Can The Pension Sector Bail out Uganda’s Economy?
The Uganda Parliamentary Press Association organized its second press Plenary on November 3rd 2016 at Imperial Royale whose theme was “ The Role of Parliament in Rejuvenating the Ailing Ugandan Economy”.
The Status of Uganda’s economy is currently characterized by unsustainable GDP growth rates and low levels of private sector confidence in the economy itself. To attain the Vision 2040 targets- Uganda’s GDP needs to grow at annual averages above 8.3% but so far, over the last 5 years since 2011 Uganda’s GDP has grown by an average of 4.8%. On the private sector confidence levels in the economy : Overall business confidence index as measured by Bank of Uganda has fallen from 62.57 in July 2013 to 56.65 in June 2016- having hit an all-time low of 52.2 in August 2015.
Stakeholders including Richard Byarugaba, the Executive Director of National Social Security Fund (NSSF), Deputy Speaker of Parliament Jacob Oulanyah, Christine N Ndawula World Bank Country Manager-Uganda, to mention but few, all gathered at Imperial Loyal hotel, to try ad debate the would be solutions to Uganda’s crumbling economy.
“About 13 million Ugandans do not have pension savings. This sector has been able to generate 7 trillion shillings. If we have been able to generate this, how much will we generate from 13 million? That’s where parliament needs to come in and reform the pension sector,” Byarugaba stated.
He suggested that government should instead focus on the pensions sector through increasing saving rates of Ugandans for pension.
According to him, there are 15 million Ugandans who work. 4 million in the formal sector and 11 million in the informal sector. Of these, 1.5 million save with NSSF and half a million saves with the government scheme. Two million are those who work for companies with less than five employees. The rest are not saving and this is hurting the saving pool.
A few Ugandan savers are estimated to put away less than 2% of their annual income for a rainy day in future as Byarugaba mentioned, this is not because Ugandans do not have enough money to save for their retirement, but due to lack of trusted saving vehicles that would ensure safety of their savings.
And who would blame them with the endless NSSF scandals, IGG clears top bosses at NSSF of fraud | Anti Corruption Coalition … Byarugaba Speaks Out in NSSF-Umeme Shares Scam –
Dreams of liberalizing the pension sector are on hold as the Retirement Benefits Sector Liberalization Bill 2011 collects dust on the shelves in Parliament.
As to whether the sector should be opened up to other players, I say, better the devil you know than the angel you just met, this is due to the history of implementation and follow up from government when the law is passed.
The onus is on NSSF to rebuild trust between Ugandans, assure them that their money is safe and indeed Ugandans can pick it when they retire.
Press Plenary is a monthly discourse that brings together the key players within the parliamentary ecosystem that is MPs, the Executive, media, civil society and private sector.