NATIONAL WORKSHOP ON REGULATORY AND POLICY FRAMEWORK FOR PENSION SCHEMES AND PRODUCTS IN RWANDA.
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GOVERNOR’S OPENING REMARKS.
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Hon. Minister of Public Service and Labour;
Managing Directors of different institutions in the Financial Sector;
Distinguished Participants;
Ladies and Gentlemen;
All Protocols observed;
It is a great pleasure for me to welcome you all to this important workshop.
As you are aware, the Rwanda Financial Sector Development Programme approved by the Government in November 2006, included, among the most important institutional reforms, the extension of the Central Bank Regulatory Authority to cover Non Bank Financial Institutions (NBFI).
These institutions include insurance companies, insurance intermediaries, and social security institutions such as the Social Security Fund, Private
Pension Funds and other Collective Investments Schemes like Unit Trust, Mutual Funds and Investment Companies.
The proper regulation of these institutions is crucial to achieve their objectives of long term saving mobilizing while ensuring that beneficiaries receive a quality service as a result of a high level of professionalism, best practices and compliance with rules and regulations governing the industry.
To deliver on this new mandate, the National Bank of Rwanda has been focussing, during the last twelve months, on setting an adequate and functioning legal and regulatory framework, which is a prerequisite for any serious supervisory activity.
The achievements so far include the drafting of a new law governing organization and supervision of the activity of insurers and insurance intermediaries. This law has already been passed by the Parliament and is currently in the process of being published in the official gazette. The BNR Department in charge of Supervising the NBFI is now busy to draft all Regulations and Directives provided within this law, and a number of them have been already drafted.
The process of putting in place the legal framework for the insurance sector is still going on; the Bank is currently in the process of drafting other Insurance supplementary laws namely the insurance contract law and the Mandatory insurance law.
Basically, the main purpose of the insurance contract law is to deal with the duties and responsibilities of each party to the insurance contract by clearly stating the terms and conditions comprising the agreement between the
Insured and the insurance company. The existing Insurance Contract Law that dates 1975 is very outdated and presents a lot of grey areas hence need to be reviewed to spur confidence of the players within the sector. We expect to share the draft of the Insurance Contract Law with stakeholders next month.
The mandatory insurance law is necessary to cater for uncovered third party liabilities. There are significant risks caused by certain activities that expose the public to enormous risks. It is critical that such risks which threaten public security be covered by appropriate insurance schemes. We Planto complete the draft mandatory insurance Law and present it to stakeholders in first quarter 2009.
In the mean time, the Bank intends to conduct external comprehensive financial and management audit of all the insurance companies. The section of the auditor is almost completed and the audit will start before the end of the year 2008. This audit will enable the Bank to draw the baseline from which to start exercising the supervisory role. The Bank has also been able to carry out off-site inspection through the analysis of 2007 financial statements for all insurance companies and on-site inspection has been conducted for some companies. The financial reporting framework for Non-Bank Financial Institutions is being developed and should be discussed with the industry before the end of this year.
Honorable Minister ;
Ladies and Gentlemen ;
The pension sector on which we are focusing today is mainly comprised of National Social Security Fund (CSR) and some private pension schemes established by some private companies. The sector is still very small and only employees in the formal sector are beneficiaries of both schemes (public and private) with a very low coverage rate of around 5%. The sector has very limited products on offer and is unregulated.
The existing private pension schemes lack legal and regulatory framework for both individual and occupational pension schemes hence less assurance of effective and efficient operation for lack of clear rules of the game. The sector is therefore characterized by lack of professionalism and compliance to best practices.
To fill the current gaps, the Bank embarked on drafting laws regulating these institutions. It’s in this perspective that a legal expert on pensions was hired to assist in developing a pension strategy & Policy framework for the Pension industry and to establish the legal framework for the proper Regulation of the industry. A well regulated industry will enhance transparency, accountability and professionalism which are core of the development of the financial sector as a whole.
The purpose of this Workshop is to bring together all stakeholders in the pension industry to build a national consensus on the Pension Policy direction, and share with the consultant the key aspects of the Pension industry which need to be regulated and how to regulate them. Let this be the opportunity for the pension stakeholders to interact and share knowledge about critical issues concerning the pension sector in order to advise the Government on a proper strategy for the long term development of the pension industry.
In accordance with the Bank’s 2008 workplan, the way forward after the workshop is to finalize the policy paper and the Draft law after including stakeholders’ views and send both documents to Cabinet for approval before end December 2008.
I’ d like now to invite Honorable Minister of Public Service and Labor to make the official opening of the workshop.
Thank you for your attention.
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