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Bota Zhumanova: ‘ENPI.kz is some kind of a street light which illuminates the dark block of the pension system.’

With the participation of active citizens and financial support of the Soros Foundation-Kazakhstan, a thematic platform ENPI.kz has been operating successfully in Kazakhstan since 2017, which specializes in effectiveness issues of the pension system. The project is aimed primarily at extending contributors’ knowledge about the work of the UAPF (Unified Accumulative Pension Fund) and taking into account the interests of contributors when reforming the pension system.


We decided to talk to the author of the idea and the chief ‘coordinating hub’ of the project Bota Zhumanova about prospects and difficulties in creating a unique resource.


Bota, we know you as a financial market specialist, a member of the Social Council at the UAPF, which you left. Have you done what you had planned?


– Not quite, actually. I quit the Council at the UAPF practically in the very beginning, after three meetings, as I did not see a particular benefit for Kazakhstani contributors, to which I belong.


We had been able to initiate a few requests to the National Bank so as to understand the situation, how decisions are taken, how and what the government have to do with the investment decisions on pension accumulations, etc.


I don’t think that social funds in Kazakhstan are effective platforms which are seen as trustworthy because part of their representatives represent not the society but certain interested communities working with pension money.


As for the work carried out, I approached the pension subject matter systematically.


A few years ago, I did a Master’s degree in Law and defended a dissertation on ‘Pension Accumulations as an Investment Object’.


At the same time, together with like-minded peers, we established the ‘Financial Freedom’ Public Foundation, and prepared a modernization concept of the pension system. We had published it several months before the National Bank came up with the announcement of modernization, whose concept, by the way, has not been defined and accepted yet.


Thanks to the support of the Soros Foundation-Kazakhstan, a thematic pension platform has been launched, which is the first and only one in Kazakhstan; and as far as I know, in Central Asia. To date, over 150 materials have been posted there, and it is 10% of all those unique publications about the UAPF or the pension system in all the media, issued in the media market. When looking at the website attendance, it has exceeded 100 thousand unique users for 6 months of existence of the platform.


Currently, we are preparing a concept on development of the ENPI.kz platform for strategic investors; and we are also working on education projects and the offline project on creation and development of the Elders Centers network.


I really see great potential of the market for people who are over 55; many people seriously underestimate it. But judging from my experience, I bet this trend will be definitely positive.


How did you come up with the idea of creating the resource? How many people are there in your team?


– My professional activity has always been connected with media, more precisely, business media and communications industry (PR in the financial sector). I’ve got most of the skills in this area. I just thought how I could use all my skill set in order to make the pension system better. The answer was pretty obvious. We need to create a ‘turning point’ in the mindset of the society, use professional skills in the media industry so as to raise the level of investment literacy in the country through understanding how ineffectively the accumulative pension system operates.


In fact, I test ‘the broken windows theory’. In the book ‘Tipping Point’, there is an instance how they managed to significantly reduce the crime rate. Basically, there were 2 solutions: to increase the police staff or make a range of interesting creative decisions. The main idea was to light the darkest streets, to remove graffiti from walls and underground train carriages and change broken windows every day. If you change broken windows, the other party which breaks windows realizes that there is somebody who cares, and sooner or later, gives up.


So we came up with the idea that if we write about the pension system in Kazakhstan and international experience, about why it is important to build your own pension capital, about a social aspect of the pension system, common issues and ideas, we can make a change for 10 million Kazakhstanis, who give 10% of their monthly income to the UAFP, yet they are unsatisfied the way this money works.


Setting up the thematic pension platform is some kind of a street light which illuminates the dark block of the pension system. This platform was meant to increase the attention of mass media and public to the problem of financial security of generations, who will be growing older  in the capitalist economic system, that is, without a state pension. This relates to those who are over 35.


Speaking of the team, the project is based on the PB (project based) approach, when all the necessary functions are outsourced by competent teams, which specialize in services from web design to promotion of content. These are the teams that created unique design projects like Krisha.kz and Kolesa.kz. For instance, the ‘Grafica’ company is one of the project partners. What is more, professionals who work on the ENPI.kz project are individuals that are sensitive to this issue. And they share the project mission in terms of the idea and relevance. My role in creating this project is the role of the project manager, that is to say, the ‘hub of assembling’ design, content, promotion and further development of the platform.


