Kenya Tourism Development Corporation managing director Marieanne Ndegwa during an interview with Business Daily at her Utalii House office in Nairobi on Thursday. Photo/Salaton Njau

Ongoing research into controlling cassava diseases in Africa may boost crop yields. The main beneficiaries of this could be female processors of cassava crops — but only if improved yields come alongside better market access.

One interesting initiative, combining the private and not-for-profit sectors, shows how training can help women raise their incomes by overcoming market challenges.

In Africa, women are largely responsible for processing cassava into locally consumed products such as gari (toasted cassava flour) or tapioca. Once uprooted, the crop’s rapid perishability makes further commercialisation difficult. In Ghana, for example, around 40 per cent surplus is produced because of limited access to commercial markets.

These female processors need better processing equipment, such as crushers used to make flour, in order to reach new markets with processed products such as higher-quality cassava flour, sugar syrups or livestock feed components.

Investment firm Goldman Sachs and the Goldman Sachs Foundation funds an initiative that aims to improve growth-oriented small businesses owned by women across the developing world.

The Goldman Sachs 10,000 Women project involves a network of local NGOs and academic institutions training women in entrepreneurial skills.

Partner institutions, local businesses and Goldman Sachs employees offer support including mentoring on business skills. Female graduates of the programme own small businesses in diverse industries such as agri-business, construction, retail and food services.

One beneficiary is Kabeh Sumbo from Liberia. Her firm sells locally processed vegetable oil to nearby restaurants and hotels and to the public. Since graduating, Kabeh has applied for a loan to expand her business, taken on six employees and opened two warehouses.

But more businesses still can learn from such initiatives. Earlier this month, Justine Greening, the UK secretary of state for international development, called on UK businesses to join the “development push”, specifically recognising that “investing in women is hugely powerful”.

Kabeh and Christine’s stories show how a blend of the corporate, voluntary and, in this case, academic sectors can bring major results for small-scale female entrepreneurs.

Miers has worked across Africa and Asia as a gender and social development consultant for 15 years

Professionals needed in counties

Ibrahim Mwathane 

 

By  Ibrahim Mwathane

Late last year I spoke to members of the Institute of Certified Public Secretaries of Kenya on governance, politics and professionalism in county governance.

I underscored the need for professionals in Kenya to rise up and participate in politics at the national and county level. Politics is about people and their welfare. It’s about ensuring accountability in the delivery of services to citizens.

It drives the provision of essential services such as power, water, roads, education and healthcare. Politics affects our quest for peace and security hence directly determines the absence or presence of an enabling social-economic environment.

Politics is intertwined with our lives. Professionals therefore cannot afford to leave what they like referring to as ‘‘murky politics’’ to others, I observed. Their very objective in practising their respective professional disciplines would be fundamentally undermined by a diminished business environment and poor social and infrastructural services.

I further observed that owing to their specialised training in various disciplines, professionals can make good politicians. This is why I was quite happy to notice from the gazetted list of those elected as MPs, governors, senators, women and ward representatives in the last polls that several are professionals.

They should apply their skills and experience in the interest of society. They should influence the development of policies and legislation. They must make strategic inputs and interventions to ensure that appropriate budgets are voted in for the implementation of such policies and laws.

I also pointed out that professionals will be critically needed for the success of county governments. The National Land Commission Act, for instance, establishes county land management boards and specifically requires that one member be either a surveyor or a physical planner.

The Urban Areas and Cities Act vests the management of cities and municipalities in county governments. But these will be run by management boards to be established by the various counties, away from previous practice. One member of each of these boards must be nominated by ‘‘an umbrella body representing professional associations in the area’’.

The County Governments Act further requires that a County Public Service Board be established whose secretary must be a certified public secretary. Legal services, housing, health, infrastructure, ICT and financial management in the counties will all call for experienced professionals.

Sadly, most far flung counties do not have enough practising professionals. Moreover, the Association of
Professional Societies in East Africa (APSEA), which is the national ‘‘umbrella body representing professional associations’’, has a presence only at the national level.

APSEA and its affiliate associations must quickly address this gap. Meanwhile, county governments could headhunt and provide appropriate incentives to the professionals they wish to attract.

But the professionals elected to various offices must be guided by professional ethics and national values in their routine work. Their exemplary performance will compel many to follow.

