By Oweyegha-Afunaduula
Uganda currently has a multi-tier pension system, constituted by some 110 pension institutions. The two most prominent parts are the public pension system, which covers the public sector employees, and National Social Security Fund (NSSF) that is meant to cover workers employed by firms with more than five employees. Other pension schemes cover armed forces, parliamentarians, and private employees as chosen by their employers.
The public pension scheme is unfunded and suffers from lack of timely access to the benefits by retired workers, and access by unqualified beneficiaries, commonly called ghost pensioners, due to lack of proper records. At the same time the scheme is expensive and not affordable.
By the time the Uganda Retirement Benefits Regulatory Authority (URBRA) was established about 11 years ago, the pension sector was unregulated. The question is: “To what extent has URBRA removed nonsense and introduced sense in the Uganda pension system, particularly with regard to ensuring that retirees consistently and persistently get their pensions from their pension institutions?
Most pensions schemes in Uganda are private but the entire pension sector is supervised by the Uganda Retirement Benefits Regulatory Authority (URBRA established by government about two decades ago. However, increasingly, such schemes are run as if they are owned by their management, and are increasingly remote from the aspirations of retired workers who saved with them for their future social and economic prosperity and that of their families. They have been over-bureaucratized and for workers to get their money after retirement is as difficult as going to heaven.
Let me focus on NSSFNational Social Security Fund (NSSF) was founded in 1985 by the Obote II government, just before it was removed from power by the Okellos; as Quasi-government institution managing funds saved by the workers of Uganda for their future social and economic security after they retired.
It is one of the very few institutions left behind by the Obote regime that were spared by the NRM regime, and perhaps the only one that has performed extremely well as far as accumulating financial capital, which now stands at more than UGX Shillings 17 trillion. It is, therefore, a critical element in the economy of Uganda.
I have written about Uganda’s NSSF in another article titled “Uncovering the hidden genocide in Uganda’s Pension Scheme”, which was published by Ultimate News of April 11 2022. I
n the article I cited Munyambonyera (2019) who submits that the purpose of public pensions is not to provide government with tax revenues or opportunities for investment, but for ensuring social security for retirees.
By extension, one may say that public pensions are not for governments, or individuals in government, to get money bonanzas from them for individual projects or individual gratifications of government functionaries and politicians. However, Meddie Mulumba (pers. Comm), a former member of Parliament from Luuka District who struggled to ensure that it became a district in 2011 by being excised from Iganga District, holds a different view. Addressing the question “Who owns NSSF in Uganda?” in a WhatsApp message to me, this is what he said:
“One saves money with NSSF and NSSF uses that money to acquire assets and, yes, they pay you interest on your money, but when you reach retirement, and they pay you your savings, with interest, you cease having anything to do with NSSF and the assets you helped to acquire. In essence, government owns it”.
If we go by Meddie Mulumba’s school of thought, then government must and should be interested in the functionality and financial resources of NSSF, tax its funds and invest them in projects to fuel development of the country. In fact, by this reasoning it would not be outrageous for government to use its funds to support foreign investment if doing so would bring profit and interest to NSSF to sustain payment of retirement benefits to retirees.
Therefore, when government uses “safeguarding the social security of workers”, it is a convincing justification but not the only reason for founding the NSSF. Government of the 1980s regarded workers well, gave them minimum wage, ensured that there were no huge gaps between different levels of employment, and wanted them to enjoy social and economic security in retirement.
So, when government founded NSSF it visioned that by deducting 5% of the monthly income of each worker and adding another 15% of the income as government’s contribution to his or her future social security, not only would his or her social security be assured after retirement but money would accumulate in the Fund incrementally. Government would continually for development purposes.
In other words, the workers and government were to save together and participate together in the social security of the workers and by extension, social security and development of the country.
A country is secure when people are secure in their minds because they and their families are secure socially, economically, ecologically, environmentally and in terms of future; not because it is armed to teeth.
