A history of Social Security in Uganda

Social security in Uganda evolved from being an informal communal arrangement to a formal scheme covering only European workers in colonial times, and later to one covering all workers in the public and private sectors.

The story of Uganda’s social security can be categorised into four eras: the pre-colonial period, the colonial days, post-Independence, and the reformed social security since 1985.

Pre-colonial period

In pre-colonial times, social security was communally arranged through the extended family network, the clan system, and the communities. It was through this network that orphans, widows, the terminally ill, and old people were looked after.

Therefore, in case a member of the community lost the ability to sustain their livelihood due to old age or some misfortune, they were cushioned by the social system that ensured that no one was abandoned to their own fate.

The Colonial times - 1894-1962

When Uganda was declared a protectorate after the Berlin Conference of 1884, Europeans began to come to Uganda.

Once they set foot in Uganda and began working for Her Majesty’s government, they constituted themselves into the civil service of the colonial government. Social security and social protection were conceived, and laws were made in consonance with the interests and objectives of colonisation and the colonial policy.

The first initial social security in Uganda set up by the colonialists was to benefit only themselves and not the African workers. It seemed as though the Africans, who were mostly doing manual work, would look after their social security through their communal network.

Be that as it may, the coming of the colonial work system created a new lifestyle and work culture that could not be adequately covered by the social security systems that existed in pre¬colonial times. The British, therefore, eventually found it necessary to establish a formal social security system.

The first recorded pension scheme in Uganda was in 1927, according to the International Policy Centre for Inclusive Growth. Prior to this, employees had been covered under different legislation. For example from 1927, there was a scheme mainly intended for Europeans and Asians. In 1929, legislation was passed to cover a few specific Africans employed by the protectorate office.

The government, however, passed the Government Employees Provident Fund Ordinance NO 1 /1941 which only catered for protectorate employees without considering African employees. The African Local Governments Ordinance No.38/1950 made it possible for the employees of the local government who desired to contribute to the Fund but it was for the non-pensionable government employees.

According to the World Bank Economic Outlook of June 2014, the public pension scheme was first established in Uganda on January, 1 1946. This was after the enactment of the Pension Act which changed the name of the Pension Department to the Department of Compensation.

However, in 1948 the protectorate government created a Social Security Department in the Ministry of Labour, which was the precursor to the present day National Social Security Fund.

Before this, in Governor J. Hathorn Hall’s report entitled An ordinance to provide for the grant and regulating of pensions, gratuities and other allowances in respect of the public service officers under the government of Uganda of 1951, there was no pension scheme in the country covering the citizens.

The ordinance also stated that “otherpublic service” means public service not under the government as of December 31, 1945, although prior to January 1, 1946, eligible workers only benefited under the European Officers’ Pensions Ordinance and the Asiatic Officers’ Pensions Ordinance.

This pension ordinance was, therefore, amended under the 1951 pensions ordinance and subsequently passed into law by the Legislative Council (LEGCO) on September 16, 1954 after the Lidbury salaries revision.

The above can, therefore, be stated as the earliest attempt to have a “social security scheme” in Uganda.

Post – Independence 1962 – 1985

The new leaders of the newly independent Uganda continued with the social security systems they inherited from the protectorate government.

The early years of independence saw the country’s industrial and formal employment levels increase. The new government was concerned about the plight of its working citizenry once they reached old age. The government realised that most of those who had been in the civil service earlier on and retired were living in urban and semi-urban areas such as Entebbe, Jinja, Kampala, Tororo and Bombo and that they seemed to be totally dependent on relatives for survival.

As early as 1963, the Government of Uganda approached the British government to help it establish a Social Security Fund on the British model. In September of the same year, Mr E. Turner, an expert from the then British Ministry of Pensions and National Insurance, was recommended to the Ugandan government to conduct a study on the desirability and feasibility of introducing a national social security scheme in the country.

In February 1964, Turner’s report was published and he recommended the following, among others:

• That the scheme best suited to Uganda’s needs was a National Provident Scheme;
• That the scheme should include all workers between the age of 16 and 60, except certain categories, irrespective of sex and nationality;
• That contributions should amount to 10% of a worker’s total cash amount shared equally between the worker and employer, with no direct contribution from the state;
• That no contribution should be paid on the part of the worker’s income which exceeds sh 800 per month.

Legislation and formation of the Social Security Fund

From the reports of Turner and John Vass, the Parliament of Uganda drafted what became the Social Security Act of 1967, which created the Fund. The draft was followed by several private studies and debates about pensions and gratuities existing in the country. On September 6, 1967, the Attorney General and Minister of Labour, Lameck Lubowa, tabled the Social Security Bill in Parliament.

Between January 3 and January 5, 1967, the draft of the Social Security Bill was in the pipeline. Letters were moving back and forth between the Labour Ministry, Finance and Planning Ministry, Public Service, Attorney/ Solicitor General, the first parliamentary counsel and the Labour Commission.

