Voluntary NSSF membership is good news

Crises such as the Covid-19 pandemic are immensely destructive, but may also have upsides.  The impact of this pandemic is still evident across nearly all sectors and spheres of society, although it is mixed and multi-layered. 

Some businesses and organisations revolutionised by embracing change through technology, digitisation and even making necessary [and somewhat undesirable] amendments to offer their goods and services, whereas others struggled, and at worse collapsed.  We can dare to say that it is still unpredictable to gauge the extent of impact on certain sectors, such as business, travel, education and even interpersonal interactions. 

The pandemic also presented unprecedented business risks which inevitably and evidently disrupted boardroom ambiance.  Contentious debates concerning the issue of mid-term access to savings at National Social Security Fund (The Fund) is one such issue that caught the attention of many, beneficiaries and non-beneficiaries alike.

This was brought to rest last month when the NSSF (Amendment) Act 2021, which essentially seeks to “expand social security coverage, enhance the spectrum of benefits available to savers and improve governance of the Fund”, was finally signed by our good President. Here, I will interest myself with expansion of social security coverage through voluntary contributions, and argue that it is a commendable step towards financial inclusion. 

Social security is basically a form of protection guaranteed to individuals and their households to ensure healthcare access and income security in their “rainy days”, that is, during old age, retirement, unemployment, sickness, work injury and loss of the breadwinner.  International Labour Organisation (ILO) estimates that 20 per cent of the world’s population has adequate social security coverage while more than half remains deprived of any kind of social security protection, even when social security is universally considered as a basic human right. 

This is attributed to various multi-faceted factors, including high levels of unemployment and then informal economy. 

Uganda’s labour-force is estimated at 17 million people among whom an estimated 15 million are employed (including both formal and informal sectors) hence pensionable.

 Uganda has three formal social protection mechanisms, namely; Public Service Pensions Scheme, National Social Security Fund and Parliamentary Pensions Scheme. However, one study revealed a pension coverage of 1.97 million (all schemes combined) by 2019. Cognizant of the possible figure adjustments occasioned by the past two pandemic years, these statistics still raise concerns about guarantee of social security for majority of Ugandans. 

The NSSF voluntary membership plan occasions an opportunity to save with The Fund at their own will and choice. There are two main target groups: employers with a workforce of less than five and then existent members who have since transited into self-employment or members who have already received their benefits, but wish to continue saving. 

It is estimated that the informal sector constitutes about 70 per cent of Uganda’s employed population. It is, therefore, a revolutionary regulatory amendment to expand the coverage of prospective clients of The Fund, which predicts that the membership can more than double in the next five years. 

However, over and above expert projections and submissions, it is equally important to appreciate benefits of the voluntary membership plan from a perspective of financial inclusion. 

The underpinning concept of financial inclusion is extending financial services and products, such as credit, bank accounts, mobile money, insurance, digital platforms and technologies, and even financial literacy to the most vulnerable and less privileged groups of people. 

The objective is to ensure inclusive growth and development in the different sectors of society, which ultimately empowers individuals to make better financial decisions for their families and livelihoods. Beneath the voluntary membership plan, in my opinion, is the principle of inclusivity of people, who would otherwise be ineligible for saving with The Fund.

 This will give members the opportunity to cushion themselves, at least considerably, from the impact of “rainy days” and also enable them to plan for their future, hence lead more dignified lives. 

Mr Augustine Bahemuka, Commentator on issues of peace and society. [email protected]