The National Social Security Fund (NSSF) has partnered with Uganda National Roads Authority (UNRA) to conduct a sensitization workshop for all contractors in the road sector, aimed at exploring the intricacies, opportunities, implications, and compliance guidelines associated with the new NSSF Amendment Act 2022.
While speaking at the event, Patrick Ayota, the NSSF Acting Managing Director, said: In 1929, the Great Depression resulted in the stocks collapse. Businesses failed, and unemployment rose dramatically. Banks failed and life savings were lost, leaving many Americans destitute. With no job and no savings, thousands of Americans lost their homes.
“To recover from the great depression, the US government spent billions on public works projects including roads. These not only created interconnectivity between regions but more importantly, created jobs,” Ayota said.
Ayota added that the Fund intends to grow social security coverage across the country from 10% to 50% by 2035 by increasing willingness to save through education and awareness, partnerships that target large groups of workers e.g. UNRA leveraging technology to make the process easier and law enforcement.
“As UNRA, your role is to focus on enabling a savings culture for all your employees and subcontractors, this is good for the economy and this will be good for your business,” he urged.
Hon. Betty Amongi, Minister of Gender Labor and Social Development stressed the need for stakeholders’ engagement in achieving compliance and expanding coverage for social security.
“At least one-third (1/3rd) of the subsistence workers are excluded from the employment statistics deliberately. In very simple terms this is exploitation. We can even be more dramatic and call it slavery!! Yes, this is happening today in Uganda and one of the sectors where it is most prevalent is construction,” Amongi said.
She added, “We also observe that when it comes to what we refer to as “casual labor”, the absence of formal contracts is such that many workers are “employed” but left without work for significant periods of the time they have available to work. In this sense, they are denied benefits for forgoing time they would have spent being productive.”
Hon. Amos Lugoloobi, Minister of State for Finance, Planning and Economic Development said that in 2017, the Managing Director of the International Monetary Fund visited Uganda and gave a keynote address. She started her speech by commending Uganda for achieving threefold increase in GDP per capita over the past generation – a feat of just a handful of countries that halved poverty by 2015.But she also turned the members’ attention to the challenges holding them back as a country. She cleverly used the now famous movie “Queen of Katwe” as a metaphor to make some important points. Quoting directly from the movie, she asked: “Can you do big things from such a small place?”
“I will make use of this metaphor to emphasize the important role of mobilization of resources to drive our development agenda. In a literal sense, it is very difficult to do big things from a small place. And the first small place we need to address is: Tax-to-GDP Ratio: Uganda’s tax-to-GDP ratio is 12.5% (2021/22) compared to 15.3% (Kenya), and 16.9% (Rwanda). The average for Sub-Saharan Africa is about 16%- significantly higher than Uganda’s. Much of our inability to collect tax is exacerbated by the depth of informality of our economy – including hiring workers without contracts and paying them in cash, rather than through the formal financial systems,” Lugoloobi said.
He added, “Secondly, Savings to GDP Ratio: Uganda’s long-term saving to GDP ratio is 12%, of which 11% is accounted for by NSSF – where less than 1 million workers are actively saving. There is a “magic threshold” of 35% that the Asian Tigers crossed, after which they accelerated their socio-economic transformation buoyed by the ability to finance larger portions of their budget with local resources. Our budget of UGX 52 Trillion this FY will commit UGX 17 Trillion to debt service. The opportunity cost of this money on furthering our development agenda is huge.”
Lugoloobi said that the same question can equally be flipped in our favour.“Can we do big things from such a small place?” The answer can indeed be yes!! The answer is found in two concepts that can be thought deeply about;
“Leverage, if the returns are competitive, we can use leverage to accelerate our infrastructure assets in a sustainable manner. This is how PPPs can work for us, and NSSF, as a long-term Fund, can work with strategic partners to avail patient and local capital to the Government to accelerate its infrastructure development in a win-win manner. The opportunities for NSSF to participate in these partnerships include the development of transport infrastructure such as Toll Roads, and the development of strategic infrastructure for our nascent Oil and Gas Sector among others,” He revealed.
He further noted that Catalytic Financing is the second solution where big things can be done from small places. “Since we are discussing roads today, we can relate the discussion of catalytic financing to one of 3 core road management roles: Policy Setting, Financing, and Works Implementation (where UNRA is the key driver). When it comes to financing, in 2008 the Road Fund was born with a mandate to provide adequate and stable financing for maintenance of 80,000km of public roads in Uganda using a road-user-charges model.”
The Fund operates semi-autonomously and with a private sector leaning board. It also endeavors to operate in a customer-centric manner and lifts considerable budgetary responsibility off the shoulders of the Government.
Lugoloobi urged the partners to deploy the similar model to work with the private sector players involved in road development and maintenance to build the capacity of small businesses involved in the sector – such as the Contractors who are present today.
