Experts counselling on investing in pension

03Jun 2021
Petrus Maré
Dar es Salaam
The Guardian
Experts counselling on investing in pension

THIS is only my second visit to Tanzania. I can vow that the last three months have captivated every realm of my imagination regarding generational wealth. The words of the Bahamian Author and best speaker Dr Myles Munroe echo in the back of my mind, ‘tertiary education’ will earn you a living.

Petrus Maré.

Since my arrival here I have been meeting with insurance brokers and investment specialists to get a grip of the framework in what I perceive to be the most peaceful country on the eastern shores of Africa. I was amazed to find out that only a mino scale portion of the working citizen actually leverage insurance.

The ‘International’ status quo investment vehicles, whether those be available in Tanzania already or are still knocking on the developing market of ‘Karibu’ are operational. Recently, I was sitting with a well-versed owner of a big insurance company and professor at a local university.

We were discussing possible reasons why regulatory authorities and the government still have not made it possible for (the prodigal son)Tanzanians studying finance abroad to come back and start a prestigious Tanzanian Asset management company here on home soil. Then, finally Africans can start keeping money in Africa!

 I do understand that there are only a handful of local companies currently to look at, but we will have to start with establishing laws and regulations that benefit the average Tanzanian. Then certainly we can start strategizing and planning with local prosperity in mind.

Many regulations are there to protect the foreign investor from running ramped, but surely the old mindset of sacrificing the 99 to protect the one golden sheep, leaves a somewhat bitter aftertaste. We are still so focused on foreign establishment that hardly any attention is given to local citizens who need to retire one day.

Education on how to save monthly and the belief that your money is safe and secure and is growing should be a human right.  Secure investment vehicles are proven to be the answer to prosperity. More emphasis will have to be put on education in this field, if we truly care about the 99 majority. There is some expectation from big ‘life insurers’ that because of investment and increased job creation, some products might hit the floor soon.

Let us take an annuity for example: A fixed investment vehicle predominantly familiar with retirement and known as a retirement annuity. What some might not know is that it is a subliminal efficient retirement savings vehicle. The retirement annuity is annually tax deductible according to your tax bracket, up to a certain contribution. You keep working that tax re-bate back into your retirement fund.

This allows the contributor of the fund to get to his/her retirement goal so much faster, therefore there is until today no alternative for a good old retirement annuity! In other words, the Tanzania Revenue Authority is paying for your retirement. There is no other conventional investment vehicle that provides these ‘returns’. Culture is caught not taught, so I honestly pray that it sells itself soon so that vehicles such as these become second nature to all Tanzanians.

Some other African countries place major emphasis on this already, and you frowned upon if you have not started to save in your 20’s. Comic looking back how Pythagoras in math’s class, or Vasco de Gama’s spice route around the horn of Africa – thou interesting, has never served me practically at the end of the month.

Tax, however, conveniently gets left out of most schooling children’s curriculums, globally. How different would Tanzania, and Africa be if we weren’t grooming little version’s of ourselves, parrots, like myself at 10 years old who could recite a 10 page memorized speech in front of a audience of hundreds of people, however, at 18 years old, along with all my peers had no idea what a budget or tax looked like. We are as a society instilling false ideologies within our children if we do not awaken to this truth about them leaving an inheritance one-day as well.

It is time that we groom independent, emotionally strong ‘out of the box-thinking’ business owners and entrepreneurs in ways and strategies to keep their money in Africa. Africa is the next big development hub of the world - no other continent has the same space left - really! But do we embrace this mindset? Do we nurture our children for this charismatic, yet almost contradictive mindset?

The other major white elephant in the ‘finance room’ to be addressed is the seemingly lack of fiduciary services or ‘wealth advisors’ outside of your conventional lawyers’ office. Citizens need to be made aware that there is more to an estate than a spreadsheet with all your assets. Dying intestate is a real event that should not be overlooked if you want to take advantage of all the growth coming to Tanzania.

A will and a proper estate planning are highly essential in today’s ever evolving society. It is globally one of those ‘old school formalities’ that have to be given more attention to as the medium class’ income rises over the coming years.

I remember one instance when a lady did not make it a priority to move her executorship for her will from the bank to my office. The banker signed off where she wanted to be buried, instead of cremated. This in hindsight is not an unimaginable mistake for a banker, because it is not his area of expertise. Eight years later that estate was not ‘un-wrapped’ yet. The government got hold of the seemingly insignificant error.

The daughters of the lady had no way to pay their school fees. This is a typical example of a multi-million dollar estate that never found the next generation in time to add real significance to lives, because no education around an estate was provided. Growth in the economic sector brings forth new specialist planners. We as an up emerging economy will have to start making provision for them.

Once again, the question is - when you close your eyes can you envision and see at all the glass skyscrapers in Dodoma or Dar es Salaam cities, dealing solely with the estate wealth of Tanzanians or do we allow ourselves to be lose out for lack of knowledge.

NB: Petrus Maré is an investment advisor based in Dar es Salaam. He can be reached through:  [email protected]

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