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RBA to draw rules for schemes’ investment in big State project

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Retirement Benefits Authority acting CEO Nzomo Mutuku. PHOTO | DIANA NGILA | NMG

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Summary

  • Pension schemes are preparing to fund the 187-kilometre Nairobi-Nakuru-Mau Narok road expected to cost Sh14 billion, awarded to China Wu Yi Ltd and expected to have toll stations for the estimated 16,000 motorists per year.
  • The move move comes in the wake of rapid growth in the pension industry’s total assets, having expanded from Sh50 billion in 2001 to about Sh920 billion by December 31, 2016.

The Retirement Benefits Authority (RBA) is crafting guidelines for pension funds to invest in infrastructure projects through public private partnerships (PPPs).

The process is expected to allow pension funds to participate in large projects and the government to tap the funds.

This comes as the schemes prepare to fund the 187-kilometre Nairobi-Nakuru-Mau Narok road expected to cost Sh14 billion, awarded to China Wu Yi Ltd and expected to have toll stations for the estimated 16,000 motorists per year.

RBA on Tuesday said the move comes in the wake of rapid growth in the pension industry’s total assets, having expanded from Sh50 billion in 2001 to about Sh920 billion by December 31, 2016.

“The RBA has already consulted the Treasury’s PPP unit and the World Bank,” said RBA acting chief executive Nzomo Mutuku in Nairobi. Mr Mutuku was speaking during a pension industry stakeholder forum organised by the Association of Pension Administrators of Kenya (APAK).

Pension funds are diversifying their investments beyond government paper and listed shares to maximise returns.

They are now investing in private equity (PE). A fortnight ago, PE firm Fanisi Capital announced that eight pension funds had invested in its second round of capital raising for small and medium sized enterprises (SME), which managed commitments worth Sh3 billion.

READ: Pension funds to finance Mau Summit toll road

Pension lobby chairman Hosea Kili said industry players should start a serious conversation on how to leverage on available technologies to attract more pension contributions and grow coverage from the current 15 per cent by making pension saving attractive to the informal sector.