Almost every two years we are treated to the spectacle of
all the ills at the National Social Security Fund (NSSF). An inquiry into the
Fund has always exposed rot leading to the board and top management getting
fired, ministers responsible being reshuffled, sometimes the managing director
and the chairman get prosecuted and jailed.
Why does the pattern of violations at NSSF remain the same
and even get worse in spite of these investigations, expositions, prosecutions,
humiliations and changes in management? The answer seems to me that the problem
of NSSF is not internal to its management but external to its environment.
Any meaningful resolution of the continuing crisis at NSSF
has to begin by situating the Fund within Uganda’s wider politics.
The paradox is that NSSF suffers these scandals ‘ not
because it has failed ‘ but because it has succeeded. The Fund has grown its
portfolio from just under Shs 100 billion only fifteen years ago to Shs 1.3
trillion and more today. Like all other contradictions under President Yoweri
Museveni’s rule, this has also been possible because of the impressive growth
of Uganda’s economy over these years.
Museveni pioneered the shift in economic policy in Africa from
state control to liberalisation, deregulation and greater private sector
participation resulting in impressive growth for two decades. Yet Uganda’s
politics has remained largely neo-patrimonial ‘ exhibiting similar factionalism
and looting seen in Mobutu’s Zaire, Moi’s Kenya and Eyadema’s Togo. Therefore
the more NSSF has been successful, the more it has attracted the attention of
powerful people who want to steal from it.
This is why we need to focus on how to get government out of
managing our savings. Yet public debate largely focuses on moralistic calls for
punishing the culprits, appointing a new board and management, on increasing
oversight over NSSF activities (all of which have been done over and over again
without anything coming of them), on having more ‘workers’ representatives’ on
its board etc.
These recommendations add to the problem instead of solving
it. We need a new vision ‘ not just for NSSF ‘ but the social security sector
as a whole. Why should the public be debating whether it was good for NSSF to
buy Nsimbe or Temangalo or to invest in this or that stock? The fact the public
is involved in such a technical debate is actually the problem. NSSF is like a
bank; we all keep our money there. The only difference between the Fund and an
ordinary bank is the time of collecting one’s money. With a bank, you can pick
it any time of your choice; with NSSF, when you are 50 years.
Why are we in Uganda not always involved in debating how the
Managing Director of Barclays or Stanbic gave out a loan to MTN or Uganda
Breweries? Don’t we have our savings there? I think that equally, when the
general public begins debating whether NSSF was right to invest in land or
stock, you have a structural problem. Our interest in NSSF should be limited to
the rate of return on our savings. The rest we can leave to the regulator to
ensure that all the rules to protect workers’ savings are adhered to. Bank of
Uganda is doing this job excellently with commercial banks already.
The lesson from the continuing scandals at NSSF is that we
should liberalise the social security sector. Currently, the law forces us to
put our money in a fund which is largely managed by the state. We should be
arguing that government should allow other players to enter the market for
social security in order to enhance competition. Every worker should choose
where to keep their savings depending on the promised rate of return.
Government should stop treating us like children whose savings it should manage
for us?
I have over slightly Shs 100m in NSSF. This year, Stanbic
Bank floated a bond with a 14.5% rate of return. Fixed deposit accounts for two
years at Crane bank return 14% and you can negotiate better terms if you fix
your money there for five years. Why does government force me and all other
Ugandans to keep our savings with NSSF which is giving us only 3%? This is a
forced tax government is imposing on all those saving with NSSF.
It is absurd for trade unions to ask that they represent
workers when only 5% of workers in this country are unionised. The outcome of
increasing workers’ representation on the NSSF board is to lull us into the
belief that our money is safe when all historical evidence shows over the last
15 years, NSSF has never paid interest above the rate of inflation. This means
workers in Uganda have been suffering negative real savings i.e. workers have
been losing money all these years.
It is even disturbing that the public gets excited about
former NSSF MD, David Jamwa, spending Shs 50m in a casino and taking salary
advances of Shs 244m. Although this is a very bad thing, it is a very small
problem for me as a saver with NSSF compared to a decision by government in
November last year to suspend all NSSF investments for five months.
The Fund collects Shs 20 billion a month, so the Shs 100
billion collected could not be invested. Even if the rate of return was only
15% as per the Stanbic bond, the foregone earnings by the Fund over the five
months were worth Shs 55 billion on the money collected between November and
April alone. If we were to add the return foregone on all other potential NSSF
investments in those five months, the figure could as well go above Shs 130
billion. That makes the scandals of Jamwa and his group a joke.
The reader should not think I am trying to excuse Jamwa and
his group for their scandals. They can as well be hanged. However, we should
fight on strategic issues not the tactical ones. The biggest problem at NSSF is
not the petty thefts by its managers. It is the business and investment
opportunities foregone as a result of government direct involvement in managing
our savings.
amwenda@independent.co.ug
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