Masi Junnah, as she is called in the small fishing village of Gizri, has been working for at least 60 years. Today, at the age of 78, unable to work or walk, she is dependent on her reluctant family and charitable neighbors. She is one of the roughly 60 million workers in Pakistan who are not covered by social security or pension benefits.
Far away, hidden in the savannahs of the Rift Valley, Kenya is leading a revolution in digital transactions, offering retirement and social benefits to all of its citizens. Known as the Silicon Valley of Africa, MPesa in Kenya, an industry-less banking service, enables users to instantly deposit, withdraw, transfer and pay for goods and services using a standard mobile phone. Every person, shop and department has a unique number that is linked to their bank accounts to enable instant cashless transactions. On the contrary, Pakistan remains an informal cash economy, with cash holdings accounting for up to 40% of bank deposits. Pakistan could easily reverse its economy and taxation simply by adopting MPesa like digital financial services.
Perhaps the most important lesson for Pakistan is how Kenya has combined technology and MPesa to provide retirement benefits to 100% of its workforce. In comparison, Pakistan has only about 10% of its workers enrolled in the Workers’ Old Age Pension Scheme (EOBI), with the rest in a state of vulnerability and dependency. The Kenyan system, the National Social Security Fund (NSSF), requires every employee and employer, whether a company or a private individual, to register under it. The employer ensures that NSSF is deducted by the 15th of each month, replenished in the same amount and electronically deposited. Any citizen over the age of 18 can volunteer to register with NSSF and start paying. Workers can check their last NSSF balance and report to authorities if a payment has been missed.
Every Kenyan worker, formal or informal, is required to open an NSSF account. An employer must contribute to the NSSF even if only one person is employed. This enables millions of people who work in irregular, informal or part-time jobs such as maids, guards, gardeners, waiters or helpers to be included in the NSSF program.
For 70 years, unsuspecting bureaucrats and corrupt labor inspectors in Pakistan have worked with employers to strip workers of their EOBI and social security benefits. Kenya has overcome this through a simple and widely accepted policy: “Any employer who does not register with the NSSF or its employees within 21 days of employment is guilty of a crime and can be prosecuted in court. Employees, please contact the nearest NSSF office immediately if your employer is not registered with the NSSF. Our compliance officers take care of the rest. “
With less than 5% registered workers, the four Pakistani social security organizations that care for workers’ health needs can be considered non-existent. Kenya, with a quarter of Pakistan’s population, has four times as many workers registered in its National Health Insurance Fund (NHIF). In contrast to Pakistan, it is the employees in Kenya who have to contribute to the NHIF. Registering a member ensures that a spouse and all registered children are also insured for their health care.
Pakistan needs to dismantle its disappointing and dysfunctional EOBI and social security structures and replace them with a small, highly digitized organization connected to the NADRA database. If Kenya is a country too advanced to emulate, could we learn from Pakistan’s own NCOC, which has proven how small, professional, technology-driven teams can outperform large and petrified bureaucratic systems?
Posted in The Express Tribune, June 6, 2021.
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