Kenyans in the informal sector, the majority being self-employed, can now save for their retirement through the Kenya National Entrepreneurs Savings Trust (KNEST).
KNEST is a government institution started by the government of Kenya to provide an avenue, where those in the informal sector can retire with dignity.
Speaking to the leadership of bodaboda riders from Western Region in Kakamega, a legal officer Eunice Oduor, who was representing the CEO of KNEST urged those in the informal sector to register with the trust and start contributing.
She urged the self-employed to take advantage of the opportunity that has not been available for the sector where only those employed were covered by a pension scheme.
“A research was done by the government together with the World Bank that found out that only 20 per cent of the Kenyan workforce have an idea of what would happen to them or how they would survive after retirement,” she explained.
She said that over 74 per cent of the Kenyan workforce in the informal sector have been lacking an alternative means to survive when they stop working.
Oduor noted that the government has realized that the pension scheme that has been there, did not recognize the informal sector workers yet they also contribute to the economy of the country.
She said as a result, KNEST has established a mechanism that would enable the individuals in the informal workforce to save a certain amount of money where 70 per cent of the savings will be taken for long-term pension while 30 per cent will be available and accessible for the contributor to use when they need it.
Speaking during a past engagement with journalists in Kakamega, the CEO of KNEST Rose Musonye said the institution will manage all the savings of Kenyan workers who are self-employed.
“We only have a small number of Kenyans which is approximately 20 percent of the total workforce and these are majorly in the formal sector who usually have a fall back plan when the time comes for them to stop working, the bulk of the workforce which is in the informal sector or say in the MSME do not really have this luxury of having a pension when they stop working. It is a serious workforce. It is very crucial to the economy but when they stop working they are on their own,” she explained.
Musonye said the government will match the savings of the self-employed who will save through the Trust and be able to reach a certain threshold of their savings.
She noted that the contributions collected by KNEST will be invested in government securities.
“The government is going to match their contributions and these contributions are going to be invested in government securities because government securities give better returns which are guaranteed,” she explained.
Musonye noted that the self- employed have not been saving for retirement because the pension arrangement in Kenya was not designed to meet their unique needs as it was only designed for the formal worker who has an employer.
“For the formal worker, the employer contributes a certain percentage at a certain time which is usually the end month; because you have a paycheck and also you contribute a certain percentage and then those funds are taken to service providers and everything is so organized,” she disclosed.
“For the ‘Mama Mboga’ or Jua Kali artisans with others like hawkers, they go to work, but they are not sure how much they will make for the day. Sometimes they earn more, other times they get nothing, their funds are intermittent, the savings themselves you can’t tell; they are very small and they are far apart,” she noted.
She explained that KNEST is very unique, where it is able to manage those contributions that are very small, intermittent and that they don’t come every day.
“And if you don’t save on any particular day there is no punitive measure that you get, you just save when you can and you save whatever you can and the beauty of it is that you are doing it at the convenience of where you are,” Musonye explained.
She said KNEST is targeting over 18 million Kenyans who are in the informal sector to register and start saving with the scheme promising that their contributions are safe.
“We are partnering with the major informal sector associations because most of them are organized so that we leverage on the infrastructure that they already have in place to ensure that everybody who does not have an employer is covered and assured of a better retirement,” she added.
The National Executive Chairman of the Bodaboda Safety Association of Kenya Kevin Mubadi urged bodaboda leadership in Western Kenya to mobilize its members to register with KNEST and start contributing to the pension scheme to guarantee a better retirement.
By Moses Wekesa
