CNPS: National Social Security Fund of Côte d’Ivoire

Interview with Denis Charles Kouassi, CEO of CNPS (Caisse Nationale de Prévoyance Sociale)

How is Côte d’Ivoire doing today?

Côte d’Ivoire, as you know, has come a long way. We are progressing continuously. The growth rate is estimated to be around 8 or 9%, and that is more important than the population growth rate. So Côte d’Ivoire is doing well in terms of aggregates, and in return, this has to have a positive impact on people. Also, this is where we, CNPS, can play an important role, as we provide services, pensions, occupational accidents, family allowances and maternity benefit. Apart from that, since we are an institution that collects savings, we have the opportunity to invest in the country to develop some sectors, including health, housing, and all the social aspects that enable the population feel the positive effect of growth.

When you mention the investment in the country in housing or elsewhere, are you doing it directly or indirectly?

We have several ways. The first way is to supply banks through term deposits, which are long-term funds. Banks need long-term resources to be able to lend money to companies. So this money helps developing companies. When companies are doing well financially, it suits us because they pay contributions and hire workers. So it’s really important for us to supply the banking system. That is the first aspect.

The second aspect is partnership; we are shareholders in several companies, we are in the Board of Directors. We act directly through our strategic vision of the development of these companies.

The third element is when the state or some institutions launch bonds, we subscribe to these bonds, especially for the state of Côte d’Ivoire, who realizes development projects. So we act directly or indirectly, we have the opportunity to act. We have an impact on the economy, and we will build upon this role in the coming years, much more than we did in the past, because we have made several reforms, and we still have a lot of reforms to enact in order to collect enough resources that will be then injected into the economy.

You are shareholders in several companies. Can you give us some examples of the largest companies where you act as shareholders? What have been your greatest investments?

We are shareholders for example in SICOGI, which is the company that builds housing in Côte d’Ivoire and that played an important role since independence until now. We are also shareholders in TOTAL Côte d’Ivoire, in SOLIBRA, the main producer of beer and soft drinks, in LONACI, which is the National Lottery of Côte d’Ivoire, which also launches social actions through its benefits. We are also shareholders in an ivorian bank, the BIAO.

Since this government took office in 2011, we made significant reforms, including reforms in the pension field, through increased contributions and raising the age of retirement, which now enables us to rake in significant funds that we will invest in the economy.

We are particularly concerned by the health sector where we are currently involved in two projects. The first one is the construction of a cancer centre, since we cannot yet treat cancer permanently in Côte d’Ivoire. Insurance companies, the state and CNPS have to do sanitary evacuations. It is complex. We have to deal with visa and adaptability problems, especially during winter in France or in Europe in general. The cost is very high, the plane tickets and the stay are expensive, in addition to the hospital costs which are very high. So it’s important for us and for the country to have a hospital to detect and cure cancer.

The second project concerns rehabilitation. We manage occupational accidents, so when the accident victim is healed, he may have a disability and may need rehabilitation. The project of building a rehabilitation centre is currently being discussed. It concerns our accidents victims, but also all the roads accidents victims, even if they are not insured, it concerns also the victims of CVA accidents… There are no reliable centres today for this rehabilitation in Côte d’Ivoire. So this is an important concern, and we would like to have partners to build such a centre. The centre will have medical treatments, as well as fitness treatments for elderly and disabled (people having back problems or a problem of disc herniation -and all such diseases that require rehabilitation).

We are also building housing since the housing deficit is striking. We made a tender for a 400 housing units project, we have also a project with SICOGI for 511housing units.

We are currently negotiating with the Islamic Development Bank to have funds that we will invest in the private healthcare sector: private clinics, especially those who need to renew their equipment: MRI, scanner, ultrasound…We will be able to do it thanks to our resources and the resources that we can collect from other institutions, because we have a credibility that allows us to collect those funds.

In all these projects: health, rehabilitation, large centres – are you just partners or do you have to look for investors who may join the project?