How criticising a worker in private undermines the team

Don’t criticise in private for behaviour that occurred in a team meeting. FOTOSEARCH 

By Roger Schwarz

Imagine the following scenario: You are holding your weekly team leadership meeting. You are discussing with your direct reports how to handle project delays that have caused the team to miss its quarterly numbers.

You know that Ted, one of your direct reports, missed two key deadlines. You’ve seen this kind of behaviour before from Ted, and you’ve seen the team’s frustration with him. You decide to not say anything to Ted in the meeting, but afterward you talk to him privately about how he’s letting you and the team down.

If you’re like most leaders, you believe in the adage “Praise in public and criticise in private.” So when an employee does something that negatively affects the team, you usually talk to him in private. But this can be a dangerous adage to follow because it significantly reduces accountability, the quality of team decisions and your team’s ability to manage itself.

As Richard Hackman, a psychology professor at Harvard, once said that the “most powerful thing a leader can do to foster effective collaboration is to create conditions that help members competently manage themselves.”

Here’s why criticising in private undermines your team, and what you can do to build a smarter team starting today.

Is your leadership team a real team— one in which members are interdependent on one another for meeting group goals? If so, they should also be accountable to one another for working together to achieve those goals, including how they rely on, work with and make decisions together.

Yet when you criticise in private for behaviour that occurred in a team meeting or affects the team, you undermine team members’ accountability to one another.

You send the message that team members are accountable only to you, not to the team. You also send the entire team the message that they don’t need to hold one another accountable— you’ll do it for them. In short, you shift accountability from the team to you.

You also make it more difficult to solve the problem. If you tell Ted that his missing deadlines contributed to the team missing its goals, you and Ted may reach an agreement on how he will change his behaviour, and that may inadvertently create new problems for other team members.

Or Ted may tell you that other team members made it difficult for him to meet his deadlines, and it’s not his fault; at that point, you’re likely to become a human pingpong ball, shuttling back and forth between Ted and other team members trying to understand the problem. The information to solve this problem lies with Ted and the other team members.

Why do leaders unwittingly shift team accountability to themselves?

First, they’ve been taught correctly that they’re ultimately responsible for the team. Yet they misconstrue this ultimate responsibility and adopt a “one leader in the room” mindset; they believe that they are primarily, if not solely, accountable for how the team functions, including providing negative feedback to their direct reports.

Second, research by Chris Argyris and Don Schon—co-authors of “Organisational Learning” —and my 30 years working with leadership teams shows that in challenging situations, almost all leaders try to minimise the expression of negative feelings: If it’s difficult for you to give negative feedback, you prefer to do it in private than in the team setting.

Leadership isn’t about being comfortable; it’s about being effective, even when you’re uncomfortable. Smart leaders address ineffective behaviour in the team setting when it occurs or when the behaviour affects the team. In the team: That’s where the information, solution and accountability are.

With Ted, you could start by saying something like, “I’m noticing two patterns in our meetings. First, Ted, this looks like the third time in a month that you haven’t met a deadline for the team. Am I off?” 

Assuming Ted agrees, you continue. “The second pattern is that each time Ted says he hasn’t met a deadline, I notice the rest of you sigh or shake your head, but you don’t say anything to Ted. Am I on target?”

Assuming people agree, you continue. “Since these meetings are the place for solving problems, and the team can’t meet its deadlines if Ted doesn’t meet his, I’m curious, what leads you not to say something to Ted in the meetings?”

If you want to create a more effective team, you and your direct reports will need to change how you handle accountability. Here’s what you can do, starting today:

1. Tell your team you’ve been unintentionally shifting accountability from the team to you. Explain how you see it affecting the team’s results and working relationships. Give some specific examples, and ask team members how they see it.

2. State that you want a team in which members can openly and constructively give one another feedback. Explain how this will help the team. Ask them for their reactions.

3. Ask your team members what they need to hold one another accountable for how they are working together. They may need others to share more information about their parts of the business.

They may need to learn how to discuss one another’s behaviour in a way that’s productive and doesn’t contribute to defensive reactions. They may need to change their mindset so they see themselves accountable to the team, not just to you. They may want some assurances from other team members or you.

4. Take a few minutes at the end of each meeting to discuss how team members are holding one another accountable and how to improve it. Making this shift isn’t easy.

Investing a few minutes to discuss what worked well and how the team wants to improve next time will increase the chance that there is more accountability in the future. Ultimately, that will save time and foster better team decisions.