If that military security was all the security a country needs, then there would be no sociopolitical chaos and decay, followed by regime collapse and succession of regimes. NSSF can indeed play a critical role in preventing social decay and collapse if its vast resources are used to ensure workers are socially and economically secure after retirement, and its funds are invested wisely to make more money to support the country’s development.
Therefore, the concern about NSSF should be multifold: Are the funds of NSSF being managed well and used well to benefit those who retire? Are employers regularly depositing workers contribution of 5% of their monthly income with NSSF? Is NSSF being managed efficiently? Are all avenues of misappropriation clogged to enhance security of workers’ money? Is the current coverage of the pension scheme greater than 5%, which was the case by 2014? Are the pension savings sufficient to meet retirees’ basic needs when out of employment? Is the pension system delivering the promised benefits to the pensioners over a long period of time? Is government gaining more that the workers from the pension system?
Strictly, Pension schemes are supposed to be run by authentic Boards constituted by people of character, honesty and integrity who may be paid sitting allowances every time they sit to deliberate on institutional issues, problems and challenges; not salaries.
The boards should ensure that there are functional, not dysfunctional, institutional systems in place. All workers and members of the Board of a pension institution must be well-deserving, with professional qualifications and experience that add value to the institution.
They must continually take the institution to a higher level in terms of rendering service to the potential and actual pensioners and also contributing to the development of the country.
This will not be the case if recruitment of workers and appointment of the Board are based on political, kinship, clannism and ethnic considerations. That would reduce the value of the institution to workers, retirees and country.
Board members are not supposed to have offices at the Headquarters of the institution. It would be best if Board members are elected by a general assembly of workers who save with the schemes to enhance participation, involvement and confidence of members that their money would be safe. However, in the case of NSSF, which is one of the institutions of government, this cannot be the case. Neither can it be for private pension schemes.
In fact, to prove that NSSF is a state institution, on September 1 2021, the Minister of Finance, Planning and Economic Development, Mr. Matia Kasaija, appointed a new Board of the institution for a three year-term, ending 2024, and headed by Dr Peter Kimbowa, a governance and management expert.
The Minister also appointed to the Board 4 representatives of the trade unions, 2 representatives of employers through the Federation of Uganda Employers (FUE). He re-appointed Mr Aggrey David Kibenge representing the Ministry of Gender, Labour & Social Development; Mr Patrick Ocailap, representing the Ministry of Finance, Planning & Economic Development; Dr Eng Silver Mugisha and Mr Fred K Bamwesigye, representing Employers through the Federation of Uganda Employers (FUE).
Other appointees are: Mr Sam Lyomoki and Ms Penninah Tukamwesiga representing workers under the Confederation of Free Trade Unions (COFTU); Mr Bahemuka Julius and Hassan Lwabayi Mudiba, also representing workers under the National Organisation of Trade Unions (NOTU) and The NSSF Managing Director, Mr. Richard Byarugaba, as the only executive member of the 12th Board.
Since the new Board assumed office NSSF has continuously been in the media, not for the good but for the bad. In one short sentence NSSF funds have been mismanaged, often with the involvement of politicians in government. However, mismanagement of NSSF started long ago.
One former Managing Director, David Chandi Jamwa, was sentenced to a long prison-term at Luzira Prison for misappropriating funds and abuse of office. The Anti-corruption Court found him responsible for the loss UX 13 billion – workers money with NSSF – and sentenced him to a 14-year prison term, although in January 2021he was out on bail.
One politician, Ms Zoe Bakoko Bakoru, under whose Ministry (Gender, Labour and Social Development) NSSF fell, and who tried to stop the culture of politicians writing chits to her and management to be given workers money for personal use, run away to a long exile life in the USA.
Mismanagement intensified, as Parliament is discovering, and accelerated with the appointment of Richard Byarugaba by government as Managing Director of NSSF. Of course, it does not make sense for government to appoint the topmost manager of NSSF since he manages workers, not government money.
It would make a lot of sense if such officer is hired by the Board, itself elected by the General Assembly of Members of NSSF. May be institutions that send workers contributions to NSSF would constitute the General Assembly.