Why do you prefer to write about pension savings but not about the banking sector, in issues of which you are also competent in?


Because I devote all my spare time to the ENPI.kz platform; in my case it’s a project on social responsibility, which may become autonomous with regard to its sustainability. It is aimed at not only at monitoring the pension market, but also at improvement of financial and investment literacy. I assume, the platform will cover the banking, insurance and investment sectors altogether with time.


The banking sector is much freer than the pension one. No one forces you to open a savings account in this or that bank, or take a loan. It’s always up to a personal decision and liability of every client. In the pension system, no one asks anything, we are all deprived of any choice. In this respect the banking sector is more liberal than the pension sector, and even as a consumer of these financial services, I feel the difference between levels of liberalism.


On your resource, models of pension system in different countries are presented. Which of them do you like personally and which one would suit Kazakhstan better than the Chilean one?


There are 3 country models, which have withstood the test of time and earned the trust of population of these countries. We are talking about Norway, Singapore and Australia (In the ranking of best countries in the world, Australia is listed 7th, Norway 12th, Singapore – 16th and Kazakhstan – 70th).


In Norway, the trust in the state institutions is so great that owing to their transparency and effectiveness, there isn’t any social tension as to how the pension system operates.


There are quite strict rules in Singapore, however, they give plenty of freedom to their contributors what to choose, what to invest in, and also, there is an opportunity to use pension savings in the present time fro medical, educational and housing purposes.


Personally, I like the Australian model most since it’s actually is the ideal of liberalism. The government said openly to citizens that their pension is their personal responsibility, they could either choose a fund, or establish it themselves if they would like to invest themselves. As a result, there are a few thousand pensions funds in Australia, which decide themselves where and how much to invest, as they are set up by physical persons.


The Norwegian model would suit Kazakhstan ideally, but, unfortunately, it’s not about the model but ethics. People who manage the money in Kazakhstan have a very low ethical standard. Ethics is one of the strongest qualities of foreign professionals who work with assets in global markets. And none of the models would work without highly professional people that have high ethical standards.


Do you get feedback from representatives of state bodies?


No. Speaking of the National bank or UAFP as representatives of the state bodies, there hasn’t been any feedback. There were personal meetings with the UAFP representatives concerning cooperation on  work with content that may be posted on the platform by the Fund, and that is what we do.


Did the commercial sector representatives offer their financial support?


The financial sector representatives have offered implementation of business projects. It’s not a financial support, but namely business proposals. In this regard, the position is simple – the project cannot implement business proposals until the time of grant support expires.


My approach in implementing any social projects is their self-sustainability, because in fact, they shouldn’t have grant support all he time. Projects which solve important social problems should be supported by the society, a group of certain people, or companies interested in their solution. Because in the case of the ENPI.kz project, the grant is a sort of seed funding of a start-up.


The start-up itself is aimed at attracting a strategic investor or a group of investors for further development of the platform into something bigger, including education services and counseling on financial planning and so on. All negotiations with potential strategists will be held after closure of the grant.


Kazakhstanis seem to have already got used to the fact that another issuer, in whose securities contributors’ pension assets are invested, allows default and is admitted as insolvent. Do you think it is possible to strengthen the requirements to investment of our contributions?


Actually, it is possible to solve any socially important problem by means of development of civil initiatives if the society wants their interests to be considered more than they are taken into account now. In my view, we are gradually approaching this moment. All in good time. So part of the society needs time to mature for becoming more proactive citizens to protect their own interests.


All is happening evolutionarily here, just like the stages which anybody goes through, say, if he finds out that he has cancer. There are 5 stages: denial, anger, bargaining, depression and acceptance. Acceptance is the most rational position, in which the society becomes conscious of the problem and mobilizes to solve it by any means. I think, at this point exactly, the society creates initiatives that can become a bridge to enable contributors more actively participate in various spheres of management and investment of their pension savings. It seems to me that generally, the society is at the ‘depression’ stage and ENPI.kz is the first example of how active people with an active civil position create preconditions for transition to the final crucial stage, where there is more positive action.