone is sleeping on the job. A revised pension law that increases pension contributions should have been debated, passed and published in the Official Gazette eons ago.

Right now, the Senate is debating a revised pension bill that maintains the current rate of 6%. I think that is scandalous, especially because there is irrefutable data showing that the current status quo is untenable.

I worry that impending pension crisis will be left to my generation to solve. And that is unfair indeed.

Advertisements

#OccupyPlayground: No one comes off well when schoolchildren are teargased

Occupy-Playground

The shocking series of events that led to the tear-gassing of schoolchildren on Monday took me quite aback. I was scrolling down my Twitter timeline when, all of a sudden, I started seeing tweets expressing outrage about a teargas attack on protesting primary schoolchildren in the Kenyan capital of Nairobi.

It sounded so unlikely that I thought those tweeting were simply exaggerating; I mean, no one in their right minds would actually use such riot gear against kids. I was mistaken.

I’m sure the vast majority of you already know what happened but let me give those who haven’t a short resume of the events that lead to the scandal. Pupils from Langa’ta Road Primary School, led by some adults, violently demonstrated against a alleged land grab that left them without a playground. In reaction to their actions, policemen in full riot gear and with dogs in tow, launched canisters of tear gas at the hundred of so students, leaving them chocking and in tears.

Yesterday morning I found a couple of fellow journalists arguing about the event. One attempted to justify the police action (by saying that the police had no choice, especially because they were being pelted with rocks) and the other just couldn’t understand how the police couldn’t even think about launching tear gas. I joined in on the side of the latter, saying that was no possible justification for instruments that are used against hardened criminals and crowds to be used on kids. I was quite irked that this debate was actually taking place.

However, before I continued my tirade, I took a step back and looked at the issue in a more holistic manner. Instead of rabidly attacking the riot police, I wondered to myself, what exactly was lacking in their police training that they would go to a primary school in full riot gear and armed? Never mind actually firing teargas at kids.

The very nature of the police force, whether in Kenya or Rwanda, is to interact with the population in a manner that is beneficial to both them and the people they are meant to protect. I believe that, though police are meant to uphold the law, they must do so in the knowledge that they are dealing with human beings and not mere potatoes.

In my own experiences with our own police forces, which have thankfully been few and far between, I’ve observed that officers often care more about upholding the law than actually treating people like, well, people. Hence instances of them entering crowded places wielding automatic weapons, scaring everyone and causing panic. When I brought up this topic of police/citizen relations with senior police officers, they admitted that a lot more needed to be done in terms of training.

So, the police was guilty of overreaction. But we shouldn’t stop there.

Those poor children did not magically decide to abandon class, pick up placards and call the media. Someone planned that demonstration. I spent a lot of time looking at video footage of the incident and a few things jumped out at me. Firstly, where did the kids get the placards spouting sentiments like ‘Land grabbing is terror against children’, ‘Occupy Playground’, ‘Dad, Mum, What did you do to change things?’

Secondly, who were those adults in the crowd, urging those kids on? Were they teachers? Activists?

Kenya-Playground

The children obviously didn’t write the placards themselves, someone printed those placards and then handed it to the children. Someone trying to make a point used those children. Like pawns. In the full knowledge that children, decked out in their little uniforms, would garner media attention and public sympathy.

Which I guess worked. But I must ask, when did we start using children as cannon fodder?

The teachers and the so-called activists who put these children in harms way should not only be ashamed of themselves, but should also be prosecuted for child endangerment if such a crime exists in Kenya.

Yes, perhaps there were real issues that needed to be discussed publicly, but eight-year olds shouldn’t have been part of that conversation. At the end of the day, no one walks away from Monday’s events with a clean slate. It was a sad, sad affair.

Mutabazi was saved, but who couldn’t be?

As is habit, the first thing I did when this Saturday was pick up my phone and open my social media networks to find out what had happened as I slept. Scrolling down, and ignoring a lot of nonsensical headlines, I came upon a post that made my day.

Vianney Mutabazi is recieving treatmeny in India thanks to all people' support.

Vianney Mutabazi is recieving treatmeny in India thanks to all people’ support.

Someone posted “#SaveMutabazi UPDATE: Good morning!!! I would like to inform you that Vianney has gone to India this morning, thanks to all your generous support!!!

Here is some background on the #SaveMutabazi online campaign: In December 2013, married father of two Vianney Mutabazi was diagnosed locally with Hepatitis B, a diagnosis that was confirmed in India. A liver biopsy revealed severe cirrhosis, for you see, he had been unknowingly living with the disease for close to twenty years.

Specialists confirmed that the only way he could safe his life was if he had a liver transplant not later than December 2014. Because Rwandan doctors and hospitals could not handle this life-saving operation, he would have to have the operation at the Institute of Liver and Biliary Sciences in India. But he would have to raise a hefty $58,000.

I don’t know about you, but if I were asked to raise that amount of money in a year or die, I’d just give up and hope I didn’t suffer too much pain as I got close to meeting my Maker. Or hope that the medical insurance could cover the cost of the life saving operation. Or barring that, hoping that the Ministry of Health could come through for me.

