Kabwe Zitto
By Zitto Kabwe
SOCIAL security is a development policy. It is a policy that aims at improving and maintaining people’s living standards. It is protection against declining living standards due to failure to earn income as a result of death, disability, and/or age (elderly group). Scholars have linked social security to Amartya Sen’s definition of development, which focuses on capability. In that respect, social security ensures development even in the absence of capability to work.
Over the last two decades, big strides have been made on social security policy in Tanzania. The government expanded the social security policy from the mere provident fund to pensions and benefits. Nevertheless, social security in Tanzania is still limited to formal employed people mainly civil servants. The self-employed and those who work in informal sectors are excluded. This means majority of Tanzanians are not covered in social security. About 70% of Tanzania works in informal sector in particular small-scale farming. Another 10% or so are self-employed. Citizens with formal employment belong to the smallest percentage of Tanzania’s population. In that light, it is evident that the social security in Tanzania covers the smallest percentage of population. Statistics show that only 6% of Tanzanians are covered in the social security schemes.
This is a national disaster. The majority of the citizens do not contribute anything to the pension pool at the moment. This means an inevitable burden to the nation. At one point in their lives, this group of citizens (about 90%) will not be able to work or produce but they will consume- how will we, as a nation, manage? This is the urgent question that needs a quick answer. The answer is simple- extending social security to all – BUT it needs revisiting of our policies, political will, and prompt actions.
One of the plus point is that extension social security to informal sectors and ultimately to every citizen is not utopia. It is possible. Even for a developing country like Tanzania. We have examples of countries that have managed to do so. These include South Korea, Thailand, and China. China has managed to extend social security to farmers in rural areas. The government of those countries worked together with the social security schemes to extend the policy to every citizen. In Tanzania, a pilot test of extending social security to farmers has been successfully done. In Kigoma, 750 members of RUMAKO- an agriculture cooperative union- have enrolled in social security scheme. These members have been contributing to NSSF for about 6 months now and are already enjoying the benefits such as health insurance and agriculture loans. In an unfortunate event of death or permanent disability and incapability to work, they will earn more or less same income from the pool because they are covered. The RUMAKO model can be improved and expanded to other areas in the country.
Since the biggest percentage of our population composes of farmers, the feasible step is to start extending social security to farmers. This is practical. It can be done through existing cooperatives in rural areas. There are ways to do so and the benefits are invaluable. Below is the list of practicalities of extending social security to farmers in Tanzania and the subsequent benefits:
– Enrolling to social security- farmers to be mobilized and organized under the umbrella of existing cooperatives/associations and sensitize to enroll to the social security scheme.
– Contribution to social security- each farmer to be contributing at least the minimum contribution to the social scheme. Since farmers’ income is seasonal, the schemes will design a system of collective contribution in the immediate post-harvest/selling season. In addition, as farmers might still find it difficult to contribute due to low-income earnings, it is proposed that the government subsidies towards the contribution. For example, the government can pay half of the contribution and the farmer pays half. This is a fair just the way formally employed are subsidized (under the statutory law and Labour Relations Act, 2004) by their employers. Lessons learnt from the countries that have managed to extend social security to informal sector are that the government intervention and subsidy is a must.
– Benefits – extending social security to farmers, means extending benefits to a large portion of population. The benefits include health insurance to the principal member and his family. This is a great step towards a healthy nation. Access to healthcare is key to any economic development.
– Investment and promotion of saving culture- social security is an investment. The investment is created out of savings. The money that is collected and saved in the pool is further invested to ensure wider risk management.
– Risk management as a crucial development policy. The World Bank and other development stakeholders have recognized and are now putting forward risk management as a development agenda (see World Bank- World Development Report- Risk and Opportunities, Managing Risk for Development, 2014). Evidence shows that risk management is one of the key variables to ensure sustainable development. Uncertainties brought about by issues such as climate change have to be dealt with prior to their happenings. In our context, here is what is proposed with regards to risk management:
1. Draught Insurance/Rainfall insurance- since most of the farmers in Tanzania are small-scale and depend on rain for agriculture production, it is crucial that draught insurance be one of their social security benefits. A portion of members’ contribution will be set aside as premium for the insurance. The social security scheme will outsource the insurance to a private company to ensure repayments and sustainability. More lessons on rainfall insurance can be learnt from India and Ghana.
2. Stabilization fund. This is another benefit that has to be included in the benefit package for farmers. Stabilization fund assures constant minimum price for the produce. With this system, farmers are encouraged to produce more because of the price assurance. The government and the farmer contribute to the fund. Lessons can be learnt from previous stabilization fund in KNCU and also from the EU CAP (Common Agriculture policy).
Noteworthy, the above two points will ensure sustainability of social security to farmers. This is because in time farmers will be in a good condition due to compensation from draught insurance, stabilization fund, and low health costs.
All in all, social security to farmers is, arguably, one of the feasible and sustainable solutions towards fighting rural poverty in Tanzania. The genius of it is that it’s a homegrown and ‘do it yourself’ solution. It is not donor dependant.