They would send one of their workers to the General Assembly, which would meet annually but elect a staggered Board every three years. Government as an interested party that also contributes 15% each worker’s pension funds, would be entitled to one Board Member.
There would be changes in the membership of the Board, with each employer having a good chance of its representative to the General Assembly being elected to the Board. It should be emphasized that the representatives to the General Assembly would have to be workers, not administrators, of the employing institution. This would greatly enhance transparency and accountability as well as workers confidence that their money is in safe hands.
What has transpired in and with NSSF to-date demands critical analysis, not just parliamentary investigation. Such analysis would be guided by the assumption is that NSSF is currently a perfect case in the mismanagement of the pensions sector despite the existence and functionality of the Uganda Retirement Benefits Regulatory Authority (URBRA) as a state agency responsible for supervising the sector.
If the status continues, the thinking that URBRA was created to conceal the filth in NSSF and the entire pensions sector rather than ensure that it is efficient workers savings would be safe in the hands of the State. It is unlikely that URBRA can regulate government’s long hand which it has recently lengthened to access pension funds.
The major failing of NSSF of Uganda is a meeting ground for politics, government and greedy businessmen/women who see its funds as free money to be freely accessed to service their interests and choices.
The fact that politics hovers over and penetrates institutions in Uganda means that they are not free from de-institutionalization. The most de-institutionalization agent is the institution of President of Uganda. The de-institutionalization has rendered practically all institutions of government dysfunctional.
Virtually every institution of government has either been politicized or militarized. Many are openly under military direction, or have been emasculated to create small entities with military officers as their administrators.
A good example is Operation Wealth Creation (OWC), which is under the President’s brother, Salim Saleh Caleb Akandwanaho It was carved out of the Ministry of Agriculture, Animal Husbandry and Fisheries.
Today it hires researchers and engages in extensive distribution of seeds and agricultural resources -activities which belonged to the Ministry of Agriculture. Many workers of OWC are military.
Vast amounts of public money are siphoned through the new make-shift institutions such as OWC, which may not adequately account for the money. There is no doubt that NSSF has been penetrated by political influence, but there is no evidence yet – that it has also been penetrated militarily.
For NSSF, currently, the boundary between politics and management is not just imagined. For example, when it was proposed that continuing workers in both public and private sectors should get 10% of their accumulated savings with NSSF when they reach 45 years of age, it required consent of the President to accept the idea.
It was clear why the President was not quick to consent. Under Presidential choice, NSSF management was reportedly releasing money to investors, mainly foreign ones, ostensibly to develop the country.
In the early millennium there was talk of government accessing NSSF money to fund sugar enterprises owned by Asians such as Alam. We now know some sugar factories are either owned by Asians themselves or as fronts for some big shots. However, most of the borrowed money was never recouped from the so-called investors.
I am not sure whether the money advanced to a Somali Woman to grow sugarcane in Amuru and to run a sugar factory at Atiak came from NSSF. This could be one of the issues for investigation by Parliament. But it is true that NSSF gave money to Uganda Clays, which has failed to pay it back with interest
What all this means is that NSSF is intertwined in a high-level cobweb of corruption of the social security scheme. The losers are of course the workers and retirees who were given an illusionary hope of future social and economic security for themselves and their families. To disengage NSSF from the syndicate of robbery will be extremely difficult.
It is systemic, with the governance of the country at its centre. The workers of Uganda have been taken for a ride. Their money now sustains government and the economy with little hope that it will sustain them in future.
Politics is now squarely in charge of their money, which seems to have been sunk into a bottomless hole where only government can sink its long arm as far as it wants. It is government to decide when, how much and in what percentages a retiree can access his or her money. It is the invisible member of the Board of NSSF.
The Uganda worker of the 21st Century, has been cheated by other means as well. There is to-date no minimum wage for workers. So, employers, including government, can pay a worker any amount deemed enough.
