Kenya Invites Stanbic, Old Mutual to Help Boost Returns From Pension Fund

(Bloomberg)  Kenya’s National Social Security Fund, which has 110 billion shillings ($1.2 billion) in assets, said it signed up Stanbic Investment Management, Old Mutual Plc and four other companies to boost returns on investments.

The state-run pension company has also hired Genesis Investment Management, Co-op Trust Investment Services, PineBridge Investments and ICEA Asset Management, according to a statement handed to reporters today in the capital, Nairobi. Transactions will be handled by two custodians, Kenya Commercial Bank Ltd. (KNCB) and Standard Chartered Bank Ltd., it said.

The move will “guarantee the best return on investment,” Alex Kazongo, the fund’s managing trustee, told reporters today in Nairobi, saying the fund is aiming for profits that are 4 percentage points above the annual rate of inflation, which was 15.5 percent in July.

The managers have control over investments in stocks and government securities, which currently represent about two- thirds of the fund’s investments or as much as 65 billion shillings, Chairman Adan Mohamed said at the same event.

Real estate assets make up the balance of the fund’s investments and it will continue to manage those internally, Mohamed said.

Membership of the fund is compulsory for all employees in East Africa’s largest economy. The contribution for each member is 400 shillings a month, of which employers pay half. There were 2.1 million salaried workers in Kenya as of the end of last year, according to the country’s statistics office.

Kenya’s main stock index dropped 19 percent this year amid rising inflation that pushed investors toward fixed-income securities with better returns. Stocks are still a valuable, long-term investment for the fund, which is the biggest investor in the Nairobi Stock Exchange, Kazongo said.

“Ours is a long-term investment, so we’re not worried about the short term because we plan to be here for the next 1,000 years or more,” Kazongo said in an interview.

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