On January 5, 1967, E.J. B. M pyisi, the Permanent Secretary of the Labour Commission, wrote to the parliamentary counsel requesting that the draft “be furnished in time for us to submit to cabinet for approval before it is published as a Bill for presentation.”

Exemptions were also being discussed for instance, the police and prisons staff and the contributions per employee per month.

On September 26, 1967, the Bill was passed with a few amendments by Parliament and on October 21, 1967 it received a presidential assent, becoming law. But it did not come into force until December 15, 1967, when it was first published by the government in the gazette. However, the Social Security Fund was inaugurated on January 1, 1968, when registration of contributing employees and members started.

The Social Security Fund (SSF) was established under section 17 of the Public Finance Act of 1967 which put in place a compulsory savings scheme to cover private sector employees and non-pensionable public sector workers.

At the time, the government was envisaging a situation where benefits were to be paid out to contributing members in view of expected contingencies such as old age, unemployment, incapacitation, immigration, and death.

At its establishment in 1967, the SSF’s management was overseen by a 15-member membership called the SSF Advisory Council, whose members were appointed by the Minister of Labour. They were:

• Five members representing the government;
• Five members representing employers, one of whom was representing local authorities as employers; and
• Five members representing employees.

Registration of private employers and members commenced on May 1, 1968. By September 1, 1968, employers of between 61 and 600 employees were registered as members of the Social Security Fund.

On January 1, 1969, private employers of between 1 and 60 employees in schools, colleges, and other educational establishments were registered. The last batch of workers to be registered was the workers of the local authorities, whose registration started on May 1, 1969.

By the end of the 1968/69 financial year, a total of 2,187 employers and 196,274 employees had been registered. However, it was believed that the number of registered employers and members would later increase to about 4,000 and 250,000, respectively. At the time, SSF’s staff comprised only 72 people.

From 1980 to December 1983, the Fund had a total of 725,896 contributing members countrywide. With a standard amount of USh 80 per month, the Fund was supposed to have a collection of up to USh 58, 071,680 per month in membership contributions. Unfortunately, due to understaffing and other logistical challenges, the Fund was only able to collect on average USh 5 million every month according to the 1985 Auditor General’s annual report to Parliament.

Gaining international recognition

Having got legal backing for its existence, the now fully and legally backed SSF set out to start working and within two years it was attending international gatherings of social security institutions. In 1969 the deputy director of SSF, Mr S.I. Kigenyi, represented Uganda at the Third Regional African Conference of the International Social Security Association (ISSA) in Ivory Coast. It was during this meeting in Abidjan that Uganda was admitted to the international association.

The Fund first became an associate member of ISSA in September 1972, and in the same month of the following year, the Fund became an affiliate member.

Challenging times of Social Security Fund

As the Social Security Fund was finding its footing following its establishment in 1967, the country experienced an economic collapse that destabilised the Fund. This was during President ldi Amin Dada’s regime where the country was ruled by decrees.

In spite of being one of the pillars of the economy catering for workers in their old age, the Social Security Fund was abandoned. Over USh 100 million of member contributions was in arrears and never paid! USh 50 million of this money was supposed to be paid to the

Fund by government ministries, including the Labour Ministry.

During the eight years of Amin’s rule, his government issued several decrees, among them the Social Security Amendment Decree no. 33 issued on March 28, 1972. The decree amended the Social Security Act to allow for the early withdrawal of benefits in certain cases.

The cabinet stated that the age benefit to be applied in respect of withdrawal of contributions should be 45 years if the contributor has been unemployed for the previous one year or if he/she has retired from regular employment. The second withdrawal option was 50 years even if the contributor continues in employment.

Under the provisions of the Social Security Act 1967, age benefit was payable to a member who had reached the age of 65. At the age of 60, if he/she had retired from regular employment, this benefit would also be paid. Thus the Social Security Amendment Decree No. 33 of 1972 reduced the age to 45 and 50.

With the fall of Amin’s regime in 1979, there was hope of rebuilding Uganda’s economy. It was after the UPC government took over power in December 1980 that efforts were made to revamp the Fund.

On May 1, 1981 during the Labour Day celebrations, President Obote promised the nation that the Social Security Fund would become an autonomous body. He re-affirmed this promise during an address to Parliament in March 1982 where he announced that a Bill seeking to transform the Social Security Fund into an autonomous body would soon be brought before the House for debate.

About a little over a year later, on June 23, 1982, the then Deputy Minister of Labour delivered a draft proposal to the Attorney General who in turn passed it over to the Solicitor General.

The proposal was about plans to transform the Social Security Fund into a public parastatal body. On November 22, 1984, Anthony Butele, the Minister of Labour, tabled the NSSF Bill before Parliament.

