NSSF should protect workers’ savings

So, the government of Uganda should use treasury bills, and Bonds as instruments than NSSF, a “steward” of worker’s savings lending soft loans to the government “to reduce long-term loans from foreign agencies to carry out critical projects,” said Ms Mukwaya, Daily Monitor March 7, 2019.

Treasury bills are short-term government instruments of borrowing money from the public; the public lends money to government for three, six or 12 months, while treasury bonds are long-term government borrowing instruments – for two, three, five, 10 or 15 years. Treasury bills are a significant outlet for governments and an excellent way for them to acquire funds without raising taxes.

While there are risks to issuing treasury bills and borrowing money, these risks can usually be lessened through proper investment management and fiscal policy decisions. This alternative seems not to be valued, but only to amend the NSSF Act Chapter 222, of Section 30 of Principal Act:

By renumbering the current provision as subsection (1) and substituting for the word “minister”, the word “minister responsible for the Finance; and

By inserting immediately after subsection (1), the following –“(2)Notwithstanding the provisions of any other law, the board may use inhouse expertise or fund managers in the investments under subsection (1), which may include lending to the Government.”

As we stand now, the government seems not to be creditworthy. The country’s debt stands at 41 per cent, which is not cleared, but the government is anxiously observing the Shs9 trillion in the coffers of a steward “National Social Security Fund (NSSF)” of workers’ savings. This is workers’ money, not government funds and for the matter of fact, NSSF is a steward, not a bank to lend workers money anyhow.

To make matters worse, as per the Bill, the amendment to section 24A to principal Act Mid-term access to voluntary benefits, which only a member who has made voluntary contributions to the Fund, shall be allowed mid-term access to his or her benefits.

Therefore, those who do not voluntary contribute are not allowed to access their saving in this unfriendly economy, where there is no job security, workers livelihood is on the basis of survival for the fittest strong race, and being at the mercy of God and relatives to survive at the workplace. This is an economy where the cost of life supersedes their earning thus fail to serve most, especially with the little they remain with after Pay As You Earn (PAYE), Local Service Tax (LST).

A clear provision or avenues should be provided for under the NSSF Act to cater for the NSSF members who are innovative to access their funds at a certain age group than running to the bank where interests are high and short-termed.

What should the government do?
Government through the Capital Market should while borrowing the money from NSSF, use treasury bills and bonds instruments to acquire money needed to provide goods and services to its people both in the short and long-term while borrowing from National Social Security Fund. The NSSF should ensure that all instruments are supported by a clear development plan aligned with the Uganda National Development Plan (NDP).

The government should ensure that proper fiscal policy is in place.

Aloysious Kittengo,
[email protected]