Let us inculcate the culture of saving as a nation: Mudavadi

Prime Cabinet Secretary Musalia Mudavadi has urged Kenyans to embrace the culture of saving for the country to strive economically.

Mudavadi said the habit of income consumption rather than saving has retrogressive effects within the society.

He said a workforce that aims to transform a nation economically has to build a strong capacity in savings.

“We have to break away from the norm and inculcate a savings culture within our society and especially the median age of our population. For us to strategically build a workforce that will yield economic returns away from the habit of consumption this is the way to go.” said Mudavadi.

The Prime CS noted the progress Kenyans are making in saving as part of their incomes for the future as a comparison to other nationalities saying there has been a great improvement in the Kenyan savings culture.

He noted that Kenyans are catching up with other African countries that have a good record of savings for retirement.

“Tanzania leads with the highest contribution to retirement savings, requiring a 10% savings of one's gross earnings with the employer matching it. Similarly, Uganda mandates a 5% individual saving matched by a 10% employer contribution, while in Rwanda, the individual contribution is 5% with the employer adding 3%,” remarked Mudavadi.

He said Africa as a continent has to re-look its economic future adding that the culture of saving will play a major role in transforming Africa’s fortunes moving to the next frontier.

He reiterated the importance of social security providers leading the path in order to rally Kenyans towards a savings society.

He spoke at the launch of the 2023-2027 National Social Security Fund (NSSF) Corporate Strategic Plan geared towards steering the operations of the agency into the future.

“It is important to note that a central focus of NSSF's strategic plan is a renewed dedication to expanding pension coverage and promoting financial inclusion for all Kenyans. Initiatives targeting informal sector savings plan tailored specifically for market vendors, boda boda operators, taxi and matatu operators are crucial components of this effort," he stated.

"By providing affordable and sustainable retirement savings options, the goal is to ensure that every Kenyan has access to financial security in their later years.”

Mudavadi said financial security and the well-being of millions of Kenyans, now and in the future, resonates with social security providers as cornerstones of the nation's social and economic framework.

“Savings and pension sectors are so emotive. They elicit a lot of trust issues in relation to planning and governance. That is why we need to navigate carefully the path towards getting the citizens to understand what lies ahead as benefits in saving rather than being drowned into consumption traditions.” said Mudavadi.

He regretted that in the past, Kenyans traditionally considered pension as a retirement package, a belief that has had adverse socio-economic effects especially among the median age.

He said as a social security provider, NSSF plays a critical role in the promotion of Kenya's economic development.

“Beyond its function of mobilization of local resources for national development, NSSF actively invests in productive sectors, such as its support for the Small and Medium Enterprises (SMEs), championing financial inclusion and reinforcing the stability of our financial system.” lauded Mudavadi.

Mudavadi said the plans underway to enhance benefits payable by NSSF in order to meet the dynamic needs of Kenyans are encouraged.

He said such initiatives are particularly significant given the evolving challenges within the workforce, especially for SMEs, which constitute a significant portion of Kenya's employers.

He said the government through NSSF, is taking proactive steps to support individuals and families during times of transition and uncertainty in the workplace a gesture that social security funds are encouraged to advance.

“These efforts, backed up by technology and innovation, will drive efficiency and effectiveness.” he noted.

“Inflation is always an issue and when we plan how to grow our funds, we must always to be prudent in our management, professionally and strategic so that the returns that will feed our pension funds are able to hedge against inflammatory pressures.” He warned.

Mudavadi said it is time nations face the challenges and seize opportunities that lie ahead with vision, determination and a shared sense of purpose.