Mr Schwarz is an organisational psychologist, leadership team consultant, and president and CEO of Roger Schwarz & Associates. He is the author of Smart Leaders, Smarter Teams: How You and Your Team Get Unstuck to Get Results.

Kenya looks for economic peace dividend after calm vote

PHOTO/STEPHEN MUDIARI. President-elect Uhuru Kenyatta (left), with Minister Charity Ngilu during a church service at St Austins Catholic Church in Lavington, Nairobi, March 31, 2013.  

Posted  Monday, April 1  2013 at  12:23

In Summary

• Tourism seen as vital source of employment
• Kenya needs hydrocarbon, infrastructure investment
• Businesses put post-2007 vote violence behind them
• Corruption, red tape still hinder business

Kenya's tourism industry may be a swift winner from the election of Uhuru Kenyatta, owner of hotels and a vast business empire, as east Africa's biggest economy seeks to benefit from a vote that avoided a re-run of bloodshed of five years ago.

Tourism is a vital sector for the nation of more than 40 million people and was one of the worst hit after a disputed presidential poll in December 2007 led to weeks of tribal blood-letting, scaring away investors and tourists by the planeload.

This time, a row over who won the vote was led by lawyers instead of armed thugs. A reformed judiciary that reviewed the case commands more respect than it ever did, a victory for the rule of law that could also lift business confidence.

As well as seeking more visitors, Kenya wants oil and gas investment to develop hydrocarbon discoveries, funds for a major new port planned in Lamu and other infrastructure, and investors to boost the nation's position as a regional manufacturing hub.

Aides of Kenyatta, son of Kenya's founding president, talk of looking east if Western nations spurn their president.

But both sides may work hard to avoid that. Chinese imports may almost match those from Europe but 26 per cent of Kenyan exports in 2011 headed to the European Union compared to 0.7 per cent that went to China.

"We have been partners for many years, we will continue to be partners for many years," said one European diplomat in Nairobi, adding that it was "not realistic" for Kenya to swiftly switch its economy towards China.

Chinese influence has grown sharply across Africa, Western firms may push to ensure their position in Kenya is not eroded. Big names in the country include Diageo, Vodafone , Tullow and Canada's Simba Energy.

Positive sentiment

Kenya's economy took a pummelling five years ago when weeks of post-election violence led to the killing of more than 1,200 people. About 350,000 people were displaced from their homes.

Growth has still not returned to the 7 per cent level it reached in 2007 before the bloodbath began. The economy grew 4.5 to 5 per cent in 2012, the International Monetary Fund estimated, forecasting before the election that it could reach at least 5.5 to 6 per cent in 2013. Prospects could now improve further.

But it still puts Kenya behind some African neighbours, which were equally concerned by the vote because their economies were hit after 2007 when trade routes through Kenya shutdown.

"We expect to see increased capital inflows and especially foreign direct investment," Finance Minister Robinson Githae said soon after Kenyatta was declared winner on March 9.

And, even as his victory was challenged in court following the calm voting on March 4, Kenya seized on positive sentiment to announce plans for a debut $1 billion Eurobond.

Kenya's initial plans to issue a $500 million Eurobond were delayed by the post-election violence in early 2008.

Tourism earned Kenya $1.12 billion in 2012 and was the third biggest foreign exchange earner behind tea exports ($1.31 billion) and remittances from Kenyans abroad ($1.17 billion). But the industry is particularly valuable because it is a big employer, vital for a nation with an expanding population.

"If the country is going to develop in a balanced way, there has to be an emphasis put on the tourism sector," said Phumelele Mbiyo, head of macroeconomic research at CFC Stanbic Bank.

Kenya drew in 1.23 million tourists in 2012, far fewer than the 8 million or so a year that visit South Africa, a nation that offers a similar mix of beach resorts and safaris.

Kenyatta's Jubilee coalition pledged to hike that to 3 million visitors a year. It could be helped by growing interest in Kenya as a destination.

"Kenyan investment plans previously put on hold because of election-related uncertainty are now likely to be realised," said Standard Chartered economist Razia Khan.

Foreign investment "may take a while longer to see a meaningful increase but that should also start to rise in the near-term," she said.

Old problems that annoy business, such as corruption and red tape, have not changed with Saturday's ruling that confirmed US-educated Kenyatta won in a fair vote against Raila Odinga, who studied in the former communist state of East Germany.

And a Kenyatta presidency comes with other baggage. He is charged with crimes against humanity at the International Criminal Court (ICC). That indictment complicates his personal relations with Western states, although diplomats talk of a "pragmatic" approach that should avoid harming trade ties.

