COVID-19 has exposed business’s ability to deal with emergencies

Parliament has been debating the NSSF Amendment Bill and among the most contentious principles that has attracted debate is in regard to allowing NSSF members who have saved for at least 10 years or those who have clocked 45 years to access some of their money (mid-term access). What’s your take on this debate?

The principle of the mid-term access looks attractive but the challenge is on its feasibility. In principle, we support the idea of 20% but let’s subject it to actual studies and determine whether it will deliver benefits for the savers because there are sacrifices that will have to be made. One of the sacrifices which is rather obvious is that if you take money away, then NSSF cannot do certain investments like it has been doing and if they cannot do these investments, then they can’t pay a level of interest that the savers are used to. But for me, the ultimate purpose of you saving with NSSF is to make your retirement good. This 20% mid-term access which everybody is talking about is actually only 5% of the employee’s salary because the employer contributes 10% to the employee’s savings to NSSF. I think this clamour (for accessing this 20%) speaks to our saving culture and consumption patterns. Our saving levels are so low and that is why we are always desperate and always looking at this NSSF money. The truth is that there are very few people saving with NSSF who would get this 20% and it makes a difference in their lives.

As employers, what is your position on the government’s proposed National Health Insurance Scheme?

Health insurance is very good for Ugandans because it is simply too expensive to pay out of pocket. However, there are a number of contentious issues surrounding this scheme. Initially, it was proposed that the worker and the employer should contribute 4% each to make 8% but then it was reduced to 5% (1% for the employer and 4% for the employee).  However, when you scrutinize this 5% contribution, the reality is that this is still part of the employer’s wage bill because the employee will not pick money from home and say, this is my 4%; it has to come from their salary. So, the contribution rate has been a contentious issue because the employer is already contributing in form of Pay As You Earn, NSSF and other sector-specific contributions. The other contentious issue is the administrative cost of collecting this contribution. From the side of the employer, we have been arguing that we don’t need to make a parallel structure to collect this money because NSSF can still collect this money. We think that if you set a parallel entity to collect this money throughout the country, the cost will be quite high. In terms of regulation, we think that the Insurance Regulatory Authority which is already regulating the health insurance should regulate this scheme. The structure of the scheme has also been quite contentious. The proposal we have at the moment is that the government wants to create one national health insurance scheme where everybody becomes a member but the proposal we have advanced is that the scheme should be split into three strands; one for people who are in the public sector where the government will contribute; the other should be targeting the private sector and the other for people who are in the communities (the community health insurance scheme). By having these schemes uniquely arranged, it becomes easier for regulations to be put in place and for everyone to get covered over time; otherwise, the scheme can easily collapse if it is managed centrally.

In regards to the impact of the COVID-19 pandemic on business, what have been some of your observations over the last nine months?

COVID-19 exposed the fact that we don’t plan at all. The pandemic exposed the inability of our local businesses to deal with emergencies mainly because we don’t have business continuity plans. The pandemic further showed us that our businesses have liquidity challenges because for nearly six months, businesses could not do much. As such, they resorted to pay cuts and other employees were sent away on unpaid leave even in sectors that are considered essential to the economy. Supply chain disruption in the economy is another serious issue that we observed. When the country went into lockdown, all of a sudden, we could not have supplies coming into Uganda because of reliance on trucks and road transport. This was the time we needed to use our railway but we kept on relying on the roads. Basically the economy ran into the risk of shutting down. On a positive note, COVID-19 has also shown our ability to produce locally as shown by the number of sanitizer manufacturers.

The pandemic is still raging and no one knows when exactly it will be eradicated. What then might the future of work look like?

I think the nature of job contracts is going to change. People around the world are paid under a piece-rate arrangement but this has not been the case with Uganda.  We are therefore going to see employees getting one-year or two-year contracts, not the open–ended contracts that we have been used to. I also see the ‘gig economy’ taking root in Uganda with many workers becoming self-employed and working from their homes.

Your last word?

Ugandan workers need to change their attitude towards employers because there is a general thinking that employers are bad; that they are greedy people and that they don’t care about employees. The reality is that employers are actually very important for society. When an employer is in business, they keep so many of us alive; through the salaries we earn, through the services that are outsourced to other smaller businesses. It goes without saying that when an employer loses, everybody loses. We should therefore protect our employers by doing our work very well—nothing more than that.  That for me is the ultimate test of patriotism. You serve your country by simply doing your work well.

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