Edward Odundo: Pension funds can be invested in infrastructure

According to data from the Retirement Benefits Authority (RBA), the pension industry’s assets hit Sh 1.2 trillion in September, 2018, up from Sh 1.08 trillion in December 2017 and Sh 912.66 billion in 2016.

With limited investment vehicles for this money there arises a need to find other alternatives to invest the money in. The World Bank in 2018 urged local pension schemes to invest in public-private partnership (PPP) projects as the government moves to open infrastructure including roads, utility lines and public buildings as a new asset class for them to invest in.

Speaking to a Business Today reporter, former RBA Chief Executive Officer (CEO) Dr Edward Odundo supported this proposal saying that the money made from pension schemes is so much and can be beneficial in development as well.

“The accumulation of this cash is so large it can help more than basically the pensioner. It can be used in the energy sector, building of roads which will assist everybody. We do not need to borrow money to build roads,” Dr Odundo said in an exclusive interview with Business Today.

If a single road building project needs Sh 40 billion, then it would be easier to get the money from pension schemes than it would to borrow. Borrowing is a process that is also expensive. It would be easier to get the money from the pension scheme which will not feel a pinch of the money.

[Read: Proper structures can tackle water, sanitation challenges]

It only takes the support of the government, legislation, trustees and industry players to collaboratively design structures that will allow the private sector to invest in Kenya’s infrastructure needs. About 65% of pension schemes in the country are run by private organization.

The use of pension funds in infrastructure development has worked well in other countries and Kenyans are just waiting for the green light from the government before they inject pension funds to government projects. As of 2015, countries like Brazil, Chile, Colombia, Mexico, and Peru were investing about 2.6 percent of their total portfolios in infrastructure.

Dr Odundo, who is currently the Director at the School of Pension and Retirement Studies, added that allowing pension schemes to invest in infrastructure can help minimize looting of money during government projects.

“If they (pension schemes) are going to put their money in any corporate form, they will follow to make sure the money is paid back than if the money is borrowed abroad then no one will care,” Dr Odundo remarked.

“Pensioners will have an interest to know how the project has performed. If the money invested in infrastructure is got from loans then no one will be interested in knowing how the program will perform. At the end of the day the loan will just be paid from taxes,” he added.

Dr Odundo served as the CEO at RBA for 16 years and helped the pension industry grow from 50 million to a trillion. The pension industry is worth a lot of money, money that can be used in development.

[See also: Ukur Yatani appointed Treasury CS in acting capacity]

Latest

Whipped and Stripped! A Survivor’s Tale of Harrowing Brutality in a Mental Hospital

The lack of a long-term vision and inadequate resourcing of mental hospital infrastructures continues to take a toll on Kenya’s mentally ill patients.

Dubai Agency Picks Top Influencer Marketers to Lead Kenyan Operation

This strategic move is in line with indaHash vision to cement its presence in Africa, following its impactful footprint in South Africa since 2017 and successful collaborations with clients like the South African Tourism Board.

SportPesa to reward Customers in Cash-Filled Festive Promotion

Running from December 4th to 25th, the SportPesa campaign promises daily excitement with six lucky winners expected to walk away with Ksh5,000 daily.

Captain William Ruto: President’s Namesake With a Decorated Career

Captain William Kipkemboi Ruto is officially known by the name William Ruto, which also happens to be President William Samoei Ruto’s official name.

Follow Us

Newsletter

Don't miss

Tusker Oktobafest Rolls East African Cultures into One

From regional events across Kenya to inaugural gatherings in Uganda and Tanzania, and the Tusker Oktobafest grand finale in Nairobi, the festival harmonized traditions, celebrated diversity, and highlighted the rich cultural tapestry of the East African culture

Lupita’s Little Brother Junior Nyong’o Charting His Own Path in Acting

Junior Nyongó, who is also a musician and a DJ and now a graduate of UC San Diego with an MFA in Acting, is crafting his own solid path in the world of acting with roles in major theatre productions.

Safaricom To Power Tusker OktobaFest Beer Festival

Safaricom’s involvement in OktobaFest as a technology and payments partner will focus on fostering seamless in-festival connectivity, empowering the youth and Gen Z community through Safaricom Hook, and powering digital payments through M-PESA.

Music Producers Launch Organization To Streamline Recording Industry

Recording Industry of Kenya (RIKE) was launched on 9th October 2023. Registered in 2022 as a not-for-profit organization, RIKE aims to promote the collective interests of producers of sound recordings in the country.

Nairobi’s Hero Bar Listed Among World’s 50 Best Bars

World Best Bars: Hero Bar in Nairobi continues to climb the list, moving up six places to No.62 and Johannesburg’s Sin + Tax comes in at No.94. Dubai new entry Ergo is at No.69 and Melbourne’s Byrdi has re-entered the list at No.61.

Kenyan DJs Face Off In Smirnoff Battle Of The Beats Season 3

The Smirnoff Battle of the Beats Season 3, a DJ competition, is poised to unleash an unprecedented musical frenzy countrywide.

The Highs And Lows Of Betty Kyallo, Sisters Show As Season 2 Ends

Kyallo Kulture has always been, above all, about sisterhood, and in Season 2 we have witnessed the charm of it - the ups that gave us wholesome moments as the sisters led by Betty Kyallo spent time together.

DStv Beats CNN, BBC To Become Most Admired Media Outlet In Africa

DStv, MultiChoice Group’s leading broadcast service, has been named...

MultiChoice Revises Subscription Fees For DStv, GOtv

MultiChoice has announced price adjustments on some of their...

Octopizzo: How I Make My Money

"I've been doing this for 12, 13 years. It reaches a point where you no longer need to prove that you can make a hit record," he stated.
Kevin Namunwa
Kevin Namunwahttp://www.businesstoday.co.ke
Kevin Namunwa is a senior reporter for Business Today. Email at [email protected].

Whipped and Stripped! A Survivor’s Tale of Harrowing Brutality in a Mental Hospital

The lack of a long-term vision and inadequate resourcing of mental hospital infrastructures continues to take a toll on Kenya’s mentally ill patients.

Dubai Agency Picks Top Influencer Marketers to Lead Kenyan Operation

This strategic move is in line with indaHash vision to cement its presence in Africa, following its impactful footprint in South Africa since 2017 and successful collaborations with clients like the South African Tourism Board.

SportPesa to reward Customers in Cash-Filled Festive Promotion

Running from December 4th to 25th, the SportPesa campaign promises daily excitement with six lucky winners expected to walk away with Ksh5,000 daily.

LEAVE A REPLY

Please enter your comment!
Please enter your name here