Well, in his case his medical insurance didn’t cover the procedure and neither could the health ministry fund the operation. However, instead of throwing up his hands in the air and surrendering to the fates, his friends used the power of social media, traditional media and good old canvassing to try to raise the thousands of dollars needed.

Through the campaign that they dubbed ‘#SaveMutabazi’, they raised $42,000 by last week, enough to send him to India and save his life. Amen to that!

However, Mutabazi’s predicament got me thinking. Though his life was saved through the generous donations of the Rwandan community, why did it have to come to that? Where was the medical insurance? Why weren’t our doctors able to perform this surgery?

Let me start with our local medical insurance schemes. What is the point of paying monthly premiums to these companies when they’ll leave me to my own devices if I get a seriously life-threatening illness?

And secondly, why don’t they tell us, in no uncertain terms, that they can’t cover certain medical issues? Perhaps I’m the dummy, but I honestly did not know that RAMA would leave me hanging high and dry if I needed to seek assistance abroad. I had assumed that they would help pay for the necessary treatment. It was only after learning about Mutabazi’s issue that I actually asked my human resources officer what kind of coverage I was receiving.

A question that I must ask RAMA, and other medical insurers is, if we aren’t paying enough in medical insurance premiums to get treatment abroad, they why don’t they increase those premiums for people who want that option? It would be a revenue-generating scheme for the companies and it would help some of us sleep easier at night.

Lastly, I have a question that the health ministry must answer. How in the world are we unable to have doctors who can perform a liver transplant? They aren’t exactly cutting edge anymore. We really should be able to have a team that can perform such surgeries in our biggest referral hospitals.

Ditch that Prado and buy a tractor

Rwanda-OilYesterday, RURA (Rwanda Utilities Regulatory Authority) issued a decree that will have users of public transport dancing in their cramped seats; transport prices have been reduced by ten percent, from Rwf20 per kilometer to Rwf 18.

This announcement follows hot on the heels of one by the Ministry of Trade and Industry late last year announcing a new pump price of Rwf 895 a litre for both petrol and diesel, down from more than Rwf 1000 at the start of the year. As an avid motorist, the new price was certainly a welcome end of year present but truth be told, it was expected.

With the price of a barrel of Brent crude oil falling from $112.18 in June 2014 to $58.86 (at the time of writing), someone would argue that the local price reduction is in fact too little. However, I’m not using this column to complain about RURA’s decision-making. Rather, I want us to discuss what this petroleum price fall means to the entire economy and most especially Rwanda’s balance of payments i.e. the monetary value of our exports versus the value of our imports.

Thankfully, obtaining Rwanda’s balance of payment figures is as easy as going to the Central Bank website and downloading two PDFs, one showing our imports from January to September 2014 and another showing our exports in the same time period. Boy does it make for interesting reading, especially as it pertains to how much of a role petroleum imports play in Rwanda’s overall economic state.

I was shocked to find out that Rwanda paid a whopping $267,515,266 from January to September 2014 for petroleum products. That doesn’t sound too bad, except when you discover that Rwanda’s principle exports (coffee, tea, cassiterite, coltan, wolfram, hides and skins and pyrethrum) earned $281,124,890. I haven’t added the little over $84 million that Rwanda earns from it’s other exports such as shoes, foodstuffs and live animals. In other words, our petroleum imports almost obliterated any earnings we made in the international market.

The bright side is, last year’s quarter billion dollar petroleum product bill will probably fall by quite a bit this year.

However, we shouldn’t get comfortable; the same way the prices fell unexpectedly is the same way they will rise once again. Therefore we need to figure out a way to do two things: firstly, we need to reduce the petroleum import bill and secondly, we need to export a lot more so we aren’t spending everything we earn to run the cars in the country.

Here is my suggestion for the first issue of reducing petroleum import quantities. Decrease the amounts of cars on the road by increasing the amount public transport vehicles.

Government should go so far as reducing the import duties on mass transport vehicles such as buses. With buses on even secondary routes (as I call neighborhood roads) less people would need to buy cars to avoid ‘ivumbi’ (dust). And on the topic of reducing import duties, I suggest the same for new, fuel-efficient cars. I mean, why should someone importing a Toyota Prius pay the same import duty as someone importing a Toyota Prado?

And on the issue of increasing our exports, we need to increase the amount we spend on importing machines, devices and tools. While we imported these value-adding instruments to a tune of $314,961,068 from January –September 2014, we need to increase this by quite a bit. The savings we are making a smaller petroleum bill should be used in increasing machine imports. These stone-crushing machines, fruit processing machines, carpentry machines etc. increase productivity and therefore exports.

We have a small window to do all this before we are back to spending almost all our foreign reserves on oil for I foresee a price rise in the near future. My sentiment is shared with Ali al-Naimi, Saudia Arabia’s oil minister.

He told UK’s The Independent that although he wasn’t pleased with the current prices, he was confident they would rise again. “Current prices….stimulate global economic growth, leading ultimately to an increase in global demand and a slowdown in the growth of supplies”. We need to act now while the going is still good.