Mbao pension contributors set eyes on mortgages

Photo/FILE Members of the scheme contribute at least Sh20 daily towards the mortgages, as part of their retirement plan. 

By NATION CORRESPONDENT

Contributors to the Mbao Pension plan, an informal sector retirement pension scheme, will soon use their savings as collateral to access mortgage services.

Members of the scheme contribute at least Sh20 daily, as part of their retirement plan.

Speaking on Wednesday at a status of business reporting in Kenya event at in Nairobi, the Kenya National Federation of Jua Kali Association chairman, Mr Richard Muteti, said the sector has long been locked out of the financial arena in the country.

This has made it hard for workers in the sector to access financing, due to the perception by financial institutions that their engagements are risky.

“The scheme was our reaction to the exclusion of the informal sector in the financial services.

“But, as the savings continue to grow, the programme will also be used to access financing for houses and property by the members,” Mr Muteti said.

Most retirement benefit schemes have targeted the formal sector, leaving out the bulk of Kenyans, who contribute 24.5 per cent to the country’s gross domestic product.

The sector still lacks representation at the National Social Security Fund board according to Mr Muteti.

After launch of the scheme last year, the Retirement Benefits Authority indicated that it was targeting about one million informal sector workers on the scheme, and mobilise about Sh7.6 billion in one year.

The plan has mobilised about Sh1 billion so far.