Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
Social security systems in Uganda 
DEBORAHI KASENTE K 1, NARATHIUS ASINGWIRE2, FIRIMOONI 
BANUGIRE3 AND SWIZEN KYOMUHENDO4 
ABSTRACT 
As a result of its recent disturbed history, Uganda has the most 
undeveloped formal social security systems and the least documented 
non-formal social security systems of the countries participating 
in this study. Through the use of qualitative research methods, it 
was observed that communities are providing the most useful 
response to the rising risks and vulnerabilities posed by poverty, 
unemployment, emergencies and inevitable life-cycle factors while 
the State has not provided social security at the community level. 
The following social security systems exist in Uganda: formal social 
security schemes targeting the employed, community groups that 
serve only group members, kinship-based solidarity groups that 
serve the extended family and village residents' mutual assistance 
groups, which are compulsory for all adults in the villages where 
they operate. These groups are currently the most widespread and 
effective of all, though they are plagued with poor management and 
a low capital base. The village-wide mutual assistance groups offer 
the potential for reaching most community members but operate in 
only one of the four districts visited. District Development Programmes 
offer a feasible entry point for beginning to address the 
lack of policy-led social security at community level. 
1 Dept. Women and Gender Studies. Makerere University, Kampala 
2 Dept. Social Work and Social Administration, Makerere University, 
Kampala 
3 Executive Director, Small Enterprise and Community Management 
Institute, Kampala 
4 Dept. Social Work and Social Administration, Makerere University, 
Kampala 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 157
Background 
This study is based on a regional initiative to try and understand the 
nature and functions of non-formal social security systems in four selected 
countries in eastern and southern Africa; Uganda, Tanzania, 
Zambia and Zimbabwe. 
In the case of Uganda, recent economic and political developments 
offer the opportunity to take stock of what people are doing about their 
social protection after three decades of political turmoil and war. 
Uganda is predominantly a rural society with a high dependence on 
agriculture for income and employment. The poor mainly live in the 
rural areas. As one of the World Bank studies on Uganda pointed out 
(1993), a number of factors appear to threaten the continued effectiveness 
of the extended family and individual's own solutions in the 
face of growing impoverishment, low agricultural productivity, the 
failure of poverty alleviation measures to reach the poorest and the 
inadequate provision of social safety-nets by government. 
In recent times it has been acknowledged that, due to a strong 
macroeconomic policy performance, there has been a reduction in 
downward poverty trends but poverty has reduced in urban more than 
rural areas. It is still a big challenge to bring growth to the poorest 20% 
of the population. 
While literature exists to show the trends of formal social security in 
Uganda, of the countries participating in this study Uganda has the 
most undeveloped formal social security systems and the least documented 
non-formal social security systems. This is mainly a result of the 
disruption during the country's turbulent past. 
The research problem 
Up till now there has been inadequate knowledge of both formal and 
non-formal social security systems in Uganda. This is dangerous, 
particularly at a time when the State is rapidly retreating from the 
provision of social services. Thus, this study focused on analyzing the 
current inadequate knowledge base of the status and implementation 
of social security systems, particularly non-formal social security 
systems. While the general guidelines were followed, the following 
158 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
specific research questions were formulated to address the Uganda 
context: 
• What formal and non-formal social security schemes exist; what 
supporting inputs do they have and where do they come from? 
• How have non-formal social security schemes been organized and 
in what way are they effective? 
• What is the experience of different groups of people with various 
types of non-formal social security systems? 
• How can effective forms of social security be strengthened and 
extended to cover more groups of people? 
SUMMARY OFTHE LITERATURE 
The research into both formal and non-formal systems of social security 
was guided by a simple framework to document and determine the 
organizational factors that are related to the quality and quantity .of the 
outcomes of social security for different groups of people. It was 
conceptualized that social protection needs would vary with the context 
of the different groups. 
Social security reforms currently going on in the African region have 
largely focused on formal social security, particularly favouring social 
insurance schemes. There are two problems here that policymakers 
need to address. First, formal social security systems do not reach most 
people in the region because they are designed only for the small percentage 
of people in formal employment. Second, even for the few who 
are reached by formal systems, women are disadvantaged because of 
gender inequalities in the labour market. Social security reformers need 
to factor in the different work experiences of women and men when 
designing the reforms. Non-formal systems in the region have not been 
adequately documented and there is therefore a need for comprehensive 
research into the these systems. 
There are a number of informal social security organizations. The 
extended family system used to be the most important of the latter. It is 
common for people employed in urban areas to send remittances in 
cash or in kind to their relatives in the rural areas. In some instances, 
people in the rural areas also send remittances, usually in kind, to their 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 159
urban relatives. Following the gradual disintegration of the extended 
family system and given the lack of access to formal social security 
systems, the poor have mobilized themselves to develop semi-formal 
systems to meet their social security needs. These usually take the form 
of mutual aid groups (Kaseke 1993). 
Examples of such organizations include burial societies, saving 
clubs and credit schemes. Burial societies are commonly found in rural 
areas while savings clubs are more common in urban areas. Although 
the operations of such organizations are not governed by any legislation, 
they operate in accordance with rules agreed by the members and, 
with the support of development agencies, they could expand and 
bring in new members to provide a gradual increase in benefits. 
People in rural communities use a variety of informal and semiformal 
strategies to help them cope with adversity. These are 
normally non-statutory and do not get any support from the State. 
Fultz (1997) argues that efforts to redefine social security to take into 
account the realities of rural life in developing countries should focus 
on the concept of living standards. This means that social security 
should refer to the broad class of measures that people adopt to restore 
their standard of living. Such a definition recognizes the existence and 
role of arrangements in rural communities such as the family, the savings 
club, rotating credit associations, burial societies and other forms 
of traditional measures. 
