Sessions on Exploring Social Protection Solutions in Sub-Saharan Africa and Tanzania – Day 2: National Social Security Fund´s Initiatives in Tanzania for Economic Development and Informal Sector Empowerment
Written by Amirhosein Rahbari (Social Protection Specialist, Intern at socialprotection.org) and Sayanti Sengupta (Independent Consultant, collaborates with organizations such as ILO, UNICEF, and the Red Cross Red Crescent Climate Centre).
Building on the insightful discussions on “Adaptive and Digitalized Social Insurance for Informal Workers” during the first day, this blog post presents a report on the second day of the three-day alumni event orchestrated by Germany’s H-BRS University. Under the theme “Advancing Social Protection in Sub-Saharan Africa – Smart Solutions for the Insurance Sector,” the event unfolded in the vibrant city of Dar-es-Salaam, Tanzania. Day two offered a remarkable glimpse into the transformative role played by the National Social Security Fund (NSSF) in Tanzania’s development journey, from strategic investments to innovative social security schemes.
The NSSF’s journey through history began in 1964 as a provident fund, which later evolved into a pension scheme following the enactment of the NSSF Act in 1997. However, it was in 2018 that the Tanzanian social security landscape witnessed a monumental transformation. A sweeping legislative reform merged four distinct pension schemes - the Government Employees Provident Fund (GEPF), the Local Authorities Pension Fund (LAPF), the Parastatal Pension Fund (PPF), and the Public Service Pensions Fund (PSPF). This significant change established the Public Service Social Security Fund (PSSSF) as the administrator for public-sector employees while entrusting the National Social Security Fund (NSSF) with the responsibility of overseeing the program for private-sector employees and self-employed individuals.
Morning Visit: Affordable Housing
The second day commenced with a visit to the NSSF’s affordable housing projects. The reserve fund is used to make strategic investments in these projects and stands as a testament to their dedication to improving the lives of Tanzanians by providing high-quality housing solutions for middle-class households. Additionally, the fund has played a crucial role in the development of essential infrastructure projects. This includes the construction of a bridge and a highway complete with a toll plaza, connecting Kigamboni New City to Dar-es-Salaam. These initiatives have significantly enhanced connectivity within the region and strengthened networks.
This visit exemplified how a nation’s social insurance reserve fund can be strategically invested to raise more funds and increase the sustainability of the reserve in the long run. Robust discussions between H-BRS alumni and NSSF staff members underscored the imperative to bolster formal employment opportunities and broaden the scope of social insurance coverage. These deliberations shed light on issues concerning returns on investment and adequacy of financing. Notably, there was a common understanding and acknowledgement of the need to diversify and allocate a portion of the reserve fund’s investment portfolio towards climate change initiatives. Such measures would not only promise financial gains (even though in the long-run returns) but also address climate risks, enhancing adaptive capacity and preventing loss and damage caused by climate-induced events.
Seminar Session with James Gallus Oigo: Unveiling Tanzania’s Social Security Landscape
In the afternoon, H-BRS alumni participated in a focused session at the NSSF headquarters led by James Gallus Oigo, the Benefit Administrative Manager. The session provided a comprehensive overview of Tanzania’s social security landscape, emphasising the central role of the NSSF in supporting the informal sector.
Tanzania, with a population of 61.7 million and a labour force of about 30.6 million, has a staggering 80 per cent of its workforce engaged in the informal sector, primarily in agriculture. With only 10 per cent covered by social insurance, the majority of the population lacks comprehensive social protection against various risks.
Figure 1: Everyday Entrepreneurs: The Vibrant World of Street Vendors in Dar es Salaam (Photo by Amirhosein Rahbari)
Mr. Oigo delved into the foundations of Tanzania’s social security system, anchored in the International Labour Organization’s Convention 102 of 1952 and enshrined in Article 11(1) of the constitution. Long-term benefits such as retirement pensions, invalidity pensions, and survivor pensions, along with short-term benefits like funeral grants, maternity benefits, unemployment benefits, and health insurance, are provided by the NSSF. Schemes are designed to comprehensively cover employees in the private sector, foreigners employed in Mainland Tanzania, employees in non-governmental and international organisations, self-employed individuals, and informal workers.
The highlight of the session was the 2018 reform which extended NSSF’s reach to the informal sector. This sector, characterized by self-employment and diverse work arrangements, became the focus of the National Informal Sector Scheme (NISS), which officially started registering members in 2019. The reform’s primary objective is to provide comprehensive social security to those in the informal sector who had previously been excluded.
The new scheme offers protection to self-employed and informal workers, ranging from transporters and small-scale entrepreneurs like Mamalishe (female food vendors) and Machinga (hawkers), small-scale miners, farmers, and fishermen, to organised groups of entrepreneurs such as VICOBA (Village Community Banks) and Savings And Credit Cooperative Societies (SACCOS). Notably, even categories like politicians, higher learning students, and others who were previously excluded from social insurance are now included under the umbrella of NISS. This scheme offers pension benefits such as survivor’s benefits, maternity, funeral, and medical benefits to its members, subject to the duration of one’s membership. Incentives are considered in the form of loans.
Membership of formal employees in social insurance requires a 20 per cent monthly gross wage contribution to the NSSF, with both employees and employers splitting it evenly. Informal workers, however, can opt for voluntary NISS membership with a minimum monthly contribution of 20,000 TSH. Currently, the total number of registered members stands at 247,628 individuals.
The seminar underscored the hurdles confronting NISS, encompassing the irregular incomes of informal workers, inadequate awareness of social security, and the issue of voluntary compliance. These factors collectively result in a low uptake rate and disruptions in contributions. Addressing these challenges necessitates a comprehensive strategy, incorporating widespread awareness programmes and initiatives like micro-loans and capacity-building efforts. Additionally, proposed measures involve implementing new incentives and establishing a robust social protection system capable of operating seamlessly even in the face of disasters.
*This blog post is part of the ‘Advancing Social Protection in Sub-Saharan Africa – Smart Solutions for the Insurance Sector’ series, which covers discussions based on insights and data from the groundbreaking three-day alumni event organized by Hochschule Bonn-Rhein-Sieg (H-BRS) University of Applied Sciences in Dar-es-Salaam, Tanzania. The event received funding from the Federal Ministry for Economic Cooperation and Development (BMZ) of Germany and was co-organized with the local partner University, the Institute of Financial Management (IFM).
Please note that the views and opinions expressed in this blog post are those of the author and do not necessarily reflect the official policy or position of the Federal Ministry for Economic Cooperation and Development (BMZ) of Germany, H-BRS University of Applied Sciences, or the Institute of Financial Management (IFM). The information provided here is for informational purposes only.
Stay tuned for the upcoming posts in this series for further insights into the event's discussions on topics including digitalization, climate change, and the informal sector.
