Why extension of social security coverage to be excluded

Written by CHRISTIAN GAYA:    Published in Business Times Newspaper

Friday, 23 November 2012 14:26

Of serious concern is the fact that public pension in Tanzania through its limited coverage contributes to social differentiation. Public pension system is therefore often seen as serving the interests of the working elite, and not reaching out to those most in need of coverage. Public pension systems in the country by and large restrict their coverage to those who work in the formal sector. Yet it is clear that the general picture in Tanzania reveals an increase in the informal sector and in unemployment, while the formal sector is generally shrinking. Concentrating attention on reforming that part of the public pension system which covers only a small part of the labour force at the expense of the informal sector and those who are unemployed is inherently unequal, as it directs the attention of government and other stakeholders away from a huge segment of the population with no or little social security coverage. There is, therefore, a need to investigate ways, means and modalities of extending coverage to these excluded categories. For those who are unemployed, social assistance support needs to be provided through the budget. Yet, the amounts spent on universal or targeted budgetary programmes in most African countries are meagre, with the exception of countries such as Kenya Gabon, Mauritius, Namibia, Botswana and South Africa. Furthermore, social assistance usually lacks a constitutional and statutory basis, with the result that social assistance is often seen as a matter of discretion, and not of right. In particular as far as those in the informal sector are concerned, several options are available and need to be considered. Experience from other countries suggests that it is possible to extend coverage to informal sector workers. Two approaches have been used in India, namely bottom-up and top-down approaches. The Self-Employed Women's Association (SEWA) India, is a good example of a bottom-up approach. In Africa, the micro-insurance model has been used to extend health care to informal sector workers. In Dakar, Senegal, the Wer Welé micro-insurance scheme provides health insurance services to people in the informal sector. Micro-insurance is also in use in Tanzania and the most well known scheme is the Mutual Society for Health Care in the Informal Sector (UMASIDA) in Dar-es Salaam. The same applies to Ethiopia. The top-down approach extends social protection to informal sector workers. A good example is the introduction of welfare funds by the Government of India at both the national and provincial (state) level. These funds, which cover around 10 million out of an estimated 370 million workers in the unorganized sector, are funded from levies on employers and manufacturers. There is no one solution to the fundamental problem of extending social security coverage to informal sector workers. The first option would be to extend the social assistance system to as many as possible of those who are poor and vulnerable. To the extent possible, steps should be taken to strengthen the social assistance framework of support for those who were not able to make other provisions. It is true that, as a matter of general experience, the economic and fiscal situation is such that in most of Africa the prospects for the introduction of a tax-based social safety net either on a universal or a means-tested basis are poor. Yet there are encouraging signs of how such a public funded safety net regime can progressively be introduced. An example of this is the overwhelmingly positive direct (individual) and indirect (household) impact of a carefully targeted means-tested old age grant in South Africa. A similar kind of regime has been introduced in Lesotho, where a basic old age pension is made available to poor people over the age of 70