"There is still the broader uncertainty of the ICC case. Whether the charges stand will be closely watched," Khan said.

"Good to go"

Yet from the small-time shopkeeper who ran down stocks for fear of renewed looting to five-star hotel executives fretting about reservations, the nightmare of another spasm of violence has been averted, with just pockets of unrest marring the calm.

"We have clients who were watching to see the outcome of the petition and the reaction that would follow," said Mohammed Hersi of luxury Whitesands hotel, Mombasa's biggest resort. "Now we are good to go. We definitely will have more bookings."

Two people were killed when dozens of protesters took to the streets in the western city of Kisumu, an Odinga stronghold. But in Mombasa, another base of Odinga support, a desire to move on outweighed disappointment that their man lost.

Some businesses said 51-year-old Kenyatta, whose family owns the Heritage Group of hotels that range from a beach resort in Mombasa to an Indian Ocean island hideaway in Lamu, could be a boon for tourism. His family's empire extends to dairies, a major bank and education.

"When Kenyatta was chairman of Kenya Tourism Board (KTB), he was someone we could talk to," said Suresh Sofat, chief executive of Somak Travel, one of Kenya's biggest tour firms. "He understood tourism and was fighting hard for us all."

Challenges remain, not least how Kenyatta will juggle a case in the Hague while running a country. He has insisted he can do both and says he will cooperate with the court to clear his name, welcome words for Western states that have a policy of holding only "essential contacts" with ICC indictees.

"I was at the world tourism trade fair in Berlin and all we did was to sign new contracts and renew old ones," said Hersi, referring to a meeting in March. "Things are looking up, and everyone is suddenly very interested in Kenya."

Seven global firms are among those showing interest in Kenya, including Best Western, Country Lodge, Accor, Carlson Rezidor, Dusit, easyHotel and Kempinski.

Lagos-based consultancy W Hospitality Group said they would add 1,500 rooms to Nairobi, with 700 opening in 2013.

"This country holds huge promise," said the European diplomat. "It can grow much faster than it has been growing."

Bullish stock market lifts workers’ pension savings

Traders at the Nairobi Securities Exchange. Funds invested in equities earned an average return of 38 per cent. File  Nation Media Group

By David Mugwe

In Summary

• Last week, the Central Bank of Kenya lowered the Central Bank Rate to 11 per cent from 13 per cent, the third consecutive cut this year from a high of 18 per cent in the first six months of this year.

Workers earned an average return of 25.3 per cent on their retirement savings over the past 12 months to the end of September, a survey by Alexander Forbes has shown. The growth in returns was mostly driven by the upturn of the equities market.

Funds invested in equities earned an average return of 38 per cent, fixed income savings returned 21.9 per cent, while offshore investments grew by 0.6 per cent.

The performance is a turnaround compared to the end of September 2011, when pension schemes posted an average return of -11.4 per cent at a time when most share prices were on a downward trend.

“Over the last four quarters, we have noted a steady increase in the one-year return performance from a low of negative 9.9 per cent as at December 2011 to a ‘high’ of 25.3 per cent as at September 2012,” said the financial services firm in the survey that was released on Monday. 

The net returns earned by savers are, however, likely to be much lower after subtracting administration fees charged by pension fund managers.

The fees vary from scheme to scheme.

Alexander Forbes says the one-year returns between September last year and March 2012 were negative and significantly lower than the one-year performance as at September 30 this year, but this had changed as at the end of June through to the end of the third quarter.

The financial services firm said that it surveyed 140 schemes, of which 134 have a total of Sh175 billion under management qualified for inclusion in the survey.

According to data from the Nairobi Securities Exchange, between January and the end of September 28 the NSE 20 Share Index closed at 3,972.03 points having gone up by 23.93 per cent or 767.01 points.

The benchmark index closed at 3,205.02 points in December last year.

Alexander Forbes said that the range of returns reduced while the median went up, indicating that share price gains had a similar effect on most pension schemes across the board.

All the schemes included in the survey had an average of 25.7 per cent of their assets invested in equities, 67.8 per cent invested in fixed income instruments, 4.5 per cent invested in property, and two per cent invested in offshore investments.

Many listed firms have reported better than expected results, defying the high interest rate regime and inflation that affected other companies last year and part of this year.

