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Monday, July 4, 2011

Even informal sector needs social security

By Editor
28th May 2010

While almost half the over 40 million Tanzanians are employed in the formal sector, most of the rest eke out a living in the informal sector, including agriculture, construction, big and small business and other income generating activities.

Unfortunately, people engaged in the informal sector operate in an atmosphere that is far from conducive right from the point that it is a nightmare for most to secure loans given the stringent conditions set by banks and other financial institutions.

They are therefore forced to toil especially hard, supported by very meagre resources, with many stumbling and falling along the way. Those who make it often spend sleepless nights struggling but earning little.

As they grow older, they again find themselves victims of another serious anomaly: a social security system that caters only for workers in the formal sector, leaving those in the informal sector to fend for themselves.

Finance and Economic Affairs minister Mustafa Mkulo, CEO of the mighty National Social Security Fund (NSSF) before he retired ten years ago, says it is appalling that less than a million Tanzanians have access to a formal social security fund.

He made the remarks in talks with workers of the Government Employees Provident Fund (GEPF) early this week, saying this was wrong, unacceptable and must be addressed to ensure that the majority of the people access social security funding.

We believe that this is the time to act. Social security funds fall under the docket of the Treasury, now headed by a man with immense experience in social security matters.

What should be underlined here is that without social security, most Tanzanians now excluded will continue to be most vulnerable to poverty and economic insecurity.

There are six social security institutions on the Mainland and one in Zanzibar, and we believe all that is required is political will and firm resolve by the government to ensure that security funds change the rules of the game and move away from covering only a fortunate few and instead reach all Tanzanians.

It needs a change in mindset. This is because of the fondness by many funds of establishing insurance schemes suited only to people with regular remuneration where such people work for an employer with a system of financing which included employer contribution.

Change is crucial especially in Tanzania where statistics show that one person who earns regular income can have as many as five dependants, some of them elderly people without any social security cover.

We understand the GEPF has been working on a new pension scheme that seeks to accommodate workers in the informal sector. The move is reportedly designed to wean the fund off near-total dependency on people engaged by the government on contractual basis and would shift from GEPF to the Public Sector Pension Fund (PSPF) when they graduate into permanent government employees.

While we congratulate GEPF for the move, we wish to urge the Treasury and social security institutions to act fast and correct this anomaly. To the extent that these institutions are public, they are duty bound to stand as such.

SOURCE: THE GUARDIAN

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