All forms are possible, but we avoid going alone because we want to reach several sectors. So we like to provide 30% to 35% of the capital, and we want to be associated with companies that have the same interest.

What about you future projects?

The government has enabled us as early as 2012 to make the present reform in the pension field. Before 2012, our company was in deficit. Since 2012, with the reform, we managed to have surpluses. We cannot say beneficiary since we are not a company that manages benefits. At the end of the year, we have surpluses that allow us to make these investments and also to establish special reserves to secure the future. So the current pension plan is balanced for at least 15 or 20 years. This is important; we are perhaps one of the few companies in this field who has a visibility of 15 or 20 years.

Till today, we only cover workers with salaries. We already finished the studies of the system that we will put in place for the self-employed workers, and it will be approved by the government. So we will move to the development phase of regulatory testing for implementation. Self-employed workers are interested in tow schemes: they are interested in pension, and in a system that allows them to get an income in case of disability. In case of accident or illness, the person cannot work for a period that can last a week, two weeks, three weeks, or a month. As the self-employed worker has no income, this system should provide him a replacement income. These are the two systems that interest the independents.

In terms of contributions, we will not proceed as for salaried workers; since for those people, the employer pays for the whole company, and then we know the salaries, we have very clear basis of calculations. Concerning self-employed workers, it is much more complex, depending on whether we are in well-structured professions or in the informal sector. So we will not complicate things, depending on the sector, we will make packages. If for example the monthly income for a butcher is known to be about 100,000 CFA francs, we will take 100,000 CFA francs as contribution basis. If people say that the monthly income for a lawyer is about 300,000 to 500,000 CFA francs, we will take this interval. We will not try to find out the actual turnovers, we will not go into this kind of complexities. We will start in a practical way and gradually improve. At least everyone knows his commitment towards the social security agency, and we also know what are the incomes expected depending on the number of people we can cover.

You work with different partners, both with workers, employers, and then also the government. What is your role? How do you manage all this?

We have a formula, which may be unique. Our board of directors includes the state, employers and workers. We are not a public body; we are a private body responsible for the management of a public service. In other words, the state has given trust to CNPS to manage the public service – with an agreement and a program contract. The program contract lasts three years. In this program contract the state gives us objectives to be achieved and at the end of the period of three years, we proceed to the evaluation and we plan for the three next years, with objectives that the state gives us. The state controls the system according to the usual device, there is a statutory auditor, there is CIPRES, which is a regional inspection body who comes regularly, and the state itself can make audits to see how the company is doing. So this is a peculiarity: a private institution performing a public service. The CEO is appointed by the Board of Directors with the approval of the government.

One of our specificities is: the CNPS projects are approved by the Board of Directors, so we have flexibility and speed that a public institution could not have.

This formula is also interesting since the social partners – workers ‘unions and employers’ associations – asked the state to give them the possibility to manage this institution, through this private status. So, since they are financing the institution, if the company is in trouble, social partners will take their responsibilities.

When we implemented the increase of the contribution in the pension field from 8% to 12%, and a year later to 14%, workers and employers have assumed this responsibility and no problems occurred.

In France, if you touch a client’s social security, you will see the strikes that will follow. Here we made an increase of contribution of 8 to 12% and we had no problem, it was done in a responsible way. That’s why I told you that the balance that is acquired with these increases will last 15 to 20 years. It is important for investors, who wish to come to Côte d’Ivoire, to be aware of the fact that things are stabilized and contributions will not fluctuate soon.

You can give courses and training to France and other countries, so that we could better manage our system.

No, I don’t think so (laughs). But I must say that these systems, which are older than ours, have been set up with a lot of generosity, since they were set up at the end of the Second World War. Over the years, they realized that the system needed an update. The problem is that everyone is attached to his gains, but in reality nothing is gained. When the financial crisis came in 2008, we could not speak of gains; the crisis was here so we must have taken it into account. So for me a social security institution must meet its short, medium and long terms commitments. We are working hard for that, we are increasing our investments; this is what we will do in the next years, so that the benefits that we make from these investments could cover all of our operating expenses. So that when we have 100 CFA francs contribution, we divert 100 CFA francs contribution to the people that we cover, and the cost of management will be covered by our genius in financial investment. We are getting closer to that objective and we will ensure to reach it within a few years.

