THE Social Security Regulatory Authority (SSRA) is reportedly conducting an assessment on debts that the government owes pension funds, which is said to be more than 1tri/-.
Social security funds, apart from investing in various ventures including construction of residential and commercial buildings, have also heavily financed government's development projects.
The projects include the University of Dodoma (UDOM), which is the biggest higher learning institution in the country and regarded as one of the major achievements of the Fourth Phase Government under President Jakaya Kikwete.
Other projects are the Machinga Complex in Dar es Salaam and the Arusha-based Mandela Institute of Technology. The National Social Security Fund (NSSF) is currently involved in the construction of the multi-billion shillings Kigamboni Bridge in Dar es Salaam, which will link the peninsula to other parts of the city.
It is encouraging that the government has started repayment of some of the debts, a move that will guarantee sustainability of the schemes, which are of crucial importance to workers in their life after retirement.
Much as utilisation of money owned by the funds is a good thing, the government should also look for other sources of funding instead of the current over-dependence on social security funds. There are already valid fears that in the long term, the funds would be strangled to death should the government fail to repay the loans, which also go with interest of between 11 and 15 per cent.
Other options for borrowing include offering of sovereign bonds to secure long-term loans to finance capital intensive infrastructure development projects such as construction of roads, railway network and power supply schemes. Social security funds seem to be concentrating on financing of social projects instead of productive ventures and to directly stimulate faster economic growth that would lead to more tax revenue.
SSRA deserves to be commended for overseeing the activities of the funds and its recent move to develop new investment guidelines. According to the new investment guidelines to the social security funds issued by SSRA and the Bank of Tanzania (BoT) that came into effect in May, this year, the schemes are allowed to extend loans to the government not exceeding 10 per cent of their total assets.
The new guidelines also allow the schemes to invest in treasury bills and bonds by between 20 and 70 per cent of their total assets. It is hoped that the social security schemes would strictly adhere to the guidelines and look for more members.
There are reports that only 6.5 per cent of the working population in the country is covered by the schemes while only 3.5 per cent of the total population is covered. Therefore, a broadened base has even greater potential for national development but with pensioners assured to get their money any time they want it.