Formal social security schemes: operating 
principles and structure 
Formal security is provided through social security schemes. These 
include social insurance, social assistance, provident funds, employer's 
liability schemes and benefits funded from general revenue. The 
difference between these schemes lies in the principles on which they 
operate (Wilber 1997). In informal schemes local people pool their 
resources and come to the aid of members(Kaseke 1998, 1999; Kayongo 
1999, Kasente 2000, Kyomuhendo 2000). For instance, in times 
of sickness or death, the affected person may be helped with goods or 
with cash (Kayongo 1999). 
160 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
Most formal social security funds are regionalized. In some countries 
the services are further localized and delivered at zone levels which are 
smaller units of the districts. This helps to achieve better services for 
clients. Many social security schemes have an administrative structure 
consisting of a managing director (director general), a board of directors 
and different heads of department (Tumwesigye 1993). These departments 
tend to reflect the functions of social security schemes, such as 
an accounts section, a compliance department, public relations, a legal 
department, computer operations and a medical advisory department. 
The National Social Security Fund (NSSF) of Uganda displays some of 
these characteristics. 
Throughout the world social security is a public responsibility 
(Kayongo 1999). No private business-person can provide meaningful 
social security because private businesses need to make a profit to 
survive. Private institutions cannot provide for people who lose income 
due to old age, invalidity or the loss of a breadwinner (New Vision 
March 1998:34). 
Most social security schemes derive their finances from employers' 
and employees' contributions, investment incomes, government subsidies 
and incomes from public penalties or surcharges imposed on 
employers who pay contributions late. Employees contribute because 
they are saving for their own future contingencies and employers 
contributes because they are using the workers for their own benefit 
while they are still energetic: the employer is therefore bound to provide 
for them in times of need. The government contributes because it is 
required to provide social protection for its citizens (Kakooza et al.,1992) 
Contributions to national social security schemes are paid monthly 
at a fixed rate. Uganda's National Social Security Fund requires the 
employer to deduct 5% from the worker's gross wage and add his own 
contribution of 10% monthly(NSSF Guidelines for employers and employees). 
These schemes normally invest their income in areas where profits 
can be yielded quickly. The National Social Security Fund, for instance, 
has invested in government stocks, bonds and fixed deposits 
with banks as well as estates. In 1998 the NSSF reported that it had over 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 161
UShs. 29 billion in fixed deposits, UShs. 4 billion in Treasury Bills, 
UShs. 2 billion in East African Development Bank bonds and UShs. 30 
billion in estates {New Vision March 19 1998:34). 
Membership 
The NSSF registers only those employers in the formal sector with at 
least five employees (NSSF Guidelines to employers and employees). 
Benefits 
The benefits paid by NSSF include old age benefit, survivors benefit, 
withdrawals, invalidity benefit and an emigration benefit. In addition to 
these five, CIS pays benefits for orphans, widows, maternity, funerals 
and a missing person's allowance (Kyobe 1993). 
Compliance and methods of collecting contributions 
Compliance and enforcement operations need to be thorough and 
efficient (Semanda 1997) for any social security system. For some 
formal schemes the employer normally pays the workers' contributions. 
Large-scale social security systems employ a workforce to collect 
contributions and detect employers who are not fulfilling their obligations. 
It has been argued that inspectors should be rotated regularly 
so as to prevent them getting too "cosy" with employers (Kakooza et 
al, 1992). 
Processing claims 
All social security schemes strive to make this process as short as possible 
as the public sees this an indicator of the scheme's efficiency. The 
shorter the period within which a beneficiary is paid, the more perfect 
the social security scheme is seen to be (Semanda 1997). To meet this 
goal, many social security schemes try to computerize their work and 
attempt to reduce the number of stages through which the claim has to 
go before it is paid. Uganda's social security system is poorer than that 
of Cyprus, for instance, because Cyprus has only seven stages through 
which claims have to go before payment whereas Uganda's has 14 
(Kyobe 1993). 
Client involvement is also critical. Various studies point to the need 
for social security schemes to involve their clients in their activities, 
rather than treating them astnere files. To achieve this goal, programmes 
to educate customers are commonly initiated. This is sometimes 
162 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
done by compliance officers at the work premises who explain how the 
scheme mobilizes and spends the money, its duties to the customers 
and the contributor's obligations (Kayongo 1999). This is true for largescale 
organizations, including Uganda's NSSF and similar schemes exist 
in developed countries (Kyeyune 1993). 
Accountability 
Social security systems everywhere strive to be accountable to their 
owners or clients, but with different levels of success. In formal schemes 
commonly cited in the literature, statements are normally issued to both 
employers and employees to indicate how much they have saved with 
the scheme over the last period. This is crucial for confirming whether 
or not the finances paid in reach the fund. Such confirmation reassures 
contributors and enables them to make personal plans and allows the 
public to judge the performance of the scheme. (Tumwesigye 1993). 
Non-formal social security systems: resilience amidst change 
In Uganda, as elsewhere, traditional social support systems were most 
prominent before the introduction of formal social security for those in 
paid formal employment. As Mudondo (1991:01) notes: "There used to 
be a universal tradition of family, tribe, village, class, or community 
care." 
The emergence of urban commerce and formal employment has led 
to labour mobility and a subsequent disintegration of kinship and 
extended family systems (Kyomuhendo 2000). Education, family planning 
and urban employment all weaken the family. This has happened 
against a background of high poverty levels in the rural areas while, at 
the same time, worsening the poverty. Education, like urban employment, 
takes away sons and daughters who would normally care for the 
aged. As people try to economize because of low incomes, it is no 
longer common to find people paying school fees for their brothers' or 
sisters' children. 
