It's a good one. But in what capacity did Ayena comment, and what is PLA?
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ATTN ALL EDITORS
SOCIAL SECURITY REFORM
By joint report
LACK OF A BOARD of directors for the last nine months at the multi-billion National Social Security Fund (NSSF) has paralysed the fund and put workersÂ’ savings at stake, The EastAfrican has learned.
A number of projects including new investments have been put on hold as the management awaits the appointment of a new board by the ministry of Finance to approve the ventures. Among the projects put on hold is the botched up multi-million Nsimbe Housing Estates that was meant to put on the market 5,000 housing units. Construction had already started.
Sources at the fund said that management couldn't carry out any new investment or go ahead with major investments, without a board in place. "The only project going on is the renovations of UDYAM house in Kampala, but others have stalled as it is the board to guide us in our operations," said the source.
Odong Ayena, of Ayena-Odong Company advocates, said that at present without a board there is no policy directive and that NSSF affairs are being run on a kangaroo basis. The NSSF, which collects an average of Ushs9billion ($5million) every month, is worth some Ushs500billion ($286million).
"Who now approves the budget, appoints directors, managers, officers, auditors and decides which bank to put the deposits," said Ayena, a leading lawyer in Kampala.
The last board was suspended in September 2004 over a controversial Ushs17billion, ($10million) housing project; a joint venture with Mugoya Estates limited, involving the construction of 5,000 houses at Nsimbe, 20km south of Kampala. The project was criticised that it had been over placed with the land being inflated by almost ten times its actual market value.
Mr. Charles Muhoozi, spokesman for the Fund told The EastAfrican that since September, when the old board was suspended, the fund has been operating without a board in place. He however, declined to comment on the impact of the absence of the board.
However, Lillian Keene Mugerwa, executive director of Platform for Labour Action (PLA), said that lack of a board had paralyzed NSSF and put workers money at risk.
"Lack of a board has paralyzed the entire management and governance of the contributors funds. And therefore government should ensure that a board is put in place as soon as possible," said Mugerwa.
NSSF being a private body owned by workers and employers as sole contributors to the fund, PLA is demanding that, they be the sole controllers right from the issues of appointment of the board to matters of management, instead of having government wield more authority than the true stakeholders.
The last board of directors was composed of two workers representatives, five government representatives, two representatives of employers all appointed by the minister of Finance.
Mugerwa said that such a nature of appointment and composition does not allow employers and workers to exercise adequate power and control over what is rightly theirs.
Ms. Robinah Rubimbwa, public relations officer of the ministry of Finance said in an interview, without giving actual dates that the board would soon be instituted. "The minister will soon appoint it," said Rubimbwa.
The Federation of Uganda Employers (FUE) says that out of the Ushs9billion ($5 million) of monthly revenue collected by NSSF from contributors, Ushs6 billion ($3 million) of that is contributed by employers and the Ushs3billion ($1.7 million) by employees, but not a penny from government.
"It is therefore not right for government to assume control over the fund even through the appointment of board members. The board should be composed of workers and employers representatives appointed by their constituents respectively and not by government," FUE argues in a press statement published two weeks ago.
President Yoweri Museveni disbanded the board and sacked the managing director, Leonard Mpuuma. He ordered investigations by a joint team comprising of police, the Auditor General and the Inspector General of Government.
Mr. Isabirye Mugoya of Mugoya Estates Limited, Mpuuma, NSSF Corporation secretary and the former board chairman, Onegi Obel appeared before the commission of inquiry whose findings have not yet been made public.
Asuman Mugenyi, police spokesman told The EastAfrican the file was sent to the DPP for legal advice and it has not yet been returned to the police for further instructions.
NSSF is currently worth $236.6 million from 150,000 contributor's funds mainly from the corporate world. Employers and workers contribute 60 per cent and 30 per cent respectively and only 10 per cent comes from profitable ventures. Social security is a sector affecting almost all workers and employers in the formal sector.
Employers are particularly irked by the fact that they are never made aware of any proposed investments of the funds in whatever area or venture. They are wondering how some one should get money from them and not account to them on how it's spent. They are also concerned that contributors' funds earn very little interest. Employers are instead seeing an increase in the misuse of funds.
Upon advice from the IMF last year, NSSF was put under the management of bank of Uganda.
President Museveni allegedly ordered the transfer of the fund to protect the contributors' money from mismanagement after a lot of money had been mismanaged under the last three regimes of managing directors of NSSF all under the ministry of Labour.
But some stakeholders say proper management can be and should be provided under the ministry of Labour, which is the ministry with the right portfolio.
Employers also want reforms of the law governing social security to address and provide for penalties for misappropriation of funds by the fund managers.
"The law does not strongly come out to address issues of fund management and investment or even on penalties for misappropriation of the funds," Mugerwa argues. Adding that, "Unless the law is reformed to stream line those areas, many of the current problems of the Fund will continue."
A. Mutumba-Lule and Bamuturaki Musinguzi
Ends
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