Can you go into detail on some complementary pension schemes, self-employed schemes?

I will talk about the complementary pension schemes. Today we only have the basic scheme – solidarity scheme. This system has some weaknesses, especially when there are job crises in a country; the ratio number of contributors to number of pensioners is deteriorating. And therefore it is important that in addition to solidarity scheme, we have a complementary schema. Capitalisation has also its weaknesses when there is a serious financial crisis like the latest one. We designed it 50% in solidarity and 50% or more in personal savings capitalization system, so that if there is a weakness in the solidarity system, personal effort can cover a significant part. And if personal effort has problems, in case of financial crisis with monetary erosion, the solidarity system can support. So that’s how we designed our system.

Self-employed workers are more numerous than salaried workers. Today, we are covering a little more than 500,000 salaried worker. This number will grow with the economic recovery in 2 or 3 years to reach maybe 1 million subscribers. But when we did the census of self-employed workers, we found a target of 6 million independent workers. For sure, we will not have these 6 million subscribers from the beginning, but we will have them gradually. The state is launching a health insurance plan that will cover the entire population; we will try to benefit from this plan, to detect employed and self-employed that are on the fringe and do not respect the legislation. CNPS will take the contributions of salaried and self-employed workers from their contributions in terms of health insurance, which is managed by CMU which will be conducted by the state. So the health insurance will allow us to get these people.

What are your biggest challenges? What keeps you awake at night?

We sleep well because in our business when we meet the commitments we sleep well. We pay benefits for example no later than the 30th of the month, we have no overdue payments. So we are doing well.

All the projects we talked about: in the healthcare and housing sector, the reforms that we have done relative to self-employed workers, to the complementary funded system etc. – these are new things, so this is actually a challenge. It exists in other countries, but it is new for us. We did a benchmarking to find our way, but it’s still a challenge, and we must be able to do it. And to achieve our goals, we will need a good communication policy. Salaried workers are easy to get as they are grouped in a company, self-employed workers are more difficult to reach. And therefore we should put in place a communication system that will allow us reaching all these people. And of course, we need a very important communication policy for all the new things that we will implement and that might not always be understood, so that people know their duties, their rights, and their benefits. All these are challenges, this is a break with what has been done for 50 years, and I think we have the needed assets to reach our goals.

Is there something you want to add before closing this interview? Are there key messages that you would like to send to the international audience?

We pay benefits outside Côte d’Ivoire. When you work in a country, you contribute to the social security of this country, but of course when you reach retirement age, you are free to go back to your home country. So we have agreements with various countries, including France, which allow us to manage these populations quite correctly. Whenever we make improvements internally, these improvements are then extended to these populations. For example, recently, we have increased the retirement pension of 8%, which is really important in the current global context, very few countries increase the retirement pension; sometimes it is even in the opposite direction, so we made a revaluation of 8%, and it was extended to pensions we pay outside Côte d’Ivoire. We also facilitate the transfer of funds, we facilitate the payment of contributions, and we are always trying to find modern ways to be able to pay with greater ease and modern means.

I would also add that we are moving to a phase of online filling of workers and contributions, so that people are not forced to come to CNPS. We are finalising the software and we will soon validate it. In 2015 we will move to the online filling.

Do you need external support or expertise from other countries?

We are inspired by what others are doing – according to the areas we address. The International Association of Social Security established an exchange platform. We attend several meetings a year; international meetings, which allow us to share best practices. There is even a competition for good practices in terms of social security in all areas: the business, the business management, investments, modernisation of management using advanced computer systems, etc. We have regular exchanges of good practices. So in this area, we enrich each other. We are not isolated; we take advantage mutually, of our experience, with African or European institutions – with the support of ILO. We act in an environment that allows exchanging and evolving by adapting to the successes of other countries.

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