However, a bond still exists between family members. The educated 
and the urban employed go to the countryside for Christmas and Easter 
to meet and share some of what they have earned with their extended 
families and friends. The continued existence of this bond between the 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 163
rural and urban (which translates into the continued existence of the 
extended family) is linked to the "economy of affection" (Hyden 1983) 
and the inability of capitalism to destroy the African peasant mode of 
production. While the urban elite buy land and invest in the towns, 
they also do the same "back home" in the rural areas where they would 
have originally inherited land from their parents. 
Semi-formal social security schemes 
Semi-formal social security schemes have achieved a considerable degree 
of success. An adult literacy centre, for example, was erected by 
the local women social security scheme (with local community leader 
support) in Thatha village, Koch parish. The same group has established 
livestock-rearing projects of cows, goats and rabbits and have 
set up a revolving fund to assist group members. Other groups have 
also pioneered impressive projects like that of Achi village, Jonam 
County. It started by contributing firewood, which was sold in Pakwach 
and the money kept in the pool. Such money has helped members in 
different ways. 
The operation of semi-formal social security systems is friendly and 
personal (Kyomuhendo 2000). A member may seek assistance on weekends, 
public holidays or during the night. Benefit or relief is provided 
promptly, with very little or no paperwork and application procedures. 
The contingencies covered arise from a variety of local realities, including 
the death of family members, urgent and unanticipated domestic 
expenditure, school fees, sickness, cultural ceremonies and investment. 
Most schemes will not define or limit the circumstances for which funds 
are provided. It is because of the unique features of these schemes 
namely; simplicity, convenience, user-friendliness and effectiveness, 
that contentment among members is high (Kyomuhendo 2000). 
However, semi-formal social security structures in Nebbi have weak 
management structures and financial basis. Although the cost of 
administration and management of these schemes is generally low 
because the executive members provide voluntary service (Kyomuhendo 
2000), there is inadequate knowledge of the book-keeping, for 
instance, that is necessary to manage such schemes. 
164 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
In addition, the financial base of most schemes is too small to address 
all contingencies. Schemes which pay school fees for orphans at primary 
level I (notwithstanding government support in form of Universal 
Primary Education), meet a setback when they cannot raise secondary 
school fees. Nevertheless, semi-formal social security systems remain 
popular. Some non-government organizations like CARE support such 
community initiatives, especially in capacity building. It is the view of 
the researchers that providing financial assistance in form of cash to 
the scheme's pool undermines the people's commitment and their ability 
to save. Intervention should be in terms of technical assistance, 
management, sensitization and investment guidelines. 
Existing gaps in the literature 
The gaps in the literature on social security in Uganda are as follows: 
• While it is known that existing formal social security systems are 
limited in scope and coverage and they are plagued with poor management, 
it is not known whether suitably reformed security systems 
would deliver higher levels of benefits and to whom. 
• It is not known what different groups of people are doing about their 
social protection, in light of the turbulent history the country has 
experienced, the growing impoverishment and the inadequacy of the 
existing formal social security systems. Detailed empirical studies 
that will fill this gap are recommended. 
Findings from the study 
The concept of social security 
The concept of social security in rural districts is radically different in 
Uganda from the Western concept. In districts where most people are 
smallholder peasant cultivators who do not depend for their survival 
entirely on a daily, weekly or monthly income, the key to this concept is 
solidarity. Social security is seen as an expression of solidarity in both 
emotional and material support. Solidarity is commonly expressed in the 
event ofcrop failure, displacement as a result of civil conflicts or other 
emergencies. Urban people, on the other hand, appear to conceptualize 
social security as a safety net. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 165 
I
Kinds of problems that call for collective social arrangements 
From focus groups it was found that the problems were forcing 
communities to form collective social arrangements were, in this order: 
• Sudden and unanticipated personal emergencies, particularly the 
death of family members and sickness. 
• Life-cycle factors, particularly school fees, funerals, weddings, 
baptism and graduation and assisting women who have given birth. 
• Impersonal crises, particularly drought and those leading to food 
shortage, floods or landslides. 
• Structural long-term factors related to a low demand for services 
produced in the community, poverty, an intense seasonal demand 
for labour (particularly women's labour) and the lack of capital to 
start up or expand business. 
• Collective social arrangements are thus made in the struggle for 
survival, to secure a certain dignity and for maintaining a minimum 
economic threshold against risks posed by multiple pressures. 
Existing social security arrangements 
The existing social security arrangements and the contingencies addressed 
are presented in Table I. Most people, including those 
benefiting from formal social security systems, depend on semi-formal 
and informal arrangements for their social protection. Community 
groups are the most prominent and widespread and the contingencies 
they cover vary from place to place but many individuals belong to all 
types of groups at the same time. 
Formal social security systems 
The types of social security arrangements in the formal sector include 
the government pension scheme for government workers and the 
NSSF and a government-initiated occupational scheme. There are also 
private insurance schemes such as the health insurance scheme provided 
by African Air Rescue services (AAR) in Kampala. 
In occupational social security systems companies which are capable 
of making their own retirement arrangements for their workers are 
exempted from participation in the National Social Security Fund e.g. 
166 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire S Kyomuhendo/UGANDA REPORT 
Table I: Social security arrangements and 
contingencies addressed 
Social Security 
1. Formal social security funds 
(National Social Security Fund 
and Pension Fund). 
2. Semi-formal community 
membership groups. 
3. Kinship-based solidarity 
groups. 
4. Village residents' mutual 
assistance groups. 
banks and British American Tobacco, which have a strong financial 
base. As participants are dependent on job security in a specific organization, 
however, when their jobs are at risk then their social security 
arrangements are also at peril. 
Case study I: The National Social Security Fund (NSSF) 
The Social Security Act was established in 1967 and enforced in 1968. 
Under this Act, the employers contributed Ushs. 40 and employees 
Ushs. 40 per month. The Social Security Act 21 of 1967 and the Social 
Security (Amendment) Decree 33 of 1972 were repealed with the 
establishment of the National Social Security Fund (NSSF) Act of 1985. 
