Kagame Captured Rwanda’s Pension Fund. His Financiers Are Setting the Captive Free

By David Himbara

Rwanda’s pension fund is invested in at least eight companies valued at US$45.3 million which have paid no dividends since the investment was made. The annual loss to the pension fund on the return on investment reached US$28 million in 2018. General Paul Kagame has long captured Rwanda’s pension fund – his ruling party companies were established with the pension money of up to 50 percent of equity. The International Monetary Fund (IMF) is setting the captive free – external pressure has forced the Kagame government into promising to reform RSSB and make the agency transparent and accountable. It remains to be seen whether the captured pension fund is set free for good.

General Paul Kagame and his Rwandan Patriotic Front’s US$500 million business empire, Crystal Ventures Ltd, and its subsidiaries: Ruliba Clays, East African Granite Industries Ltd, Inyange Industries Ltd and Crystal Telecom.

Every year, Rwanda’s Auditor General documents the enormous losses of the Rwanda Social Security Board, noting that the companies in which RSSB invests rarely pay dividends. In 2018, for example, the Auditor General reported that eight companies into which RSSB has invested Frw 43,537,948,867 or US$43.5 million “have not paid any dividend from the time of initial investment or establishment.” The Auditor-General indicated that the annual dividend losses to the pension fund in the eight companies “increased from Frw 19 billion (US$19 million) in 2017 to Frw 28 billion (US$28 million) in 2018.” With these vast losses to Rwanda’s pension fund, it is the same thing year in, year out. For the would-be guardian of the Rwandan peoples’ retirement money, namely, government of General Paul Kagame, it is business as usual. But there is a change in the air, thanks to the intervention of the International Monetary Fund (IMF). Under the IMF pressure, the government has promised to clean up Rwanda Social Security Board in the following terms:

“We are committed to keep RSSB’s finances transparent and sustainable. The RSSB’s new strategic plan for 2020–25 details an ambitious reform agenda to transform the agency…We remain committed to the planned review of the RSSB’s asset allocation and intend to have it completed and to submit the associated report to RSSB management by June 2021.”

The government adds that Rwanda Social Security Board is to be granted “significant autonomy in the determination of its strategic and operational policies affecting its reform plans.” The government further states that “we remain committed to the ultimate objective – i.e., conducting a review of the RSSB asset allocation” to be completed by June 2021. It remains to be seen whether the government completed the review of the RSSB asset allocation by June 2021 as promised to the IMF. And who is to say that the captured pension fund will be is set free from Kagame and his ruling party for good.

Nevertheless, the IMF’s intervention is welcome news. No domestic institution can hold Kagame accountable. Let us hope that the capture of the Rwandan workers’ pension by private interests will now stop. Crucially, let us hope that Kagame will no longer appoint relatives or cronies into the leadership positions of the Rwanda Social Security Board. Previously, Kagame had installed his brother-in-law, Innocent Gakwaya, as RSSB’s the Chairman of the Board. When Gakwaya died, Kagame replaced him with Ephraim Turahirwa, the former CEO of the ruling party business empire. Unsurprisingly, Crystal Ventures Ltd used the pension money to establish its subsidiaries, including Inyange Industries Ltd, East African Granite Industries Ltd, Crystal Telecom, and Ruliba Clays Ltd. Let us hope that the capture of Rwanda’s pension fund is over. Stay tuned.