Registrar of Financial Institutions Dr. Wilson Banda says efficient and effective management of pension funds is key in driving Malawi’s economic development and achieving the 2063 development agenda.
He was speaking at the launch of Trustee Development Program for pension funds management in Blantyre.
The program is aimed at equipping trustees with skills to effectively manage pension funds, and it involves a five-day examinable intensive training program where successful pension funds trustees will be awarded certificates.
Banda said the pensions sector in Malawi has experienced significant growth, with pension assets standing at K2.8 trillion Kwacha as at June 2024, therefore emphasizing the need for capacity building of trustees for effective management of pension funds.
“As at June, 2024, pension assets soared to K2.8 trillion from K74.8 billion in December 2011. Additionally, membership has risen to 618,152 compared to 102,505 in December 2011. The trajectory of the growth of pension assets within the financial sector is unparalleled and can be expected to match the banking sector in the near future. This suggests that the sector has quickly become systemically important requiring our close attention in terms of impact on financial stability,” said Banda
The Reserve Bank of Malawi Governor also disclosed that the pensions sector in Malawi has shown promising growth with assets at 2% of the GDP in 2011 to the current 7%, therefore giving confidence of Malawi growing pension assets to reach 15% of GDP by 2030.
The Reserve Bank of Malawi appointed a consortium of international consultants comprising of Zamara Kenya and College of Insurance Nairobi to facilitate development of the program.
Dr Ben Kajwang Director of the College of Insurance Nairobi, said the launch of the Trustees Development Program is an important landmark for the Malawi pensions sector as it lays the foundation for a transformed economy through significant investments of the pension funds in key areas such as infrastructure development.
“Across the globe, pension funds serve as powerful engines of economic development. In Europe and North America, pension assets often exceed 100% of GDP, with the U.S. boasting a staggering $35 trillion in pension assets representing 132% of the GDP.
While developed economies have benefitted potentially from pension funds, Kajwang said the situation in Africa is a bit different as despite having developed markets like South Africa, pension assets represent about 63% of GDP as of 2023, and the current disparity represents a great opportunity to be explored.
For this to be achieved, he suggested the need to improve on pension coverage in Malawi and the Africa continent as a whole which currently remains low as the informal sector dominates the economy, leading majority population with no pension coverage.
On the other hand, Ekari Chauluka, President of the Life Insurance and Pension Association of Malawi-LIPAM, welcomed the move saying sustainable operations of pension funds rests on the competence of trustees which can be achieved through skills trainings under Trustees Development Program.
“Well trained and exposed trustees are easier to wake with and efficiently serve the interests of pension members they represent,”
The program aspires to achieve a number of objectives including ensuring that the pension funds trustees are demonstrating an understanding of the conceptual and operational frameworks, governance issues, able to apply provisions of relevant legislation and regulations governing pensions funds operations, as well as understanding of the investment dynamics of pension funds activities.
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