The Bill sought to repeal the Social Security Act No. 21 of 1967 and the Social Security Amendment Decree No. 33 of 1972 in order to create a fully-fledged Social Security Fund.

From November 1984 to early 1985, the National Social Security Fund Bill was debated by Parliament.

On January 4, 1985, Hon. Kafumbe-Mukasa, then MP for Mpigi Central while contributing in the House proposed the second reading of the NSSF Bill 1984. In his deliberation, Kafumbe-Mukasa said: “On the proposed amendment of the NSSF Bill, Mr Speaker Sir, I beg to move that the NSSF Bill 1984 be read for the second time. The Bill seeks to repeal the Social Security Act No. 21 of 1967 and the Social Security (Amendment) Decree No. 33 of 1972.”

On January 8, 1985, Parliament passed the National Social Security Fund Act into law to provide for its membership the payment of contributions to, and the payment of benefits out of the Fund, and for other purposes connected.

Birth of the National Social Security Fund

On December 1, 1985, the National Social Security Fund was established by NSSF Act Cap. 222 when the SSF Act 1967 was repealed.

On December 1st, 1985, the National Social Security Fund was established and the Social Security Act 1967 was replaced with the NSSF Act of 1985.This legislation mainly transformed the scheme from a depar tment in the Labour Ministry to a fully-fledged autonomous body and revised the age benefit as well as the contribution rate. The new NSSF now catered for all employees in the private sector, working in enterprises employing five or more workers aged between 16 and 55 years. The government employees were now catered for under the pension scheme administered by the Ministry of Public Service.

Thus NSSF was firmly established as a contributory scheme fully funded by contributions from employees and employers, both contributing a total of 15% of the workers’ monthly wages, whereby the employer pays 10% and the employee pays 5%.

Initially under SSF, contributions for members were 10%, i.e 5% from the employee and 5% from the employer.

Although technically established on December 1, 1985, the statutory instrument bringing the Fund into operation was issued on March 26, 1986 and the Act was not operational until 1987 when the first Board of Directors was appointed as required by the establishing law.

The leadership of the new NSSF fell on James Marcus Rwabeire Baira who had been holding fort in the now defunct Social Security Fund (SSF) as Director General since 1977 with his deputy, E.M. Asia. Rwabeire held the new position of Managing Director for the next three years till 1988 when he handed over the reins to Albert Brewer Abaliwano for just one year before Abel Katembwe took over in 1990.

The first ministerial supervisor of the new Fund was Jaberi Bidandi Ssali who was the first NRM government Minister of Labour from 1986 to 1988.

The early years of the re-born Fund were devoted to establishing systems, widening membership and updating data on members and their savings.

Social Security in Uganda today

Social security in Uganda has evolved since the 20th century, when available evidence can be traced,  from the ancient to modern tradition and finally to the formal system of today. In modern Uganda, social security is provided in a better and more formal way whether provided by the government or individual entities, through the Public Service Pensions Scheme (PSPS) for civil servants, the National Social Security Fund (NSSF) for the private sector, the Parliamentary Pensions Scheme for Parliament Commission employees and MPs, and many other private schemes under the supervision of the Uganda Retirement Benefits Authority that was set up by the UBRA Act of 2011.

There are also other non-statutory social security schemes managed by employers and public institutions either on their own or through Insurance companies. These include Makerere University Retirement Benefits Scheme (MUTBS).

The National Social Protection Policy (2015) includes provision for social security benefits for older persons in the form of social assistance and social insurance.

Through the National Social Protection Policy, the Uganda government gives Social Care and Support Assistance through the Social Assistance Grant for Empowerment (SAGE), a core-cash transfer program to elderly people and vulnerable families to help tackle chronic poverty and also access health care.  SAGE was officially launched on March 8, 2020, by the President of Uganda, Yoweri Museveni, at a function in Mbale district.

SAGE has two components - the Senior Citizens Grant (SCG) and the Vulnerable Family Grant (VFG). The SCG provides the main form of tax-financed social assistance for elderly persons in Uganda.

Uganda aspires for a high standard of living for its citizens by 2040. Provision of social security services to the different categories of the population is one of the strategic actions to achieve this national vision. Social protection aims at building secure and resilient families. The policy focuses on a social protection system that is built on two pillars-

The National Social Protection Policy emphasizes the country’s Vision 2040 on social protection that: “Uganda Vision 2040 underscores the importance of social protection to address risks and vulnerabilities. Government recognizes the need to provide assistance to people who are vulnerable either by age, social class, location, disability, gender, disaster, or who do not earn any income”.

The report further mentions that, “The Vision envisions a social protection system that includes a universal pension for older persons, public works schemes for vulnerable unemployed persons and social insurance to vulnerable children, persons with disabilities and the destitutes. The Vision also identifies universal health insurance as one of the key strategies for alleviating the high cost of health care for households and enhancing access to affordable health services for all.