The large disparities in salaries, sometimes determined by unknown entities, mean that some workers are grossly cheated while others are grossly overpaid. Sometimes, people may have similar qualifications and experience but some preferred workers may get several times more salaries and wages than those with qualifications and experience with them. Or else individuals with inferior qualifications or experience may hold jobs for which they do not qualify and earn excessively.
There is no more body that determines salaries and wages. There are suspicions that these days the salaries of some high-level workers are determined by the President himself. There is no evidence that the salary of UGX 88 m paid to the Executive Director of Uganda Airlines was determined by the Uganda Public Service Commission.
This means that for some people retirement can be lucrative source of retirement benefits. They will have no stress in retirement in terms of social and economic security. The ones destined to be stressed in retirement for the rest of their lives, are the poorer workers who have persistently and consistently earned peanuts and whose money they saved with NSSF has also been persistently and consistently stolen by those meant to safeguard it for them until they retire.
They may even struggle to get it while the better paid may even get their retirement benefits long before they retire. One may even suggest that the pension system in one of the many means of creating poverty and a slave society in Uganda today.
In an article “Of Extensive and Elusive Corruption in Uganda: Neo-patronage, power and Narrow Interests”, published in African Studies Review Vol 56 No.2 (September 2013) p. 129-144, Geoffrey, B. Asiimwe shows that political and bureaucratic corruption in the country is intricately intertwined. Political corruption, according to Asiimwe, persists and permeates society and its institutions largely because it is situated within the framework of neo-patron-clientelism.
Not only bureaucrats such as those that govern pension schemes are integral to the framework, but the epicenter is the President of Uganda who has sometimes reappointed fallen bureaucrats and rejected politicians or fiercely defended them against accusations of corruption, even if the evidence against them is glaring.
It will be interesting to what extent the President’s political and economic interests have ruined NSSF and thrown the interdicted Managing Director of the FUND, Richard Byarugaba, in serious trouble.
The cardinal question that the Parliamentary Committee investigating NSSF scandals should ask and answer is “How much money has flowed out of NSSF on the instigation of the President of Uganda since he started to pursue his exacerbated interests in NSSF, ostensibly to develop Uganda? If it is established that the President is partly responsible for the financial losses in NSSF and the troubles of Richard Byarugaba, the Parliament and the Executive should find a way of reducing political and bureaucratic corruption in NSSF.
The critical issue are two: 1. Reducing the vulnerability of NSSF to politicians and bureaucrats, individually and collectively; and 2. Maximizing the benefits of retired workers from their savings with the Fund. So far so bad.
Cases, such as the Minister of Gender, Labour and Social Development, Betty Among, coercing NSSF management to give her UGX 6 billion of workers’ money is not only irregular and unacceptable, but undermines the Zero Tolerance for Corruption policies of Uganda.
Otherwise, as John Njoroge wrote in THE INDEPENDENT of May 4 2010, NSSF is an institution in which the state has a strategic interest, it is in charge of the savings of the workers of this nation and after all that has gone on there, it would be wrong for those in charge to sit by and look, only to take the blame when things go wrong”.
Government politicians and bureaucrats should not be at the forefront of undermining the workers of Uganda and the development of the country by stealing workers’ savings, whatever justifications they give, Nor should they be the ones to sabotage the country’s Zero Tolerance for Corruption policies of the country. There is every indication that in pursuit of their narrow interests of financial gain they are doing precisely this. It is both criminal and treasonable.
I was personally happy when New Vision, a government mouthpiece, President Tibuhaburwa Museveni ordered investigations of interdicted former Managing Director of NSSF, Mr Richard Byarugaba, ostensibly after a meeting with the Minister of Gender, Labour and Social Development, Betty Among, for alleged abuse of office, corruption and mismanagement.
I was interested to see how Uganda would be freed of the unity of neo-patron-Clientelism and political and bureaucratic corruption, which are entrenched in NSSF and of which Byarugaba had become a key agent.
Those investigations might in the end exonerate the institution of President of Uganda from claims that it is integral to the persistent troubles of NSSF, which have led to sackings of Managing Directors.
For God and My Country
The Writer Is a Ugandan Scientist And Environmentalist
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