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Widening the pension net to the informal sector a welcome idea
2005-10-26 06:29:31
By Editor
Probably it may not sound abusive to claim that our pension funds in Tanzania are still very much colonial in nature and character.
Their evolution and functioning to-date seems to be exclusively targeting salaried workers of the formal sectors of the economy.
This approach is based on the wrong assumption that only those employed in the formal sectors are assured of a surplus and steady income streams which could alternatively be channelled to savings, or even better be pooled into various forms of pension schemes.
After four decades of post-independence, this colonial legacy has stayed with us, although we are now living at a time when the traditional means of social security are waning rapidly in both rural and urban areas.
Over the last twenty years, we have witnessed massive rural-urban migrations involving youngsters leaving the old in villages without any assured means of sustenance.
Many of our senior citizens lead a miserable life lacking any hope.
The social tragedy which the HIV/AIDS pandemic has imposed on communities is well known.
Orphans and the old that are left behind after thousands of productive adults have been decimated by HIV/AIDS are presently a social headache of immense dimensions.
The Parastatal Pension Fund (PPF) deserves credit for taking the bold decision to set up an additional benefit targeting the informal sector employees in Tanzania.
We may need to remind ourselves that the scattered cottage industries in urban areas, organised farming communities in rural areas, fishermen, and the informal services, account for more than 80 percent of the active working population.
As the PPF management eagerly expects the Parliament to bless this new line of benefit, the outlook for the informal sector looks even brighter now that the government has committed itself to support it by setting-up an informal sector guarantee fund.
A number of banks in town have designed a range of loan products for the informal sector, having seen its growth potential.
Similarly, supportive initiatives are coming from civil society organizations (CSOs), targeting building of a solid business skills base among informal sector stakeholders.
The National Strategy for Growth and Poverty Reduction (NSGPR) is enjoying massive multilateral donor support partly because of its resolute objective that focuses on small and medium enterprises (SMEs) development as a key move to achieving poverty eradication .
All this suggests that more gainful jobs will be generated in the near future, and pension funds are better placed to offer their social security services in this potential sub-sector.
Now that PPF has done its own research and proved that the informal sector is pensionable, other social security funds should emulate this example so as to widen and strengthen the formal social safety nets.
We cannot but expect that respective managements would take up the gauntlet for the benefit of the citizenry.
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