Promises broken by weak institutions, poverty and corruption

David Obot

Uganda has ratified various international conventions on human rights and social security, and attempts have been made to domesticate the conventions by developing national laws and policies. However, the limitations of the institutions currently responsible for social security services delivery, and the high incidence of poverty and corruption pose a variety of challenges for the existing social security arrangements, which are highly inadequate.

Social security or socialprotection is a human right. The extent to which a population enjoys socialsecurity depends on factors which include the country’s legislation and policyregulation, social security fund management, resource mobilization andinvestment, beneficiary coverage, the linkage of social security to socialpolicy within a country’s broad economic framework, and adherence to standardsthat guide the decisions and actions of the government and social securityprovider institutions. The mix of these factors and their effectivenessdetermine the population’s protection and confidence in the social securityarrangements.

This report examines Uganda’s social security sector with regard to theeffectiveness of the policies and institutions involved in delivering services,and also addresses future plans in the sector.

Political, economic, social, anddemographic context

Uganda has a parliamentary system of government. There are 332 members ofparliament, who have responsibilities for legislation. At present, 100 of the332 members (or 30%) are women (PoU, 2007,
p. 19).

The country’s economic performance has been affected by global economicactivity, which expanded 5.5% in 2006, up from 4.9% in 2005, and has registeredstrong growth for the past four years (IMF, 2007). The domestic economy isestimated to have grown by 6.5% in 2006-2007 as compared to 5.1% in 2005-2006(RoU, 2007a, p. 5). However, according to Uganda Bureau of Statistics (UBOS)data on sectoral contributions to GDP, contributions from agriculture are on thedecline, as shown in Table 1. This decline in agricultural contributions to GDPis of concern, since around 80% of Uganda’s rural dwellers depend primarily onagriculture for their livelihood.

TABLE 1. Sectoral contribution to GDP (%)





















Source: Uganda Bureau of Statistics.

Half of the children living in poverty

Over the years there have been mixed achievements in reducing poverty. Accordingto a UBOS National Household Survey,
8.4 million Ugandans – close to 31% of the totalestimated population of 27.2 million –were living in poverty in 2005-2006. This represented a decline in the povertyrate from 39% in 2002-2003 (UBOS, 2006, p. 7).

However, a 2005 reportfrom the Chronic Poverty Research Centre (CPRC, 2005) estimated that 50% of thecountry’s approximately 15 million children were living in poverty. Thefactors identified by the report as responsible for poverty and vulnerability inUganda included inadequate social security and protection against shocks, poorhealth, HIV/AIDS, rapid population growth, limited access to land, and lack ofmarkets. Corruption also contributes by diverting resources necessary forenhancing the well-being of the poor, including the sick. Uganda’s PovertyEradication Action Plan provides a framework for poverty reduction, and thegovernment has also budgeted UGX 10 billion (USD 6.1 million) for fightingcorruption (Biryetega, 2006, p. 29). Improved social security has the potential to reducepoverty by providing safeguards that protect the most vulnerable sectors of thepopulation against shocks.

The right to social security

Social security legislation and policy regulation are fundamental foreffective social security in any country. Article 22 of the UniversalDeclaration of Human Rights proclaimed that “every member of society has theright to social security.”[1]ILO Convention 102 (1952) sets out the minimum standards of social securitybenefits for old age, invalidity, survivors, medical care, sickness,unemployment, employment injury, families and maternity. However, thesestandards are of benefit to the population only if public measures againsteconomic and social distress are backed by legislation, policies, regulatoryframework and systems, political will and wide population coverage.

Uganda has ratified various UN conventions and adopted laws and policies toprovide social security for its population. Chapter 4 of the Constitution ofUganda provides for protection and promotion of fundamental and other humanrights and freedoms (RoU, 1995). Ugandan legislation and policies for socialsecurity and social protection include the Ministry of Public Service 1994Pension Act (Cap. 286) for retired civil servants, and the 1985 NationalSocial Security Fund (NSSF) Act (Cap. 222), which established a contributoryscheme for workers in the formal sector. Other social security-related policiesbeing developed include the Social Health Insurance and Community HealthInsurance schemes by the Ministry of Health, and cash transfers for the poor bythe Ministry of Gender, Labour and Social Development. There are plans to revisethe country’s pension and social security legislation (RoU, 2007b, p. 8)towards fulfilling ILO standards. At present, however, the country’s socialsecurity legislation provides far more for workers in the formal sector thanthose employed in the informal sector and the unemployed.

The social security sector is regulated through the Ministry of Gender,Labour and Social Development (MGLSD). The ministry is responsible for policyfunctions, including tabling bills in Parliament for the enactment of laws.Other ministries providing social security-related services include the Ministryof Public Service, for pension management, and the Ministry of Health, which isdeveloping the Social Health Insurance scheme. The NSSF and private institutionsare also involved in social security provision. The private institutionsproviding social security health services are mainly insurance companies, suchas AAR
Health Services and AIG Insurance Company.[2]Most services offered by private institutions are for contributors who canafford to pay for them, leaving the poor excluded. The total number of Ugandansbenefiting from social security is difficult to estimate due to fragmentedinterventions.

The NSSF covers employees in the private sector who work in organizations thatemploy five or more people. As of 2003, a total of 1,282,994 people were coveredby the NSSF scheme and its beneficiaries numbered 8,995 (ISSA, n.d.). However,the performance of the NSSF is viewed as below average due to managementchallenges, the irregular flow of information about the status of members’contributions, flawed investment plans and corruption (Osike, 2007).Contributors’ funds currently total around UGX 500 billion (USD 305.8million), and such a large amount of resources demands careful planning andintegrity in the fund management.

