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20% NSSF payout benefits no one

While everyone understands the financial squeese workers are going through, let’s not court more disaster

COMMENT | PETER NYANZI | In the 1830s, the British Economist William Forster Lloyd wrote an essay in which he described a phenomenon he called the ‘tragedy of the commons.’

Simply put, if a shared/common resource (for example a lake) is excessively exploited for the benefit of a few people, the benefits enjoyed by the few would be short-lived and everyone would eventually lose (the fish stock would be depleted).

I think this could be applied to the ongoing discussion about midterm access to at least 20% of pension savings in NSSF for Covid-19 relief to members.   Let me illustrate.

Supposing a member has Shs30 million in savings; 20% of it would be Shs6 million. As we all know, this money can be easily ‘chewed’ without a trace within a few months. However, at a conservative interest rate of 10% (NSSF has been paying higher than that), the Shs6 million would compound to Shs16 million in ten years!

What does this imply? It implies that if a member takes out Shs6 million today, he would forfeit Shs10 million in interest earnings over a ten-year period. Now, if just 100,000 members took out a minimum of Shs6 million, the Fund would have lost Shs600 billion over a period of ten years. Now with the proposed 20% payment running into the trillions, do the math. When the Fund loses this kind of money, of course everyone loses.

But does the NSSF actually have the liquidity to dish out trillions of shillings in bailouts? Yes of course, it must find it if it has to, as every faithful trustee.

But remember that NSSF holds long-term liabilities (70% of its members are below 35 years), so it must put those resources in long-term investments, so as to earn interest for all its members. These investments include long-tenure Securities (Treasury Bonds), Equities (shares in profitable companies), and real estate properties such as estates and high-rise buildings.

So, if the Fund is forced to find the 20%, it must sell some of its long-term assets by liquidating its equities in listed companies or its real estate properties. Of course that would mean finding buyers. But at a time of economic downturn in all countries including developed ones, where do you find buyers for your shares or estates at the price you wish to sell?

Okay, supposing buyers are found; if the income-generating asset is gone, how will the Fund ensure its viability and sustainability going forward? How will it ensure that the balance of the money on your account generates interest above inflation given that everyone expects to earn interest above inflation at the end of the year? You see how everyone loses?

Alright, let’s suppose that NSSF must call (liquidate) its Treasury Bonds to raise the 20%. Who will buy those bonds? Most likely it will be commercial banks, which of course will use the cash they are supposed to lend to the private sector as business loans. It means there will be no money to lend to businesses. Those that are lucky will get loans at very high interest rates, which means there will be no jobs and no taxes and the prices of goods would rise and cause inflation, which will hurt everyone.

Finally, let’s suppose that NSSF eventually pays out the 20% in trillions in bailouts to members. It’s easy to predict the result; there would be too much money in circulation chasing too few goods because of the low productivity in the economy due to the corona virus lockdown. That is a recipe for spiraling inflation. Of course the Central bank will have no choice but to crank up monetary policy measures in order to mop up the ‘excess liquidity.’ Guess who will lose from those scenarios; everyone (perhaps except the banks)!

So, what is the best way forward for NSSF members who are evidently cash strapped? I would propose a win-win solution. NSSF could be allowed to offer low-interest loans (at most 6%) to eligible members to be paid back in monthly installments over a period of two-three years.

Even better, the provident savings could be left intact and instead, the Government provides low-interest loans (at most 6%) accessible through commercial banks, and to be paid back in two-three years. Their NSSF savings may be used as collateral, if necessary. Lastly, the Government could secure a concessional loan from donors such as the World Bank; to be disbursed to eligible citizens as microloans through commercial banks, SACCOs and investment clubs.

In summary, while everyone understands the financial squeeze workers are going through, let’s pursue solutions that enable us to avoid Lloyd’s ‘tragedy of commons,’ which could spell more disaster for a fragile economy already battered by the Covid-19 pandemic.


Peter Nyanzi is a veteran business journalist.



  1. I lost my nssf card how can I get it during this Corona period

  2. This is very disgusting, you can’t tell your members that the economy will be this case , you sound to value the country economy, business partner,gorvment program and the non members who are having access to loan to keep developing while the members contributing to the nssf are remaining poor, their children are being expelled from school, Land load and evicting theme from the house over the long delays to pay rent bz of covid 19 and somemore of them have lost their jobs and you fail to look into that.simply because you are being misguided by the group of people who are interested in embezzling of the workers saving.. please send show your members that you are caring about their experience and strasion during this period of pandemic out break by allowing the pay off of 20/ than giving out a soft loan.thanks