This Act required employers to register their organizations when they 
employed more than five people. All employees between the age of 16 
and 55 years were to be members of the NSSF. The Act requires a total 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 
Contingency addressed 
Retirement (loss of employment). 
Death of family members; taking the 
sick to hospital; funeral requirements; 
school fees; organizing functions like 
weddings, baptism, graduation; food 
shortages; capital to start or expand 
business; seasonal demand for 
(agricultural) labour 
Food shortage; funeral requirements; 
organizing social functions; taking the 
sick to hospital. 
Sudden unanticipated family and 
community emergencies; funeral 
requirements; organizing functions. 
167
contribution of 15% of an employee's monthly wages, 10% from the 
employer and 5% from the employee. NSSF is a national saving scheme 
for workers and provides benefits to cover contingencies such as old 
age, invalidity and death. 
Qualifying employer registration 
A qualifying employer registers by completing the National Social 
Security Fund Registration form and is issued with a certificate of 
registration, the SF.2. At the time of registration, members must put 
their right thumbprint in the space provided on the SF.3/4 card, whether 
they can write or not. When claiming benefits members are required to 
place the same thumbprint on the claim form which is then compared 
with the master card. They must be identical in order for benefits to be 
paid. It is, therefore, important that a clear thumbprint is provided. 
The National Social Security Fund pays the following benefits: 
Age benefit: payable to members who have attained the age of 55 
years, whether they are still working or not. 
• Withdrawal benefit: payable to a member aged 50 years who has 
been out of work for a period of 12 months. 
• Invalidity benefit: payable to members so disabled and incapacitated 
that they are unable to work as a result. 
• Survivors benefit: payable when a member dies. Wives, husbands 
and dependant children have a priority claim. 
• Emigration grant: payable to the member who is leaving the country 
permanently. The amount payable is normally the whole balance in 
the member's account, including all contributions paid by the employer 
and member, plus, interest. 
Under the Act the following people are exempt from the National Social 
Security Fund legal requirements: members of the government pension 
scheme and the Army, the Police Force and prisons' and teachers' 
pension schemes. 
The resource base of NSSF widened when it became a corporation 
recently. It bought 16 houses in Bukoto which it rents mainly to 
168 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
expatriates. It has 36 mansions and 18 houses in Namuwongo Lower 
Estate, each rented at Ushs. 200,000 per month. It has deposits in 
Stanbic Bank and investments in the Workers House, a commercial 
multistoried building in Kampala. 
Constraints 
NSSF in Uganda in general and Kampala District, in particular, is constrained 
by the following factors. Employers often understate the 
workers' salary in NSSF schedules in order to remit less money and 
divert the difference for their private, personal use. Poor record-keeping 
also constrains NSSF operations as employers do not keep information 
in acceptable ways. In some cases the documents on which they 
register employee's names, ages, numbers and other information are 
lost. So, when filling in the NSSF S.F. 3/4 card, they may misquote the 
dates of birth and it becomes hard to process claims. 
Similarly, some people resist contributing to NSSF because they 
believe they will not reach the age of 55 years for their age benefits 
claims. People are not interested in the other claims offered like the 
survivors, withdrawal and invalidity benefit. 
There is no comprehensive register of organizations or businesses 
and therefore, the identification of eligible employers proceeds by mere 
enquiry by NSSF field staff. This is costly for NSSF. Claims to benefits 
are also sometimes delayed if the information given by the employer 
does not correspond with that given on the original S.F. 3/4 card of the 
employee. This necessitates the cumbersome interviewing of the employees. 
Understaffing is another constraint with inadequate numbers of field 
officers and supervisory staff. Kampala, for instance, has only three 
supervisory area managers although most of NSSF activities are concentrated 
in Kampala. 
Case study II: Uganda's National Pensions Scheme 
Provisions for pensions in the public service is enshrined in Article 254 
of the Constitution. The pension scheme for the civil service and local 
administration is administered by the Pension Act (CAP 281) and the 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 169
Pensions Regulations. The pension scheme for the military is provided 
for under the Armed Forces Pensions Act (CAP 298), while the urban 
authorities' pension schemes are administered in accordance with the 
Municipalities and Public Authorities Provident Fund Act (CAP 291). 
Pension Act (CAP 281) 
The Act provides for the granting and regulating of pensions, gratuities 
and annual lump sum allowances-in respect of public officers in 
the Government of Uganda. A public officer qualifies for pension in a 
number of circumstances, including retirement; removal from the public 
service; on the attainment of 45 years of age after serving for a continuous 
period often years or more; on successful completion of 20 
years of continuous service in a pensionable appointment. 
Women officers who resign on, or retire with a view to, marriage are 
eligible for pensions if they have served for a continuous period of five 
years. Police and prisons officers below the ranks of Assistant Inspector 
and Principal Officer respectively are eligible if they have served for 
at least 13 years. Member of the Police Force retire on reaching 55 years 
of age or on completing 20 years continuous service. 
Developments in Uganda's National Pension Scheme 
In order to improve pensioners' benefits, in 1994 government made 
major amendments to the Pensions Act (CAP 281). These provided for 
the computation of pension whenever the salaries of serving public 
officers, in terms of rank and length of service, are equalled. This 
should increase the pension levels of older pensioners and improve 
their standard of living and dignity. 
The implementation of the amendments was, however, delayed, 
mainly because government wanted to establish the number of pensioners 
and their service records. By the end of the financial year 
1999-2000 the revalidation and recomputation exercise was complete for 
verified pensioners, including those who had retired in the higher salary 
scales. As a result their monthly pensions increased from Ushs. 50,000 
to Ushs. 600,000 at the higher levels and from Ushs. 3,000 to Ushs. 
80,000 at lower levels. 
