Four billion is allotted to buy shares this year
The Public Employees Social Security Administration (PESSA) has allotted four billion birr to be invested to buy shares from commercial banks in the Ethiopian fiscal year 2022/23.
The administration estimates a 20 percent investment return from the proposed share buyout will result in a profit of 800 million birr.
The administration is making its first foray into other financial frontiers after previously only putting money into T-bills and state funds.
Eight months earlier, the PESSA and the Private Employees Social Security Administration had their founding documents amended. In addition to bonds and T-bills, the new law allow the two administrations to invest their own money in viable frontiers.
After the new legislation allowed the two to invest in alternatives other than T-bills, the return on their assets is anticipated to increase significantly. The administration decided to include real estate as one of the six investment frontiers in order to spread out the investments in the fund.
“The four billion birr will be invested in banking shares,” an official of the Administration told The Reporter.
About 415 million birr will be invested in current bank shares, while four billion birr will go toward new bank shares.
The combined estimated return on both shares is 20 percent.
The NBE Treasury Bill, however, is the administration’s biggest investment for this year, amounting to 112 billion birr with a nine percent return expected. Dividends of 5.7 billion birr are anticipated from a 160 billion birr investment in Treasury bills. 6.5 billion birr are invested in bonds, with a nine percent return.
This year, the administration aims to make 17.5 billion birr in profit. It expects to collect 50 billion birr in pensions, a 21 percent increase from the previous year. It has also lost 1.5 billion birr as a result of the conflict in northern Ethiopia, and recipients were also unable to access their funds. 14 billion birr will be paid to beneficiaries this year, out of the 50 billion birr that will be collected.
In collaboration with the International Labor Organization, PESSA carried out a strategic investment policy.
Thus, in accordance with the investing guidelines of pension funds, the administration is getting ready to explore new investment horizons. One of the newest investment options is to build its own structures.
Along with the ongoing initiatives in Harar, Jima, and Addis Ababa, the administration is getting set to invest in construction projects in Bahir Dar, Hawassa, Dire Dawa, Adama, and Addis Ababa.
Similarly, the Private Organization Employees’ Social Security Administration (POESSA) anticipates bringing in 20 billion birr in 2022/23. The profit from investments is expected to be 11 billion birr.
The administration now maintains a reserve of 70 billion birr.
The required pension contributions of private organizations in Ethiopia were at 64 percent, according to the National Bank of Ethiopia’s report to Parliament.