  3. tempo bom todos os nossos membros das boas línguas francesas, é bom na próxima vez de apreciar o estudo da Bíblia sobre o verdadeiro Deus bom Jeová Judeus Deus a Bíblia diz em João 17: 3, também apreciar os bons é verdade conhecer Jesus Cristo a Bíblia diz que também desfrute a vida verdadeira de João 17: 3 em João 17:17. Na próxima vez em que você souber muito bem francês, é bom receber nosso salão do reino dos batistas das sociedades de testemunhas de Jeová e aproveitar muito bem ouvir sobre o verdadeiro Deus bom Jeová Judeus que Deus Bom deseja nos livros das escrituras, todas as escrituras são inspiradas pelo verdadeiro Deus bom Jeová Judeus Deus nas escrituras bíblicas que a Bíblia diz em 2Timóteo 3: 16,17 também desfruta feliz da verdade, dizem os livros das escrituras novamente em João 17:17, é bom ouvir todos os que apreciam o amor verdadeiro em João 13:35, também desfrutar de bons e felizes livros verdadeiros é do verdadeiro Deus bom Jeová na bíblia diz e muitos desfrutam no 2Timóteo 3:16 , 17, também gostamos de receber nossos bem, são os benefícios do sc rasgos que a bíblia diz sobre o encontro regural nos hebreus 10: 24,25 nas escrituras da bíblia diz: aproveite o tempo para agradar às vezes também os nomes felizes do verdadeiro Deus bom Deus Jeová nas escrituras da bíblia, é bom que todos gostem de ouvir sobre o bem os mais felizes na revelação 22: 4 também desfrutam dos bons sobre a leitura da Bíblia todos os dias e desfrutam de muitas disciplinas, desfrutam bons dias todos os dias seguintes também alegres todos os dias, tudo para paradisiar o reino do verdadeiro bom Deus Jeová Organizado no Salmo 37 : 29

  4. boa noite, bom dia senhor, é bom estudar a bíblia e apreciar os bons saber sobre o verdadeiro deus Jeová, você sabe que a bíblia diz sobre João 17: 3 é bom o deus é apenas Jeová nas escrituras da bíblia, também gosta de conhecer Jesus Cristo é bom para aprender também gosta de ler a Bíblia todos os dias, também você sabe sobre a Bíblia diz nos bons livros das escrituras da verdade em João 17:17, é bom ouvir muito bem sobre o próximo coronavírus, também aproveite bem-vindo nosso salão do reino das Testemunhas de Jeová, é bom que você saiba que os portugueses gostam muito de ser bem-vindos no próximo bom programa, e também muitos gostam de estudar a Bíblia, é bom amar os outros, diz a Bíblia em João 13:35. bom diário senhor também aproveite a semana, é convidando você também sou uma das Testemunhas de Jeová aqui estou.

    • I think nssf from managers to worker they think upside down,becouse all of us were members even one or five years i have to share on my funds if not i have to take them in courts of low

  5. meu nome é Tumwesigye Benjamin John Peter Testemunhas de Jeová, bom tempo para todos os nossos próximos, mas você tem um tempo livre também é bem-vindo, é um bom programa para o estudo da Bíblia, também é um bom momento para ouvir, também gosta de uma boa qualidade de fala na Bíblia, explica muito bem, é bom também curtir ouvir nossos bons amigos contando os bons do estudo da bíblia. obrigado senhor.

  6. muito obrigado também aproveite semanas tudo o que vem a seguir é bom, você sabe que o salão do reino das testemunhas de jeová é nossa patrice, é bom não só também desfrutamos muito bem de todos os nossos familiares.

    obrigado senhor.

  7. Charles Semambo

    So it’s better for members to starve because of your mathematical economy??? Lastly what’s the use of saving if you can’t access your savings even in time of an emergency like COVID-19???

  8. Dear Peter, hope you are a family man, just imagine one of you child is sick and he or she requires medical attention urgently, Imagine for some reason you done have any cash and all efforts to borrow ended in failures, but you got cows that you can sell and get the cash, imagine your neighbour showing to your house and start advising you how it is not wise to sell the cow in order to save the milk while your child is dying ,Am not impressed with your disposition, sometimes the issues at hand are bigger than reasons and sense, sick people will die if no medical attention is given, the reason for the accumulation of wealth is the guarantee of comfort in times of trouble, you missed the mark when you reversed that order, the irony here is that you will save the cow and lose the child and the cow will be slaughted to feed the people at the funeral. your advice is not clever, it is wrong and dangerous. for all you facts and figures, you haven’t saved any life, you have just condemned this people to their fate.

  9. Stop tying NSSF to economic issues, it is about social security not economic security, the problem is that NSSF uses social security money to trade in other issues, even if this in the law, it is crafty. Actually NSSF and those proponents preventing the 20-30% are are not good citizens.

  10. So what if I put my money in a good business where government earns from me through taxation to build the economy u r defending.

    U mean the country’s economy should stay strong at the expense of savers with almost no alternative means of survival.

    Why always look at nssf savers as people who don’t know how to invest their money wisely after withdrawing it from the fund.

    It’s my savings, it’s for my benefits, let government look for other ways too to protect the economy than denying severs of their savings. With or without, the economy is already disorganized

  11. Its individual money not economy`s money. Savings are for bailing outs.
    You can’t advise us to acquire loans yet we have money embedded somewhere in the so called NSSF.

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