NSSF mid-term: rethink country’s savings strategy

On Monday, hundreds of people flooded the National Social Security Fund (NSSF) headquarters in Kampala to apply for their 20% mid-term access.

Some of the applicants said they had travelled from as far as Arua, Gulu and other districts where NSSF has no branches. The long queues and the congestion were also reported at all NSSF branches countrywide.

The mid-term access is timely relief for many of the savers who lost a live hood as a result of the COVID-19 pandemic effects.

When the call for NSSF to consider giving members a portion of their savings first came up at the peak of the COVID-19 pandemic, the argument was that savers needed the funds to mitigate the effects of COVID-19.

This argument was logical and ideal. Many sectors of the economy had been shut, businesses closed shop and many lost jobs as well.

Although the access did not come during the peak, it has still come when the country is still dealing with the effects of the pandemic.

The good news is that the savers are accessing the money after the economy has fully reopened and should have a lot they can do with the money in terms of investment opportunities.

However, the reality from most of the people who turned up to apply for the savings on Monday is far cry from the arguments given for the need to access NSSF.

Many of the applicants interviewed by the media said they wanted their money to clear school fees and pay for other bills. A handful listed investing in a business as a major reason for accessing part of their retirement savings.

This is where the problem lies. While many people will get the 20%, it will only be temporary relief and they will slide back. They will pay fees and bills or debts. But this will be short term. In a few months, they will still have bills to pay and fees. Where will they go? But this is just a symptom of the bigger issue at the national level.

As a country, we must rethink our national strategies on savings culture. What are we doing to ensure that there is a robust savings culture?

Ugandans save less than 10% of their income, making it difficult to start investment projects which will generate more revenue in future.

If as a country we are to generate more income, we should inculcate a culture of saving at the individual and national level. That is how developed countries succeed. But with less than 10% of our income saved, we cannot invest for the future as a country.

The implication of this is that the mid-term access has only reminded us of the bigger problem we have as a country – limited social security nets at the community level.

Going forward, more efforts should be focused on empowering people to save and to engage in income-generating activities.

That is why the Parish Development Model which was launched on February 26 should have mechanisms that will discourage people from getting money to solve immediate needs which are mostly consumption in nature.

The parish model presents a practical approach to improve household incomes and move millions out of poverty. If well implemented, Uganda’s target of achieving middle-income status will be achieved in the short term.

Poverty levels are highest in rural areas where most households survive on subsistence farming which only provides food to mouth with no excess to sell and earn income.

As a farmer, I believe that the empowerment of rural communities through mechanised agriculture is a viable approach to dealing with poverty.

Local leaders and those involved in implementing the model should ensure that it is not affected by issues that have previously affected some government programmes like corruption.

Source: New Vision


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