Steve Umidha @Umidhasteve

Pension schemes in Kenya are banking on a rebound in local demand to spur profits and drive margin expansion after a downturn on Covid-19 shocks hit their growth areas.

The latest industry figures by Retirement Benefits Authority (RBA) reveal that retirement benefits assets under management increased by 5.77 per cent from Sh1.32 trillion in June 2020 to Sh1.399 trillion in December 2020, same period last year.

The assets had just grown by 7.76 per cent, up from Sh1.298 trillion in December 2019.

RBA blamed the gentle growth to the impact of Covid-19 pandemic which affected the financial markets in the first half of 2020 but are hopeful to leverage ongoing mega projects.

“The slow growth in the assets during the period can be attributed to the adverse effects of the Covid-19 pandemic which adversely affected the financial markets and the wider economy in the first half of 2020,” RBA noted in a statement yesterday.

Growth area

The retirement benefits assets are however expected to grow in the first half of 2021, albeit at a slow pace due to the sluggish rebound of the stock market, and the unpredictable effects of the third wave of Covid-19 on improved positive sentiments.

With the government expected to revive stalled projects amid targeted spending on infrastructure, fund managers are eying investments in these in capital-intensive infrastructure projects, under the Big Four Agenda programme this year.

The Big Four agenda comprises food security, affordable housing, manufacturing and affordable healthcare whose plans cooled due to the global pandemic — key sectors the schemes will be looking to cash in on.

“The schemes are also expected to continue to invest in alternative assets given the broadening of the allowable investment categories and to take advantage of the public infrastructure projects under the big four agenda,” reads a statement by RBA.

Government securities

Majority of fund managers last year continued to invest heavily in government securities with the asset class accounting for 44.72 percent of the total assets under management.

Industry players equally invested in immovable property which accounted for 17.96 per cent, investments in guaranteed funds which accounted for 16.48 percent and investments in quoted equities which accounted for 15.59 per cent.

Gen Africa asset managers had the largest share of assets under management amounting to Sh237 billion which translates to 18.48 per cent of the total assets under fund management, dislodging Sanlam Investments East Africa Company to position two with assets amounting to Sh227 billion which translates to 17.65 per cent of the total assets under fund management.