The Fund we love to hate: NSSF is a victim of its recent success – Part I

Thursday May 28 2020



My first recorded contribution to NSSF was Shs46,325 in July 2001. I say ‘recorded’ because, although I had been under wage employment for many months at that point and had been working almost fulltime for years, a lot of that income was either ad-hoc or employers had not bothered to pay in their and my contribution to the Fund.

Even in those days, Shs46,325 was peanuts. It could probably buy a small goat but I believe, you’d have to fork out extra for the rope. But it didn’t really matter. We were paid very poorly, saved very little, and whatever we put into NSSF went into a financial black hole.
In good years. NSSF paid statutory interest of three per cent, below inflation. Mostly, the folks at the Fund played with the money in one dubious deal after another, almost always culminating in their dismissal, arrest, or as happened often, both.

Lucky Fund members died young. Those unlucky enough to live into retirement did not drive off into the sunset in a convertible S63 Daimler AMG with a duffle bag full of cash in the front passenger seat. They were wheeled down the boulevard of broken dreams into their unfinished peri-urban houses or village huts to await death to take them out of their misery.
Claiming one’s benefits, if the term benefits can be used loosely, was an unpleasant and arduous process involving arcane bureaucracy and bone-crunching trips to the City.

Tales abound of savers who spent more in fares than they eventually collected from the Fund.
We return to the NSSF story because it has refused to go away, and perhaps for good measure. The Covid-19 pandemic has swept away jobs, hacked through salaries, eviscerated savings and pointed many of us down the barrel of destitution and financial collapse. It is the most serious threat to livelihoods in over three decades, and savers are within their rights to look around for help.

The current fight over whether to allow savers access at least 20 per cent of their money from the Fund is very revealing. To begin with, and while it might not look that way for the folks running the Fund, this is a good problem to have. In less than a generation, we have gone from the NSSF being a parasitic body that takes away what it never returns, to one that represents, for most members at least, the most significant pile of cash.
NSSF is thus a victim of its success. Starting with the short and turbulent rein of David Chandi Jamwa who lit the backburners on the rocket of financial growth before setting himself alight on the resultant bonfire of the vanities, to the current stretch overseen by Richard Byarugaba, the Fund now routinely beats the government paper markets.

Add to this, the turbo-boost power of compounding and you have some serious financial horsepower under the hood, especially for those late-20s, early-30s savers who joined in the last decade or so.
Reforms aimed at transparency, including the ability to see one’s savings in real-time, are good deeds that were always going to be punished. It is hard to convince a man with 100,000 in his pocket but 100 million in an app to wait 15 years. You cannot download common sense.
This column has previously argued that we are barking up the wrong tree. In the two decades since my first contribution to NSSF, I have religiously paid at least a third of my income to the government in form of income tax. If you add consumptive taxes like VAT, import and excise duties, I give the government at least 500 out of every 1,000 shillings I make.


Despite this I am saddled with private school tuition because public schools are limping, and medical insurance because the public hospitals are sick or abandoned. On top of this, I have to hire private security, build a mini-power plant in my house for when the power goes out, a mini-water storage and treatment plant as well as an elaborate waste management plant because the main sewer line has not been extended with any seriousness, across the expanding city.

Even the few services that only the government can provide, like a passport, driving permit, national ID, et cetera, I have to pay for, as well as the roads I drive on. This is not to say that NSSF is not without blemish and next week we will look at specific paths out of this impasse and reforms we need in the Fund.
For now, though, miss me on plans to break up my piggybank to pay school fees.
You will find me in the queue of those demanding accountability for the 50 per cent taken in taxes, not in the one clamouring for access to the five per cent!

Mr Kalinaki is a journalist and a poor man’s freedom fight.