Between June and August 2000 inter-ministerial teams of officers were 
dispatched to all counties and municipalities to verify and update the 
170 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente. Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
records of pensioners. The response was tremendous. Nearly 15,000 
pensioners updated their life certificates and another 5,378 completed 
the census registration forms. The processing and analysing of data is 
currently underway. It is planned that by the end of December 2000, all 
pensioners with valid and authentic records will receive new pensions 
and catch up with their colleagues. 
Another factor affecting pensioners is the lack of information about 
the basic procedures involved in pension administration. It was realized 
that an information manual on pensions management would be 
useful for stakeholders and so a Pensions Management Information 
manual was prepared and published by the Ministry in April 2000. 
Some of the challenges of Uganda's National Pension Scheme 
• The scheme lacks a redistributive component. The moneys obtained 
are a function of the last salary scale of the officer in question and 
length of service. Low salary payments to workers means that these 
pensioners also get poor benefits, perpetuating poverty. The process 
of securing terminal benefits is still largely initiated by the 
claimant, not the government. 
• This leads to cases of very late claims or no claims at all, especially 
when the officer in question has died or retires to a remote village. 
• There is often a time-lag between the time a public officers cease to 
receive a salary and the time they receive the gratuity. 
• The pension offices and the mother ministries are centralized in 
Kampala city. Costly trips to Kampala by claimants militate against 
the objective of solving the financial problems of the pensioners. 
• The process is painfully bureaucratic and irritatingly slow. Even in 
the advent of HIV/AIDS, no marked improvement in speed has been 
realized. 
• Pension officers are badly understaffed. 
• Excessive numbers of files and paperwork lead to the misplacement 
of documents. The process can only be partially computerized as 
some situations need human judgement. 
• The centralized workload overstrains the officers and renders them 
liable to errors and possible misjudgement and miscalculation. 
Other challenges to formal social security 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 171
Benefits are not paid promptly and in many cases, they are inadequate. 
Formal security systems promise more than they give. Absolute figures 
are required which take into account the value of currency and 
future inflation. The fragmentation of social security is another problem 
facing formal social security systems. When you segment you disunite. 
This leads to too few contributors available for each scheme. The 
following, for example, have their own small and unviable schemes: local 
government, Makerere University (with National Insurance Corporation) 
and the civil service with its government-funded pension scheme. 
One of the key informants based in a rural district assessed the formal 
social security systems as follows: 
Government social security systems are hopeless, completely 
hopeless. My father worked for 27 years and on retirement he 
was given as his package Ushs. 25,861. Twenty-seven years for 
this? Hopeless! It shows that those who work hard to benefit in 
retirement in the Ugandan situation are fooled at the end. 
. People who probably picked a few things [a euphemism for 
embezzlement] from government and built houses and bought 
exotic cows are now telling him, "Man, I think you are absolutely 
hopeless". Social security schemes are hopeless. Somebody 
might get Ushs. 700 as a pension: does this make sense? 700 x 
12: Ushs. 8,400 for a whole year! If somebody works very hard 
for you and you give him Ushs. 84,000 for a whole year, this will 
not encourage his son to work hard himself in future. That is 
why you find that, when it is market day, teachers in this district 
are not in the classroom; they are busy in the market. Because 
they know that at retirement the package will be very small. Key 
informant, district leader. 
Semi-formal social security activities 
Semi-formal social security schemes are not recognized by government 
but they are recognized by the local authorities where they operate and 
are governed by rules and regulations that are agreed upon by their 
members. The struggle against poverty and other social problems in 
172 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhsndo/UGANDA REPORT 
urban areas like Kampala has led to the emergence of various semiformal 
social security arrangements. These are common among 
low-income groups like taxi operators, guides and conductors, market 
vendors, hawkers and, in slum areas, sellers of local brew. Although 
both men and women are involved in these schemes, there is a tendency 
for more women than men to join, as one of the key informants 
said: 
These days things are not easy: men no longer look after their 
children properly. The unfortunate part of it is that more and 
more men are becoming unemployed and it is now the women 
who are the breadwinners for the family. So I advise every woman 
who is not a member of any scheme to join so she will have 
a way of providing for her family. Women FGD. 
Non-formal social security systems 
This is provided to people in need by their families, friends and neighbours, 
mainly for the aged and young children, especially orphans. 
Informal social security is strong at the level of the extended family. The 
family used to help in the inheritance of the widow on the death of her 
husband, but this practice is being discontinued because of AIDS. 
When Western education was introduced people tried to invest in their 
children, especially their education, but this has been found to be an 
unsound investment. It appears that the more highly educated a person 
is, the less use is made of informal social security. Children educated 
up to Primary Seven tend to live near their parents and grandchildren 
are therefore able to take care of their grandparents. Traditionalsocial 
security support has actually weakened because education and waged 
employment tend to take away people from their parents. 
However, AIDS has created a dramatic new need for social security, 
especially for orphaned children. These children are cared for by the 
extended family who provide school fees, medical care, clothing, food 
and shelter. When it is not possible to house such orphans in the 
towns because of the limited space available,, they are sent up-country 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 173
to other members of the extended family, like grandparents and financial 
and other support is provided from the city members of the family. 
Non-governmental organizations like World Vision help to strengthen 
families and communities so they can look after their orphans and the 
elderly and other people in need. We might say, therefore, that although 
village rural structures are crumbling and are therefore becoming less and 
less reliable as safety nets, modern techniques are penetrating the countryside 
to strengthen families. 
Principles and organization of existing arrangements 
The principles behind the different groups and the way they are managed 
are summarized in Table II. The principles behind the different 
social security arrangements and the management processes influence 
which groups in the country are reached. In terms of coverage, the 
NSSF reaches a very small part of the population, consisting only of 
those in formal employment. Semi-formal social security covers more 
people because it is community-based. Almost all community members 
qualify for the semi-formal social security systems and they enjoy the 
benefits much more than those covered by NSSF because they control 
the principles and conditions that are applied. They are also more responsive 
and can react rapidly to problems and help members 
according to the needs of the day, unlike formal systems that opeate 
like an obstacle course with a long series of barriers and no real guarantee 
of help at the end. 
