Africa Business Communities

Uganda retirement authority targets informal sector with new schemes

As the Ugandan retirement authority seeks to cater to persons out of formal employment and rope in more informal sector players, it has announced that it has licensed two informal sector schemes to bolster its efforts.  The Uganda Retirements Benefits Regulatory Authority (URBRA) has branched out and licenced two informal sector retirement schemes.

Kampala City Traders Association (Kacita) which is mainly composed of traders across the city, and Mazima Retirement Plan, which caters for individuals in various work outfits have officially been registered.  This will now extend social protection coverage to the majority of Ugandan workers faced with inadequate social welfare coverage.

Several employers and employees in the informal sector lack proper hiring procedures, stable savings channels and reliable business records. Employees in the formal sector enjoy access to internal and external savings schemes. An estimated two to three million Ugandan workers are covered by private pension schemes, the National Social Security Fund (NSSF) and the Public Service Pension Fund out of 15 million employed Ugandans, official data shows.

While some informal sector players earn considerable incomes every year, absence of stable revenue streams and low innovation appetite among fund managers is partly blamed for poor pension benefits coverage in the sector. Uganda’s informal sector accounts for 60 per cent of GDP and nearly 50 per cent of available jobs, government data shows.

Whereas membership to MVIRBS is open to anybody engaged in the informal sector, enrolment in KACITA retirement benefits scheme is restricted to members of the country’s most prominent trade lobby group that boasts of more than 1,000 members spread countrywide.

Member contributions to MVIRBS have been set at a minimum of $0.59 per day and a minimum of $2.9 per week for interested persons while registration fees have been fixed at$2.9 per person. Many local savings and credit co-operative organisations (Saccos) offer low income members monthly contribution rates of less than $5.9 that stimulate steady collection patterns and smooth lending operations.
MVIRBS said it has already accumulated initial contributions of $2,925 from about 300 members and plans to grow its membership to 50,000 people over three years.

“Previously, the excuse for the self-employed and players in the informal sector was that there were no schemes where they could save for their retirement. Now we have these two schemes and many more will come,” the chief executive officer URBRA, Mr David Nyakundi, said

Currently URBRA has 66 licenced schemes with NSSF being the biggest and mandatory scheme where most employees save for retirement.

 www.urbra.go.ug

 

 

Share this article