By Denis Jjuuko
Sometime back, a friend who had been out of employment for many years had a problem. His house was being sold by the bank after failure to continuously pay the monthly installments as a result of a mortgage he had taken when he was still employed. The money obtained from the bank had been used to improve the very house that was now being sold.
While he was still employed, he was a contributing member of the National Social Security Fund (NSSF) where 5% of his salary was chopped off before the employer contributed 10% to make it 15% in monthly savings. The money was enough to pay off the bank and save his house. However, he was below 50 years old and therefore NSSF couldn’t give him his money to save the house. The house was eventually sold on the cheap.
The only real asset the majority of people will ever have is their house. Nothing much else. The money they earn goes into paying fees for kids and survival. Yet the money with NSSF cannot help you unless you are 50 year old and above. And there lies one of the problems with the forced saving scheme. Of course NSSF argues that it doesn’t make laws. It is parliament to make that change. And parliament doesn’t contribute to NSSF so they have less interest in the scheme.
There is an ongoing TV campaign by NSSF oddly named Friends with Benefits where somebody who got their money and used it ‘properly’ can win Shs30m. I have watched a few episodes of the current season as it is now annual. The majority of the contestants have used their money to start new ventures. Some have started food cottage industries, others boda boda business, and all sorts of enterprises. This is problematic for those saving and the country generally.
The reason money is given to people who turn 50 years old and above is basically to enable them retire with respect so that they don’t become destitute, begging from one child to another as is usually the case. Instead, the people who get this money go on to start businesses. These are people who, because of age, are supposed to retire not to be running around starting a new business they ideally have not much experience of.
However much one does research while starting a business, there are certain things that one will have to learn on the job. And most businesses are very profitable on paper. Most business plans show profitability at a certain stage. The reality is most times very different due to mainly market and other forces that are sometimes hard to foresee. Although, there is no age at which one can’t start a business and it thrives, success is built over a period of time of very hard work. Of course some of the most successful entrepreneurs started very late in life but they aren’t many. At 50 years and above, there is less flexibility. You are used to doing things in a certain way and therefore change is hard. So if you worked in an office all your life, got your money at 55 and started a new business, the chances of succeeding are very minimal.
In fact at 50 and above, somebody should be concentrating on what they know best. They have matured and have acquired the necessary experience and acumen to succeed in a certain field. Even seasoned businessmen rarely go into new businesses after 50. Their focus is to grow what they have been doing all along. They know that they can’t simply enter into new fields and succeed. Don’t get me wrong, there will always be outliers who defy the norm. The majority of people who start a demanding enterprise like food production or boda boda at 55 will not succeed. There are also very few Ugandans who have started businesses with lots of money and succeeded.
So since people who retire go to starting business ventures that are competitive, there is need to lower the age where one can receive their money to about 40 when one chooses to. So that those who want to do business can do it when they still have the energy, the drive and guts needed to succeed.
At 40, a person has a few years to learn their new trade and master it. They are also still flexible enough to make changes if things don’t work. They have an option to go back into employment as well should things fail which option is not available to a 55 year old.
Money could even be given in installments where at 40 one qualifies to withdraw 50% of their savings to start a business. The other 50% could be kept until one is 55 as the law is now. That would actually ensure that the person isn’t testing the depth of the river with both feet.
The law should also allow anybody who hasn’t been working for sometime pay off their mortgage using their NSSF savings instead of the bank selling the house on the cheap. Otherwise, there is no need in saving. Like NSSF’s commissioned TV show has revealed, the people who are retiring are simply going into business or actually becoming hustlers in Kampala speak. So it is better that people become hustlers at a younger age and if their businesses grow, they will still save with NSSF. They will also be ambassadors for the fund. It benefits NSSF and the country in the long term if people can get their money before they retire to do business and create jobs or save the only real asset they will ever have.
The author is a media consultant and businessman. email@example.com. 0758111409