Last week, the Central Bank of Kenya lowered the Central Bank Rate to 11 per cent from 13 per cent, the third consecutive cut this year from a high of 18 per cent in the first six months of this year.

Foreign and local investors have continued to bid up share prices while companies which have done well have continued to pay out dividends, pushing up returns for investors who include pension funds.

Low inflation leaves pension savers with positive earnings

The Retired Teachers Group members speak to journalists in Nakuru over pension arrears amounting to more than Sh42 billion last year. File 

By Mugambi Mutegi

In Summary

• Retirement schemes post average returns rate of 28.39 per cent from previous year’s negative.
• All the four investments vehicles preferred by pension schemes registered positive returns stopping a four-year value erosion.
• Returns were highest in the fixed income segment of the pension scheme investment.

Pension schemes rode 2012’s strong economic recovery wave to significantly grow their investments, leaving savers with positive returns for the first time since the 2008 global financial crisis.

An industry report by Actuarial Services East Africa (ACTSERV) says savers earned an average rate of return of 28.39 per cent in the year to December 2012 moving firmly in the positive returns territory.

All the four investments vehicles preferred by pension schemes registered positive returns stopping a four-year value erosion that began with America’s sub-prime mortgage crisis in the last quarter of 2008.

Returns were highest in the fixed income segment of the pension scheme investment, including government bonds that yielded up to 21.8 per cent earnings.

Offshore investments posted an average of 10.52 per cent rate of returns climbing out of the previous year’s dip that yielded -5.61 per cent performance rate.

Last year’s upturn in the equities market gave pension funds a 51.3 per cent rate of return — the highest among the investment mix compared to -23.55 per cent recorded the previous year.

The Pension Schemes Investment Performance Survey, which sampled 103 schemes in Kenya, brightens the pensioners’ prospects one year after they watched their investments shed value across all segments.

“2011 was not a good year for pension schemes as inflation, high international oil prices and a bear run at the Nairobi Securities Exchange (NSE) combined to erode investment value,” said George Kilibwa, one of the lead researchers in the study.

“But things improved last year with the stock market’s rebound and the easing of inflation pressure to record lows that has been reflected in the earnings.”

(Read: Bullish stock market lifts workers’ pension savings)

The schemes included in the study have an estimated asset value of Sh57 billion. The schemes’ stellar performance coincides with the NSE recovery that saw the 20-Share Index close the year at 4,133.02 points, 28.95 per cent higher than its opening level of 3,205.02 points.

During the bear market run of 2011, Retirement Benefits Authority (RBA) said that pension funds’ exposure to quoted shares dropped to Sh93 billion from Sh130 billion in 2010.

Last year’s good showing came in the wake of the Central Bank of Kenya’s (CBK) aggressive monetary policy intervention to tame runaway inflation that peaked at 19.72 per cent in November 2011.

Inflation steadily declined to single digit levels helped by a tight monetary policy and favourable weather that kept food prices in check.

Low inflation opened a window for investors to return to the NSE, putting share prices on a recovery path that peaked with the better-than-expected results in the second half of the year.

Analysts expect the trend to continue this year but caution that it all depends on the performance of equities and government securities in the third and fourth quarters of the year.

“The period after the second quarter of the year will be key to projecting annual investment returns,” said Eric Musau, an investment analyst at Standard Investment Bank.

“It will all depend on measures adopted by the new government, including its stay on the current path of heavy indebtedness or a change to a new model that involves raising revenues bearing in mind that each option has unique effects on the economy and for investors.”

The ACTSERV report also shows that pension funds increased their participation in real estate to 2.34 per cent of their total investment despite a slowdown in the construction industry in the first three quarters of last year.

The survey divided the pension schemes into three categories — large, medium and small — based on the total value of funds held.

Only 21 schemes qualified to be in the first group of funds with more than Sh500 million but control the largest fraction of the industry’s total savings of Sh49 billion or 86.04 per cent of the total.

The bulk of their portfolio (65.61 per cent) was invested in fixed income while equities accounted for 27.72 per cent of investments, property (2.49 per cent), cash reserves (2.41 per cent) and offshore 1.77 per cent.

Twenty-four medium-sized schemes with reserves of between Sh100 million and Sh500 million controlled Sh5.42 billion of total invested funds, translating to 9.52 per cent of the industry’s investment.

Like their top-tier counterparts, this cadre of pension schemes also had the largest fraction of their investments in the fixed income instruments despite the fall in total holdings to 68.36 per from 72 per cent the previous year.

