Uganda’s retirement benefits sector investment portfolio shot up to Shs 14.28 trillion in 2019, up from Shs 11.8 trillion in 2018, as more people warmed up to the idea of saving money for a rainy day.
The figures are contained in Uganda Retirement Benefits Regulatory Authority (URBRA)’s annual report, which was released last week. However, despite the steady growth in portfolio investment, there is still a lot of work that needs to be done to get more Ugandans to save money.
The national labour force survey of 2016/2017 showed that the size of the working population in Uganda stood at 15.3 million. Yet, only 16 per cent, just over 2.4 million Ugandans, are part of any saving scheme. With so many Ugandans in the informal sector, URBRA is looking to have them on some retirement benefits scheme by initiating them into saving.
Martin Nsubuga, the CEO of URBRA, said a number of voluntary retirement saving schemes have been established in the sector. The voluntary segregated schemes cover 31,343 individuals, and these can save as low as Shs 2,000, meaning that even low-income earners, particularly in the informal sector, could also save and invest.
Benjamin Mukiibi, the manager Research and Sector Development at URBRA, said the strategy for the informal sector client group begins by making sure the retirement savings product is understood.
He said they were looking at enrolling at least five million new customers on a retirement savings scheme. Mukiibi noted that automated processes to calculate and apply interest on a continual basis is crucial to build confidence among customers. At the same time, a process that allows for automated deductions and direct debit of remittances provides convenience.
In addition, addressing the customer’s financial needs properly, a combination of micro-pension and other suitable products may be necessary to get the informal sector on board. In this, the scheme ought to be safe from fraud, but at the same time the money invested being able to yield returns.
Over the last five years, the retirement benefits sector has achieved an average growth in assets of 20 per cent per year.