Services for selected vulnerablecategories of the poor

The MGLSD is presently utilizing the Social Development Sector StrategicInvestment Plan of 2004 as a framework for planning, implementation, monitoringand evaluation of social development, including social security.[3]

Efforts to provide for orphans

Protection of the vulnerable through social security is still a problem inUganda due to the prolonged armed conflict the country suffered, in whichchildren were affected most. The MGLSD (RoU, 2004) is currently undertaking theNational Strategic Programme Plan for Orphans and Other Vulnerable Children:2005-2010. The priority areas for intervention are sustaining livelihoods,linking essential social sectors, strengthening the policy and legal framework,and enhancing capacity to deliver. However, there is a challenge of resourcesfor implementing the programme effectively. Other important policy guidelinesrelated to children include the National Child Labour Policy.

The challenge of pension payments

The Ministry of Public Service is responsible for the civil service pensionscheme as per the 1994 PensionAct (Cap. 286). The pension scheme is non-contributory, and covers workers fromthe traditional civil service, teachers, military pensioners, widows andorphans, and former employees of the defunct East African Community. Coveragewas expanded to include army veterans from past regimes recognized through theUganda Peoples’ Defence Forces Act of 2005. Benefits include terminal and severancepackage payments, gratuities for contract and short service employees, monthlypensions, and survivors’ benefits for widows and orphans.

The payment of pension arrears has been a major challenge for the government. Asof March 2007, there were a total of 44,000 civil service sector pensionbeneficiaries and the pension arrears accumulated had reached some UGX 289billion (USD 176.7 million). The government has allocated UGX 200 billion (USD122.3 million) from the 2007-2008 budget towards clearing this debt, althoughthis still leaves a shortfall of UGX 89 billion (USD 54.4 million) (
Mugerwa, 2007).

Other problems associated with pension payments in Uganda include inadequateinstitutional capacity for effective service delivery, delayed payments ofbenefits, the low value of actual pension packages, the inability to meet basicneeds from the benefits, and high transport costs for collecting payments.

No special protection for refugees andimmigrants

The Refugee Act of 2006 and Immigrants Act of 1999 provide protection andassistance to asylum seekers, refugees and immigrants, with a focus on assistingand protecting refugees living in refugee settlements. There are no specialsocial security arrangements for refugees and immigrants, and since they fallunder the category of the poor in Uganda as identified by the MGLSD, most socialsecurity services are accessed through public institutions where resources areusually limited.

Proposals for covering the poor

Social Health Insurance

The Ministry of Health’s National Health Policy (RoU, 1999) and Health SectorStrategic Plan (RoU, 2000) emphasize seeking alternatives for health carefinancing so that the poor and vulnerable groups are not marginalized andexcluded. The ministry is in the process of tabling the Uganda Social HealthInsurance bill in Parliament with the aim of improving the population’s accessto health care. The proposed health insurance scheme would be introduced inphases, starting with formal sector workers, and later expanding to includeinformal sector workers and the rest of the population. The bill is expected tobe presented to the Cabinet in 2007.

Community Health Insurance

The Community Health Insurance (CHI) initiative is being piloted in about 10 CHIschemes in Western Uganda. The CHI requires community contributions to cater formedical treatment of family members at nearby health facilities. Lessons learnedfrom the pilot stage will inform the Ministry of Health in the design of thenext stage of roll-out for greater population coverage.

Cash transfer schemes

Interventions being developed by the MGLSD targeting people living below thepoverty line include a proposal for cash transfers to the poorest of the poor.Proposals at the pilot stage aim at applying two options, in which cashtransfers are linked with improvements in schooling and preventative healthcare. The MGLSD is the overall coordinator for the design of the cash transferscheme.


Given the limited scope of current social protection measures, we put forwardthe following recommendations:

• The government should increase consultations for the development of thesocial security sector by involving employers and workers who make thecontributions; government; institutions such as the NSSF and private insurancecompanies; investors who may plan to use social security investment funds;direct beneficiaries who are entitled to receive benefits from the fund;indirect beneficiaries from the public who depend on the earnings from socialsecurity savings.

• The 1985 NSSF Act, 1994 Pension Act and 2000 Insurance Act should be amendedwith a view to liberalizing the social security and pensions sector, so thatworkers have the freedom of choice of where to keep their social securitysavings.

• The ILO Convention 102 minimum standards of social security should beintegrated into national policies for social security and protection.

• Strong penalties must be enforced on officials who mismanage social securityfunds.

• Programmes for cash transfers to the poorest of the poor should be adoptedand implemented countrywide.

• More research should be undertaken to find effective ways of increasing thepopulation’s social security coverage.


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Mugerwa, Y. (2007). “Uganda: Govt to pay Pensioners in September”. TheMonitor. Kampala, 19 June.

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RoU (Republic of Uganda) (1995). TheConstitution of the Republic of Uganda.

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RoU (2000). The 2000 Health SectorStrategic Plan (HSSP). Kampala: Ministry of Health.

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RoU (2007a). Background to the Budget2007/08 Fiscal Year: Re-orienting Government Expenditure towards Prosperity forAll. Kampala: Ministry of Finance, Planning and Economic Development.

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[1] TheUniversal Declaration of Human Rights was proclaimed on 10 December 1948 at theUN General Assembly. <>.
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