There is a sense of ownership of semi-formal social security systems 
because all members participate in decision-making and in monitoring 
the scheme. This rarely happens in the formal schemes because the 
workers are simply forced to contribute and take no decisions concerning 
the level of benefits paid or investment decisions. To illustrate the 
issues raised about the management and responsiveness of non-formal 
social security, a case from peri-urban Kampala is given; 
We come together so as to solve our problems. At first we were 
10, then 20 and now we are over 30. We do not have restrictions 
on membership. We accept men, youth and women. We meet once 
174 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Katente, Aiingwlre, Banuglrs & Kyomuhondo/UGANDA REPORT 
Table II: Principles and management of existing social security 
arrangements 
Principles 
Type 
Social Security 
Structure 
Formal social 
security funds 
(NSSF & Pension) 
Compulsory savings by 
employee; providing 
economic protection 
on termination of employment. 
Semi-formal member- Pooling together. Monthly 
ship community 
groups 
contribution of an agreed 
amount of money and food 
during the harvest season; 
optional membership; 
addressing specific 
contingencies as agreed 
by members 
Kinship-based 
solidarity groups 
Solidarity and an obligation 
to care for family members 
and relatives in times of 
need. Reciprocity: those 
faced with contingencies 
expect support from their kin 
Village residents 
mutual assistance 
groups committee 
Risk'sharing through 
pooling resources; 
reciprocal mutual 
assistance. 
VOL 17 NO- 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 
Management 
Characteristics 
Established by an Act 
of Parliament; managed 
by government. 
Management structure 
with leaders elected 
and regulations 
• developed by members 
and recognized by local 
councils; regulations 
enforced by members 
with sanctions agreed 
by members. 
An informal arrangement 
with societal sanctions 
for those who fail to 
meet their obligations 
(this is becoming 
ineffective). 
Co-operation enforced 
through sanctions elected 
against non-complianance 
an elected committee of 
women and men in the 
village allocate tasks; a 
written constitution and 
regulations spell out the 
contributions and 
obligations of all adult 
village members. 
175
every -week and each of us contributes Ushs. 500. If someone is 
unable to attend the meeting they send the money. 
We loan out money to members, for example, to start a food-selling 
kiosk. A member may approach us for a loan of, say, Ushs. 
30,000 to inject in his business. We normally assist such a member. 
But we charge a small interest so that the association does 
not just give out money gratis. The interest is kept in the association 
's account. If a member gets sick or dies, we try to help. 
In cases such as the imprisonment of a member, we look after 
their family. If a person is unemployed, he is likely to land into 
many problems; he is tempted to steal. But you see, if we are together, 
in a group like ours, such a person cannot get involved 
in such practices because he has colleagues he can fall back to. 
However if the association is financially weak, it may not adequately 
help a member with a problem. So our main challenge 
is: we need support; someone to help us. 
All the semi-formal social security groups visited are run by committees 
headed by chairpersons with their executives. They have posts like 
vice chairperson, general secretary, organizing secretary, purchasing 
secretary, treasurer and welfare officers and some also have the post of 
health secretary. Leaders are democratically elected and they face little 
competition during elections because the services they render are voluntary 
and hardly involve any allowances or other fringe benefits. The 
candidates are normally nominated and supported by all members unless 
proved to be incompetent. In some cases the term of office is not 
well defined and an officer just ceases to hold the position as a result 
of incompetence, old age or through resignation. 
Observations on existing social security systems 
The viability of different social security systems 
Formal social security systems, which are employment-based and implemented 
on the principles of pooling resources and sharing risk, are 
only accessed by a small percentage of the urban population. Contributors 
to the fund do not participate in the decisions and management of 
176 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banuglre & Kyomuhendo/UGANDA REPORT 
the investment of their funds and neither do they have the means of 
monitoring the activities of the fund. The NSSF generates large sums of 
money that do not serve the interests of the participating employees. 
As one key informants said, 
The NSSF scheme has been abused and it has also been made 
ineffective by other reforms. Employees' salaries are deducted 
but the employers do not all pay their contributions. The devaluation 
of the Ugandan currency made the scheme meaningless. 
When the scheme moved out of banking and entered real estate, 
the value of the fund improved but beneficiary do not know how 
their money is invested—// all happens far away in Kampala. As 
for the Pension Scheme, nobody knows how it works. Government 
cannot really afford gratuities to public employees and the 
pension paid is valueless. The pension scheme does not factor 
inflation into its operations. 
Non-formal social security arrangements serve most people in the 
districts the team visited and probably the whole country. Semi-formal, 
membership-based social security arrangements appear to be the most 
feasible from the perspective of the communities they serve. This view 
was expressed by one of the focus group members: 
If there were no such groups in our community, it would not 
have been possible for most of us to manage this far and the future 
is likely to remain the same. Even without considering the 
emergencies that happen to different families in the community, 
we would all be much poorer than you see now. We also get 
some peace of mind knowing that the groups we have paid to 
join will come to our aid when we fall into big trouble. Those 
who get too old or too sick or fail to honour their membership 
requirements have to ask their children to rescue them and help 
them to pay the membership requirements or they will be left out. 
That the way things are turning out. Translated from vernacular, 
district focus group. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 177
It was, however, observed that semi-formal social security arrangements 
have a weak management structure and an inadequate financial 
basis. While the cost of administration and management is quite low 
because executive services are voluntary, the knowledge of managing 
the schemes within the organization is limited. Bookkeeping is informal 
and irregular and the strategic planning skills to make the schemes economically 
viable are missing. The schemes depend largely on social 
support. While they have the potential to meet social security needs of 
most communities, because of their wide coverage, flexibility and being 
owned by the beneficiaries, their financial base is too small to create the 
required impact, leaving most contingencies inadequately addressed. 
