East African Business Week

DAR ES SALAAM, TANZANIA - President Jakaya Kikwete last week ordered for the harmonization of benefits subscribers to the handful social security funds and future ones.
The order was made when Kikwete inaugurated the long awaited Social Security Regulatory Authority (SSRA) stressing that the gap must be narrowed to enable subscribers who have served for similar length of time and made similar contributions to be the same.
Tanzania many social security funds that have been created under different legislations and supervised by different ministries their mandates have also differed. So far Tanzania has six pensions funds of NSSF, LAPF, GEPF, PSPF, PPF and NHIC.   
The new regulatory body will also ensure that the workers' subscriptions are prudently utilized to benefit subscribers. Many of the funds have been investing in real estate quite unrelated to its members such as huge edifices. The new SSRA will lay down guidelines on investments of the funds' and strive to index pensions to inflation.
The National Social Security Fund (NSSF), for example, is in the process of building a multi-million dollar bridge across the harbour, planning for another multi-million dollar Dar to Mwanza oil pipeline, as well planning to engage in energy generation.  
The financial resources of the funds in Tanzania are estimated to be  25 % of the total deposits made in all banks in this country, with a combined value of assets held by these funds being equivalent to 10 % of the Gross Domestic Product (GDP), and 45 % of investments made in Government securities.
 "It is critical for SSRA to regulate these pension's funds to ensure economic viability of their investments," the President emphasized, directing: "You should invest in areas that have short repayment periods and make quick money to safeguard the contributions of pensioners."
 Moreover, the president stressed the importance of pension funds to cut their exposures to risks by avoiding 100 % equity investment in projects, adding that they should become joint investors along with other entrepreneurs.
The president directed social security funds to cut their management costs which average 12 %, an amount deemed to be more than twice the internationally recommended 5 %.  
 He noted that Tanzania was lagging behind other East African Community (EAC) countries in coverage of its citizens in social security funds. "Out of a total workforce of 20 million Tanzanians, only 6 % are covered by pension's funds," he lamented.
 The figure is far below that of Kenya which has attained 15 % coverage.