The Treasury has joined a growing chorus for pension schemes to pool funds for big-ticket infrastructure projects to ease overreliance on expensive debt.
Mr Stanley Kamau, the acting director-general for Public Investments and Portfolio Management at the Treasury, said the Sh1 trillion pension industry can help plug part of the country’s infrastructure finance gap.
Kenya’s deficit in projects such as roads, power plants and lines, bridges, water and houses is conservatively estimated at more than Sh400 billion a year.
“There is a pipeline of opportunities to invest under the Public-Private partnerships (PPPs) programmes and pension funds can benefit from the stable and attractive long-term returns that can be obtained by investing in infrastructure PPP projects,” Mr Kamau told a meeting of trustees of retirement schemes in Nairobi. Such calls have in the past been made by institutions such as the World Bank Group.
Workers’ savings have long been seen as ideal in funding infrastructure projects which are long-term in nature, taking between 10 and 30 years to generate returns.
Pension schemes are already a key source of cash for public projects in countries such as Brazil, Colombia, Mexico and Chile.
Individual pension schemes in Kenya are, however, said to have inadequate funds to venture into big-ticket infrastructure projects.
Retirement Benefits Authority’s rules cap investment in “other assets” where infrastructure projects fall at 10 per cent of portfolio of retirement savings under a pension scheme.
Kenya Pension Fund Investment Consortium (KEPFIC), made up 14 of the country’s more 1,300 pension schemes, has in recent years been trying to pool cash for big-ticket projects with an initial target of Sh5 billion.