One of the key issues of 2008 was the
price at which the National Social Security Fund (NSSF) bought land belonging
to security minister, Amama Mbabazi. I strongly believe it was a good price.
Many believe it was a rip-off. If i am right, workers should be happy although
they ought to be morally outraged at how political influence was peddled to get
their money out of the Fund to buy a ministers land. If the price was inflated,
they should be extremely angry and call for action.
Yet there was little attempt to bring
expert opinion to bear on this subject. Workers stand to benefit if NSSF
developed the 5,000 houses in Temangalo even if the price per acre was inflated
by Shs 8m. This is not to say that inflating the price is a good thing. In fact
I believe that even though there was no direct evidence linking Mbabazi to
political influence peddling in NSSF, as a beneficiary of the transaction riddled
with gross abuse of procedural rules, he should have resigned.
But the chattering class was telling
workers to block the housing development in order to get Mbabazi. Yet settling
political scores with Mbabazi could only benefit the politicians who did not
like him. The most strategic issue for workers was to insist NSSF builds the
houses in Temangalo, Nsimbe and Lubowa. If workers bought those houses, it
would be their most effective real savings in the long term.
Workers lose more money when NSSF puts
their savings in fixed deposit accounts in commercial banks. NSSF collects Shs
18 billion every month. The Managing Director of NSSF decides by phone where it
should be deposited. Commercial banks lend us money at 24%. Yet they take in
our savings from NSSF at 14%. Therefore, they make 10% on our savings. The MD
of NSSF does not deposit this money in bank A instead of bank B out of
altruism. Banks compete for his favours. It follows therefore that they offer
him inducements for his decision.
Let us assume that the NSSF MD insists
on a 2% cut on Shs 50 billion in Bank A. That is a billion shillings in bribes.
NSSF has more than 700 billion on fixed deposit accounts. That can generate
annual bribes to NSSF managers worth Shs 14 billion. This allows its managers
incredible opportunity to cream off workers money without ever raising a red
flag. Only when workers get NSSF to build them houses which they can buy on
mortgages even if the prices are inflated, will they gain meaningfully from
their savings.
As I have discovered during my
investigations, former MD David Jamwa had an uncanny ability to take money out
of the fund at will, a story I will write in detail in our next issue.
The optimal solution to the social
security sector in Uganda is to liberalise it. Here, we would have private
companies getting licences to take our savings. Ugandans would choose who to
save with depending on the rate of return given by competing private companies.
The role of government under such conditions would be to provide a regulatory
framework.
If Company A pays its subscribers less
interest on their savings, they can shift to company B or C who pay subscribers
a good return. Competition in the market for our savings would give us the best
available return. We do not need to bother ourselves a lot with how a company
we save with invests our money just like we do not ask banks with which we keep
our money the procedures they use to lend it. We put our money in a bank that
offers us the best services to our convenience.
Imagine if the public had to debate
whether the process through which Barclays Bank advanced a loan to MTN followed
procurement procedures! We leave that to Bank of Uganda. Only when banks begin
to collapse would we ask questions.
Therefore, rather than debate how NSSF
invests our money, we should only be concerned with the return on our savings.
A competitive social security sector provides exit options if anyone feels the
returns with a given pension fund are not good. Thus, while government control of
NSSF gives us some voice in Fund matters, it actually gives vent to our rulers
to use our savings to promote their political and financial interests.
A lot of discussion about NSSF has
focused on what ought to be done instead of what is likely to be done given our
politics. The former is moralising, the latter is analysing. The lesson from
the Temangalo saga is that government is unlikely to liberalise social security
for fear of putting vital resources into hands of those they cannot control.
And even if they liberalise, government will not allow open and competitive
bidding. They will only licence those companies owned by the cronies of the
regime.
In the short term, President Yoweri
Museveni and his corrupt gang will be in control of government. So they have
ability to use the power of the state to direct resources to those whom they
want to reward or whose support they want to buy since they decide who gets the
tender. Under such situations, the victims of misrule in Uganda have to accept
a bargain: to benefit from any government controlled program, we should be
willing to accept that our rulers will cream off a share of the investible
money.
There is going to be no road
constructed, no school built or housing estate developed through the agency of
government without someone in the ruling clique getting a cut. The choice
facing Ugandans is either to draw a line in the sand and reject every
investment that has question marks on it and therefore have no investment at
all. Or accept that in exchange for government service, we should be willing to
tolerate some shenanigans by our rulers. Of course, this is the very painful
reality to accept.
Yet it is seems to me the only
practical way we can keep our country going as long as Museveni and his cabal
tighten their fingers around our nations throat without easing the grip. In the
medium to long term, Museveni will leave whether he likes it or not. He may
avoid politics but he will not escape Mother Nature.
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