John is one of the employees who was recently informed by his human resource manager that his services are no longer required. The company has lost all its business due to the COVID-19 lockdown. In the letter terminating his employment, he was told that he will be paid for the days he has worked this month. He was told he will also be given a certificate of good conduct and a recommendation letter to help him in his search for a job.
John is the first born in his family. With his job, John has been able to look after his ailing mother who needs medication, pay school fees for his siblings and look after his family. He almost saves nothing as transport costs, housing, medical and education leave him with almost nothing. He was a dedicated worker but like many of his colleagues at work, the company has lost so much business that the owner has decided to send everyone home. It is sad!
With the economy in freefall, John can’t even start looking for a job. He spends the night awake wondering how to make rent and pay for all his expenses. In his circles, everyone is either at home or not sure for how long they will have a job. John was an active member of his local church but with no fellowships, his networking is now simply limited to his phone. Soon, buying data will be a problem. His dreams of a life where he can look after his family are now disappearing faster than the morning mist.
For the years John has been in employment, he has been saving with NSSF and he has Shs20m. It is a huge amount of money for him, access to it could help during this difficult time. NSSF won’t entertain him because there is no legal framework to pay him or so they say. The NSSF Act was made in 1985 when more than 75% of Uganda’s population was not yet born! He can wait until he is 50 without a job or 55. That is 10-15 years away. So what is the purpose of saving? What is the purpose of social security? In fact, what is social security?
There are many Johns out there. Those with enough resources are quick to scourge him for not saving. “NSSF only takes 5% of your money. What were you doing with the 95%?” they quickly demonize him. “Next time, learn to save your money,” says a man who works in a government ministry and earns Shs800,000 a month but lives in a house the size of Acacia Mall. “People should learn to work smart,” he volunteers more advice.
John was actually saving his money. He is very frugal. For the time he was employed, he only boarded the taxi to work. He always walked his way home so that every shilling is saved. He doesn’t drink alcohol and doesn’t have any side dish. But without social services such as education and health to write home about, he isn’t left with anything at the end of the day.
He looks with disdain at those who tell him to wait until he is 50 years old and unemployed or at 55 to get his money saved with NSSF. “What is the use of that money if I can’t look after my family? Will I ever live up to 50?” he asks but there are no answers.
There is an ongoing debate to allow people access to a portion of their money saved with NSSF with a figure of 20% thrown around. I think it is the wrong debate. People who save money anywhere should have options to access it. If somebody fixes money with a bank, for example, they can access it at any time although they will pay a penalty but they have a say on when to get it. People also have a say in which bank to save their money. If Bank A is crazy, they go to Bank B or Bank C. They have options and the terms always different.
Like we have seen everywhere in the world, monopolies behave as worse as brutal dictators. NSSF needs to have competition. What the government needs to push is that people are saving and open NSSF up to the competition. They will become more concerned about their savers than considering themselves as savers of Uganda’s economy.
John who saves with NSSF has no job but the people who manage his money are assured of their jobs — to manage his savings! Apparently, he will need it in old age. NSSF tells us that the majority of those who retire and get their money waste it within the first three years of getting it. That in itself calls for reforms.