Ugandans are not really into savings. Lately it has been a sort of belief system. Tough economic times y’know. First came the gift cycles, then the SACCO’s. There is increasing faith in the market in this era of stock markets and such.
The most consistent savings program has been the involuntary ” National Social Security Fund”. The fund is part of a coercive government plan to force savings. As we speak now, the Fund is being debated as a pension program- in other words as a creature of choice.
It would be just another choice for people who want to save for a rainy day. Anyhow i wrote to NSSF ( i am a member because of my employment at the Daily Monitor) to ask them about inflation. It turns out that with such a low interest rate paid to its members and with much of its holdings held in Uganda shillings- the Fund would be hit fairly hard by the high inflation today ( 16%). If you exited the fund a year ago- the value of your take home would have been higher.
NSSF promised an explanation. I got an email that even mentioned a deadline for that explanation. Since then the fund has backed off and my emails have gone unanswered. This is not a problem in journalism. Its an occupational hazard. But it is a pretty serious matter.
What impact would inflation have on its 1.8 trillion shilling holdings? What about other gift circles and SACCO’s? What does this mean for the conversation on savings in a formal system? And pensions?
I will blog later about the back and forth i had with NSSF and offer some thoughts on the general problem. I take it that the reason the Fund rescinded its offer to break the silence is that there is more to inflation than meets the eye. I turn this over to you for now.