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Enwealth Financial Services manage assets worth Shs2trillion in Africa
Kampala, Uganda | JULIUS BUSINGE | A new pension administrator, Enwealth Financial Services, has entered Uganda’s pension market upon securing an operation license from the regulator, Uganda Retirement Benefits Regulatory Authority (URBRA).
The firm that joins nine other pension administrators in the country plans to offer pension retirement services, training and consultancy services.
Founded in 2011 in Kenya, it currently manages pension assets worth over Shs2trillion for 120 clients in 12 countries within Africa.
Nelson Kuria, the company’s chairman Board of Directors said at the unveiling event held at Sheraton Hotel in Kampala on Feb.21 that they are bringing to the market innovative social security financial services powered by new information technology functions.
They are also offering financial literacy education programmes to the small and medium enterprises.
“We are passionate about value proposition,” Kuria said adding, “We have done visibility studies to inform sustainability of our business. Our products and services are driven by research.”
For now, Kuria said they are not looking for profits.
“Our driving force is a long term perspective; we have confidence in Uganda’s economy which has potential to grow,” he said.
The company is targeting 60% clients in the corporate arena; 30% in the small and medium enterprises space and 10% operating within the informal sector space.
The products
The firm’s executives said they are introducing sustainable retirement investment options that provide a regular cash-flow during retirement such as income draw downs, diaspora and expatriates fund as well as post-retirement healthcare fund to guarantee security in retirement.
Currently, Uganda’s pension sector covers only about two million of the population, representing less than 10% of the country’s 34.5 million people. The sector contributes slightly more than 9% to the country’s Gross Domestic Product.
This new development comes as the latest data from URBRA shows that the sector’s asset portfolio stood at Shs10trillion as at the end of 2017, with the National Social Security Fund controlling 90% of the portfolio and the rest controlled by small schemes.
With more players joining the market, Martin A. Nsubuga, the acting chief executive officer for URBRA said, more products would be put to the market and regulation will be enhanced.
“We are also adapting to modern supervisory tools to ensure that people’s savings are secure,” Nsubuga said, adding that this development is also expected to increase people’s appetite for saving that has remained low.
The 2016 World Bank figures shows that Ugandans save around 5% of their monthly earnings compared to 23% for Kenya, 13% for Tanzania and 18% for Rwanda.
Nsubuga said that they did due diligence on the company and its top managers before granting them a license.
He said the new pension administrator would bring in high level of professionalism that will boost the sector’s growth. “This is value addition to the sector,” he said. “They are ranked highly in other markets.”
He said that based on their research, Enwealth is bringing in the market expertise, innovation, and a culture of integrity and compliance to the regulatory provisions.
Beyond Enwealth, he said URBRA is currently encouraging players to enhance corporate governance function in order to strengthen the sector’s growth by protecting assets of owners.
In addition, he said that they are confident Enwealth will provide well researched information on issues affecting financial services, social security and employee benefits in Uganda through their regular research based report and debate dubbed ‘Enwealth Conversations’.
Speaking at the same event, the NSSF Managing Director Richard Byarugaba said the pension sector currently faces challenges relating to low investment and savings culture, informality of the economy, lack of liquidity, poor infrastructure, limited understanding of insurance and pension sector opportunities.
He said partnerships amongst key players, and support from the regulator could help reverse the trend.
He, however, said more entrepreneurship innovations and the move from mandatory schemes to voluntary schemes are slowly defining the current and future status of the pension sector.
Currently, only about 2.4 million (14%) of Uganda’s workforce is covered by National Social Security Fund, Public Service Pension Scheme, Parliamentary Pension Scheme, Supplementary Voluntary Occupational Schemes and Supplementary Voluntary Individual Schemes.
The low coverage is attributed to the current retirement benefits system that was designed to cover workers in formal employment.
Yet, the country’s informal sector accounts for more than 86% of the country’s total workforce, according to the Uganda Bureau of Statistics of 2017.
It is estimated that by 2050, the ageing work force in Uganda will comprise of, for the most part, the self-employed and laborers in the informal sector, to whom retirement benefits and old age security provisions are unavailable.
Enwealth products at a glance
- Post-retirement healthcare fund: This enables retirees to access good quality healthcare during retirement
- Enwealth personal pension scheme: it is a long term investment product that allows individuals to contribute to build up their retirement fund
- Enwealth umbrella fund: it is a fund whereby many employers decide to participate in retirement investments together as a pool for cost cutting/sharing
- Income draw down fund: it gives pensioners an alternative to the annuities, where the retiree is able to draw down on their pension while the residual is still being invested
- Enwealth diaspora and expatriates fund: it provides a saving and investment solution for the diaspora community both within and out of the country
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