Should NSSF cough part of members' savings?
By George Bakiwanya
As Uganda feels the impact of the Coronavirus pandemic, several citizens have come out to suggest that the National Social Security Fund (NSSF) should release funds to cater for the needs of its members who are no longer working.
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Uganda, like many countries, has ordered for a total lockdown to help reduce or prevent the spread of the Coronavirus (Covid-19). The lockdown prohibits citizens from leaving their homes unnecessarily. Only those deemed essential workers in the medical field, security, hygiene services and media are allowed movement.
As a result of this lockdown, many citizens find themselves out of work. Some have wondered why they should starve at home yet NSSF has "their money." Let me explain why I believe NSSF releasing funds would be a mistake.
It widens the income gap. NSSF has about 1.5m active subscribers. These are people in formal employment who earn a minimum wage and in any event they are able to make ends meet provided they are retained by their employers therefore it would be unmerited if NSSF simultaneously showers them with more cash.
20% proposed flat rate is not scientific. Assuming one’s total safety net is shillings 200M, this calls for partial payment of 40m which in light to the current state looks more of a cash bonanza than just basic relief, chances are high this money will be spent on goals which are not developmental. The essence of these savings is to help the member live off them for the rest of their life not temporarily.
It causes inflation. If NSSF shells out this money, which is also highly unlikely given the lack of a legal basis to do the same, the majority’s ultimate target will most definitely be shopping, as a result, we shall have many buyers chasing few goods on the market giving exponential rise to prices for products hence triggering inflation.
It is based on these considerations that I support NSSF Managing Director Richard Byaruhanga's reluctance to support dishing out this money at this time.
George Bakiwanya is an accounting student
