Reform social security sector

As Uganda looks forward to debating and passing of the NSSF (Amendment Bill ) 2021, I would like to add my voice to broaden the debate about the social security sector beyond the mid-term access to 20 per cent by savers 
Social protection is critical in poverty reduction, inclusive growth & social cohesion. It is integral to achieving the 2030 Agenda and the principle of “Leave no one behind” of the Sustainable Development Goals. 

On a sad note only 3 percent of Ugandans access formal social protection. Social security is not a new construct because in the ancient Greek culture, Olive Oil was a social security saving for emergencies, while in Africa , we have mutual support networks of communities and extended families but the challenge has been our inability to formalise it so that it becomes a social contract rather than a norm.

The social Security sector ideal situation should be a situation where we have  government as employers, employees ,insurance companies  and non-governmental organisations as providers encapsulated by community engagement, enforceability, and democratisation .

The initial concept of social security meant providing help to the poor but things have changed to include   financial inclusion orientation - rather than just passive protection against contingencies. 

Globally, about half of the world’s population has cover but developed countries are far ahead of the less developed countries (LDCs) with average coverage of 75 percent compared to 20 percent in LDCs. 

For Uganda, although the National Social Protection policy  has been in place since 2015 and focuses on social protection in addressing risks and vulnerabilities, the sector is still lagging behind. Social protection mechanisms include: cash transfers to vulnerable groups, pensions for the workers, social assistance grants for senior citizens and grants to people with disabilities. Social security is a right for every member of our society under Article 22 of the Universal Declaration of Human Rights  which Uganda ratified in 1987.

A genuine social security sector should observe some principles that include being Comprehensive enough to cover as many contingencies as possible, Universal (all who need it, should gain access), adequate (level of benefits should be reasonable), promote equality (provision be made for all marginalised groups) and procedural (process for accessing should be reasonable). 

While we try to recognise these principles in Uganda,  truth is that this right is more in theory, than practice. This is because Uganda has 19 million workers, but only 3  percent have access to formal social security. This has contributed to a Widening inequality gap and yet we are pushing for inclusion. To have an understanding of how the sector is doing we have existence of 67Schemes ,1.2 million Members of the National Social Security Fund Uganda, 408,119 Members of the Public Service Pension Scheme, 304,155 beneficiaries of the Senior Citizens Grants.

The challenge the country faces is how to take care of the large informal sector because currently 85 percent of Uganda’s labour force is employed in informal sector. This implies that majority lack social security and consequences include heightened vulnerability to poverty, old age poverty and substantial economic losses in the long run. 

There is urgent need to reform the Public Service Pension Scheme whose current features are: Non-contributory, with defined benefit and fully funded by the government through budget allocations.

Uganda has experienced increased life expectancy now at 59 years which increases the pension obligations hence the affordability & sustainability challenge. 

Regarding  health, there is urgent need for a policy on affordable National Health Insurance scheme because of high expenditure out of pocket especially during Covid-19 era. 

Government spending on health as a ratio of GDP is only at 1.04 percent and over 40 percent of expenditure on health is out-of-pocket while those who cannot afford have no safety net.

There is need to strengthen Financial Inclusion structures, enhance use of technology to make access easier and more affordable, increase reach to hard-to-reach rural areas and deliberately address challenges of vulnerable groups via legislation focusing on women, youth refugees, people with disabilities.

This is a special call to policy makers to reform the social security sector in order to create an environment that will increase coverage, adequacy (increase contributions to cover more benefits, increase partnerships with insurance & fintech to deepen and widen inclusion, to strengthen compliance (ensure that all employers pay their dues and protect their workers, and Innovate (Lower cost of access and have customized products).

Gerald Werikhe Wanzala
Africa Leadership Institute
[email protected]