KAMPALA, Uganda. The battle to block the liberalization of the National Social Security Fund (NSSF) has taken a new twist with the workers’ body National Organisation of Trade Unions (NOTU) securing a court injunction barring the debate of the Bill before Parliament.
The Investigator has established that NOTU, through its Secretary General, Peter Christopher Werikhe filed the case vide an application No. 662 of 2017 at the Civil Division on the 12th September, seeking to stop any further debate regarding liberalization of NSSF until the main case is disposed off.
NOTU had earlier, in suit no 282 of 2017 sued the Attorney General, National Social Security Fund (NSSF) and the Uganda Retirement and Benefits Regulatory Authority seeking to have NSSF reverted back to the mother ministry of Gender, Labor and Social Development. The High Court of Uganda has summoned the above three respondents to appear in court on September 28th 2017.
City Lawyer, Rwabwogo of M/S Rwabwogo and Company Advocates revealed to the Investigator on Friday they had secured a court injunction. “The court papers are here. Court has set September 28th for the respondents to appear in court,” he said.
In the affidavit signed by Christopher Werikhe, that we obtained, the NOTU Secretary General observes that they seek for a judicial review for injunction against the respondents, the Attorney General, NSSF and Uganda Retirement and Benefits Regulatory Authority. “That there is a likelihood of the application being rendered a nugatory if an order of temporary injunction is not issues against the Respondents,” Werikhe noted in his affidavit.
He noted that the injunction was necessary after they realized that the first respondent, (AG) was in advanced stages of liberalizing NSSF (2nd Respondent) without the approval of the applicant (NOTU) which is the most representative of the workers. The workers body is opposed to the liberalization of NSSF.
The rush to court by NOTU now seems apparent after efforts to hold dialogue between various stakeholders hit a dead end. On May 9 2017, NSSF, NOTU officials, Minister of Finance and the Governor, Tumusiime Mutebile held a meeting to try to harmonise views regarding the proposed liberalization of NSSF, but nothing much came out of that meeting.
What seems apparent is that Bank of Uganda and Capital Markets Authority is opposed the amendment of the NSSF insisting on liberalization instead.
The Retirement’s Benefit Sector Liberalization Bill that is currently before Parliament proposes a number of reforms which include; the power of an employee to choose a retirement benefits scheme of his or her choice, the right to transfer retirement savings from one scheme to another as well as midterm access to retirement benefits. The bill also allows workers to utilize their savings for medical, education, maternity and home ownership prior to retirement.
NOTU Chairman General, Usher Wilson Owere explained that much as the proposal appears ‘so good’, ‘not all that a glitter is gold.’
He says the essence of Social Security is to help pensioners safeguard against financial shocks when they retire due to old age and can no longer afford to work or earn a living.
The Permanent Secretary Ministry of Gender, Labour and Social Development, Pius Bigirimana is also opposed to the liberalization. In a letter dated July 14 2017 addressed to the Permanent Secretary Ministry of Finance, that we obtained, Bigirimana noted that in the round table meeting held on May 9 2017, they agreed on principals to amend the NSSF ACT, Cap 222.
“Reference is made to a meeting of stakeholders on the Retirement Sector Liberalization Bill 2011 that was held at the Ministry of Finance, Planning and Economic Development on 3rd July 2017 chaired by Hon. Matia Kasaija, the Minister for Finance, Planning and Economic Development. You will recall that the said meeting resolved among others that the Ministry of Gender should develop principles amending the NSSF Act with a view of enhancing the scope of coverage and benefits as well as improving its internal governance,” noted Bigirimana. In a cabinet memorandum by the Gender Minister Jannat Mukwaya, sections 39, 40 need to be amended to allow for the appointment of the Managing Director and Deputy by the minister on recommendation of the board for a period of five years but renewable basing on performance.
Cabinet was also notified of the need to amend section 41 of the Act to provide for the appointment of the secretary by the Board on a five year contract. The minister also notified cabinet that section 7 of the Act be amended to provide for a mandatory contribution of all workers regardless of the size of their enterprises.
However, in a response to Bigirimana’s letter, Prof. Emmanuel Tumusiime Mutebile, the governor Bank of Uganda in a letter dated July 25 2017 Ref. GOV,926 strongly opposes the issue of amendments. In his advice, Mutebile states; “The consequences of NSSF’s monopoly are deleterious for both its members and the far wider economy.”
He adds; “If workers had a genuine choice for pension provider for their statutory contributions, pension providers would be compelled by the pressure of the market forces to become more efficient and maximize the benefits to the contributor,” said Mutebile.
He observed that much as NSSF faces no competition, it should not worry about losing its members to competition which can offer members a better service. “In no other market in Uganda do we allow one firm to have statutory monopoly. There are no valid economic or social reasons for treating the pension market differently,” he said.
The NSSF that was established in 1985 has grown to be the biggest player in the retirement benefits sector with assets worth over UGX 7 Trillion representing approximately 6% of Uganda’s GDP. The Fund also holds approximately 80% of the traded shares on the Uganda Stock Exchange with investments to the tune of UGX4 Trillion and an additional UGX 220 billion in fixed bank deposits. In the year 2016/17 NSSF paid UGX 278 billion in benefits compared to UGX235 billion paid out in the financial year 2015/16.