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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