These funds, however, spread their assets beyond the country’s borders by a whopping 74 per cent while also dabbling in real estate where investment rose by 1.25 per cent from a no-show the previous year.

Small-scale schemes — with less than Sh100 million — were the majority at 58 but with only Sh2.52 billion worth of industry assets or 4.43 per cent of the total.

“Most of the small schemes have an average of Sh43 million in saved funds and this is not enough capital to make any genuine investment in the real estate,” said Mr Kilibwa.

“The regulatory limit that the schemes cannot invest more than 30 per cent of their total portfolio in property leaves such funds with just about Sh13 million to invest.”

Benchmarks used in the quarterly survey include the 364-day t-bill rate, the PineBridge Investments 27 Share Index and the Morgan Stanley Composite Index for fixed income, equities and offshore investments respectively.

The RBA is currently working on regulatory changes that if adopted will introduce new caps on asset classes that retirement funds invest in.

Retirement funds’ assets rise to half a trillion shillings

Retirement Benefits Authority chief executive Edward Odundo. Data from RBA shows the industry’s assets increased by 20.7 per cent in the first six months of 2012. Photo/File 

By George Ngigi

In Summary

• Data from the Retirement Benefits Authority (RBA) shows the industry’s assets increased by 20.7 per cent in the first six months of 2012.
• During the period, the portfolio of pension schemes at the NSE grew by 38 per cent to Sh128.3 billion from Sh93 billion in December.
• The equities market grew by an average 28.95 per cent last year.

Assets held by workers’ retirement schemes have crossed the half-trillion shillings mark, reflecting growth in pensioners’ nest egg which got a boost from last year’s stock market rebound.

Latest data from the Retirement Benefits Authority (RBA) shows the industry’s assets increased by 20.7 per cent in the first six months of 2012, hitting Sh522.6 billion as at end of June.

“The amount was composed of Sh381.6 billion that was held by the 16 registered fund managers, Sh110.9 billion held by National Social Security Fund (NSSF) and an additional Sh30.0 billion of property investments held by schemes but not under control of fund managers,” said Edward Odundo, CEO of the regulatory body.

In the six months between January and June, the portfolio of pension schemes at the NSE grew by 38 per cent to Sh128.3 billion from Sh93 billion in December. The equities market grew by an average 28.95 per cent last year.

(Read: Bullish stock market lifts workers’ pension savings)

Government securities were the lead investment option for the schemes with Sh184.1 billion invested in Treasury bills and bonds.

Government securities are risk-free investments for the retirement schemes with a predictable rate of return while the equities market ordinarily offer a higher rate of return but are a more risky option.

“The growth is a result of returns on investment and generic growth from new entrants or higher salaries,” said James Oyugi, the general manager at Metropol Life and chairman pensions committee of the Association of Kenya Insurers (AKI).

Pension scheme contributions are based on a percentage of workers’ salaries.

The growth in assets is good news to pensioners as it is an indication of the rate at which their contribution is compounded during the year to calculate their final retirement package.

“That growth means more income in retirement for the pensioner as the kitty grows,” said Mr Oyugi.

An industry report by Actuarial Services East Africa released earlier in the year showed that savers earned an average rate of return of 28.39 per cent in 2012, moving them firmly in the positive returns territory after high inflation left them in the negative in 2011.

(Read: Low inflation leaves pension savers with positive earnings)

Real estate which has been experiencing a consistent rally over the past decade has seen the sum invested in it continue to grow reaching Sh94.8 billion in June, which constituted 18.1 per cent of the total portfolio.

The retirement schemes managers’ risk appetite went up as the guaranteed fund category was the only asset category to experience a decline, falling to Sh45.9 billion from 48 billion in December 2011.

 

Other asset options for retirement fund managers are fixed income securities whose portfolio stood at Sh23.4 billion in June, offshore investments of Sh6.9 billion and unquoted equities of Sh3.9 billion.

The pension assets were expected to grow faster in the second half of last year driven by capital gains from government securities as a result of the decline in interest rates, which have an inverse relationship with valuation of Treasury bills and bonds.

RBA is working on proposed regulatory changes in recognition of investment risks faced by the pension administrators.

One of the most radical proposals by a consultant hired by World Bank and whose report was submitted to the regulator recommends that the level of exposure pension funds can have in ordinary and preference shares be slashed from the current 70 per cent to between 20 per cent and 40 per cent of total investments as it is in Chile and Nigeria.