That having been said, there is a sense of ownership of the semiformal 
social security systems because most members participate in 
decision making and monitoring the activities of the scheme. In the formal 
schemes however, this rarely happens. The informal schemes are 
friendlier than the NSSF, where people are forced to join. 
Kinship based solidarity groups are declining in effectiveness and 
limited to specific contingencies, particularly those related to life cycle 
factors like celebrations and deaths. In some districts they also cater for 
sudden emergencies and food security. The strength of the extended 
family in providing social security has been undermined by modern life 
styles that are spreading to rural areas quite fast, introducing individualistic 
and market-centred behaviour. Increased urbanization and the 
poverty and death of breadwinners, mainly from AIDS, have compounded 
the situation. While some bond still exists between extended 
family members, it is becoming less obligatory for people to be responsible 
for financial needs of the extended family. The bond that exists is 
increasingly limited to affection and empathy. The potential for kinship 
based solidarity groups to expand into meaningful social security is 
therefore low. 
The kinship-based social protection tends to exploit women to the 
benefit of other family members, without guaranteeing their own social 
protection. As one women's focus group observed, 
We find the family groups very demanding on our labour for the 
benefit of our husbands and in-laws. For example, in some ex- 
178 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Aslngwire, Banujire & Kyomuhendo/UGANDA REPORT 
tended families, orphans are distributed to different homes 
within the family. It is the woman who usually has to feed them, 
dress them and even find money to pa? for their education. During 
celebrations when we gather together, the men provide meat 
and we have to do the rest. We would rather spend our energy 
in membership groups where there is some hope for material 
gain but, as you know, it is difficult to come out and say all this 
without being misunderstood. Translated from vernacular. 
Village residents' mutual assistance groups are all-embracing, operating 
on the premise that all households need their collective services. 
All adults (over 17 years old) are liable to pay contributions determined 
by the general assembly. All are, therefore, automatically eligible for all 
the welfare and insurance services provided by the organization unless 
they have been declared unco-operative by their peers. The performance 
of these organizations is good, particularly in mobilizing villages 
for mutual support in times of emergencies. Their coverage was also 
found to be quite wide in one of the four districts visited where all 
households have access to one of these village organizations. These 
groups have gradually taken on some of the judicial, administrative and 
even political roles of the local administration council, which are enshrined 
in the Local Government Act (1997). There is a need to evaluate 
not only their performance in this respect but also the possible area of 
conflict and ce-operation between the two forms of village governance 
(formal and informal). 
While this kind of organization for social security was found in one district 
only, it is the one with most potential to reach all community 
members. For that reason, we found it worthwhile to recommend a more 
detailed follow up to establish whether it could be supported to promote 
the cause of community and household social security. 
Problems and constraints 
Stakeholders identified severe constraints facing social security organizations. 
The kinship-based solidarity arrangement has been eroded 
' by poverty and cultural change to such an extent that most people are 
either unable or unwilling to meet their traditional kinship obligations. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 179
Community groups lack recognition and support from government, as 
well as from intermediary non-government organizations, despite repeated 
recommendations that they do so since the mid 1980s. The 
limited external resources they do get are remittances from urban migrants 
especially aspiring politicians and a few compassionate 
individuals. Their main strength is in the co-operative spirit and meeting 
felt needs, but rampant poverty keeps internal contributions to 
woefully inadequate levels. Low levels of literacy limit members' organizational 
capacities and functional literacy programmes do not exist. 
Many members find it difficult to meet their contributions, partly 
because of poverty but also because of alternative demands on their 
labour and funds. At the same time, the demand for social security services 
has expanded rapidly due to diseases (especially malaria, HIV/ 
AIDS, sleeping sicLness) and the high cost of living. Among these expenses 
are the cost recovery measures demanded for social services, 
the increased monetization of the economy and their own increasingly 
limited cash opportunities, together with natural misfortunes such as El 
Nino, drought and famine. 
Perceived solutions and prospects 
Stakeholders are unanimous that the government must recognize its 
responsibility for the social security of the family by putting in place 
appropriate schemes. According to local authority leaders and administrators 
at district level, the current Poverty Eradication Action Plan has 
failed to appreciate and address the nature and magnitude of this problem. 
Communities wonder how government can claim to be fighting 
poverty when it neglects community-based organizations which are the 
frontline organizations in the struggle. Many members of the community 
recognize that intermediary non-government organizations should 
focus on activities from which community members are likely to reap 
tangible benefits. 
The prospects for improving social security services will depend 
largely on support" services targeting grassroots self-help communitybased 
organizations. What is required is the strengthening of their 
social and institutional capacity and focusing on poverty eradication 
through these organizations. Liberalized markets will not fill this gap 
without massive subsidies. 
180 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Kasente, Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
Distinctions 
From the presentations made by the different groups that were consulted, 
a number of distinctions between social security schemes, 
systems and organizations were made, as follows: 
• A scheme is perceived as a specific arrangement (with facilities and 
procedures mutually agreed by suppliers and beneficiaries) designed to 
address a specific set of contingencies (such as famine relief, medical 
support, funeral services, seasonal mutual labour transfers and reciprocal 
consumption loans). Such schemes and services may be organized 
or rendered by a wide range of community-based organizations but 
they are not all social security systems. 
• An organization was said to be an arrangement such as a community-
based organization which may be providing social welfare or 
development services. 
• For an arrangement to qualify as a social security system, it should 
have clear criteria for membership, it should be long-term and not ad 
hoc, with a system that is operational and a clear management structure, 
based on contributions and backed by law and policy. If these criteria 
are followed, very few of the current arrangements can be called social 
security systems. 
Distinguishing the roles of stakeholders 
The roles of all stakeholders in the business of providing social security 
services at household, community and local government council 
levels must be identified. Field experience illustrates that communities 
represent the principle strategic response to the rising demands of 
rural households for social security. There is lack of specific State 
support for social security at community level and therefore an explicit 
development programme targeting the social security dimension of 
family welfare and poverty eradication is needed. 
Policy implications 
On local governance and decentralization 
It is understood that sub-counties will be allocated funds for their 
development plans as components of the District Development Plans. 
This provides an opportunity for targeting poverty eradication through 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 181
social security by supporting at least two community-based organizations 
in each parish. This will promote social security schemes and 
capacity building. 
Using community-wide village residents' mutual assistance groups 
as the grassroots organizations for social security support to households 
will maximize poverty targeting. Ways and means for integrating 
the community-wide social security arrangements with the local council 
system should be identified. Feasible intermediary community-based 
organizations need to be identified and developed as channels for 
social security support. 
Market liberalization and community participation. 
Important roles have been identified for collective community action in 
natural resource management, education development and primary 
healthcare, among others, but the currently effective and operational 
community action groups for social security have been neglected. This 
is a major inconsistency in government service delivery systems, which 
is very difficult to justify and defend. It gives the impression of a government 
that is not really committed to its own declared goal of poverty 
eradication and broadbased economic growth. There is a strong need 
to shift towards a community-focused Poverty Eradication Action Plan 
(PEAP) while retaining a market-oriented growth promotion strategy 
under market liberalization. Growth policies must recognize the limits to 
liberalization, which ignores support to collective action of both market 
enterprises and communities. 
Employment creation and social safety nets. 
The key to the creation of employment and social safety nets is a social 
development strategy that seeks to expand and deepen the space for 
collective action in the medium and long-term concern for social security. 
Besides enhancing self-help efforts for community safety nets and 
household initiatives, it will improve access to external funds, thereby 
spreading effective demand for goods and services. In particular, it will 
spread existing and innovative financial services related to social security 
provision (micro-finance) as well as economic infrastructure (such 
as communication and power). 
Researchers' views 
182 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
References 
Kasente. Asingwire, Banugire & Kyomuhendo/UGANDA REPORT 
We have noted the lack of an appropriate conceptual framework for 
defining and identifying the various types of social security services 
(products) provided to the rural population. It is clear that the ILO definition 
of social security referring to "statutory provision" for employed 
persons alone is inadequate and, indeed, inappropriate for rural areas. 
The relevant concept has to embrace both financial and non-monetary 
services as well as informal and semi-formal arrangements, as exemplified 
by operations of village residents' organizations. 
The World Bank has supported the policy of building social safety 
nets but this strategy has not been concretized in specific measures. 
Their neglect of community-based organizations that are trying to fill 
this wide gap is clear evidence of their lack of commitment to such a 
programme. Indeed, the Community Trust proposed in the budget of 
1991 as a support mechanism for such community-based organizations 
was shelved, probably due to the over-emphasis (and the over-valuation) 
of the liberalization strategy. 
Development of social security systems in rural areas, whether as social 
safety nets or as investments in social and human capital, is central to 
the poverty eradication strategy in rural areas. It must be noted that 
social and institutional capacity building for collective action and 
human development requires different types (or baskets) of instruments 
compared with the capacity building of liberalized markets. 
District development plans depend heavily on external resources 
from donors, non-government organizations and central government. 
Support to semi-formal social security will depend on the sensitivity of 
development programmes to social security concerns. This points to the 
importance of targeting social security services in the macro-economic 
policy framework and social sector development programmes. 
Fultz, E. 1997. Social Security for Rural Households: Problems, Challenges 
and Prospects, Occasional Paper, Harare, ILO 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 183
GTZ, 1995. The Capacity of Social Security Systems in Southern Africa: 
Conditions, Constellations and Socio-political Relevance, Malawi 
Hyden, G. 1983, No Short cuts to Progress^ 
ILO, 1984. Introduction to Social Security, Geneva 
Kaseke, E. 1993. Rural Social Security Needs: The Case of Zimbabwe, 
Harare, School of Social Work 
Kaseke, E. 1998. Introduction. In Kaseke E. (ed.), Social Security Systems 
in Rural Zimbabwe, Harare, Friedrich Ebert Stifiung 
Kasente, D. 2000. Gender and social security reform in Africa. International 
Social Security Review 53 3 27-41 
Kayongo, S. 1999. Assessment of the Organization and Performance of 
the National Social Security Fund from the Contributors' Perspective: 
The Case of Industrial Workers in Ndinda-Nakawa Industrial 
Area—Kampala, unpublished B.SWSA dissertation, Makerere University 
Kyeyune et al., 1993. ~NSSF report on the Department of Social Security 
and Ghana Social Security and Insurance Trust, Kampala, NSSF 
records 
Kyomuhendo, S. 2000. Reforming Social Security in Uganda; Lessons 
from the Informal Social Security Arrangements, Paper presented at 
the International Conference on the Challenges to the Social Sciences 
in Africa in the 21st Century. Makerere, Kampala, 25-27 October 2000 
Mudondo, H. 1991. Attitudes and Knowledge of Employers towards 
the National Social Security Fund: A Study of Kampala City, unpublished 
B.A (SWSA) dissertation, Makerere University 
New Vision (March 19, 1998:8) National Sociab Security Fund Press 
Release. Kampala, New Vision Publications 
National Social Security Fund Act 1985. Kampala 
Semanda H. 1997. National Social Security Fund Report on ISSA Seminars 
in Accra, Ghana. Kampala, NSSF records 
Tumwesigye, F. 1993. NSSF Report on the study tour to the Department 
of Social Insurance in Cyprus 
184 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002