Masi Junnah, as she is known in the small fishing village of Gizri, has been a working woman for at least 60 long years. Today at the age of 78, unable to work or walk any more, she is dependent on her reluctant family and charitable neighbours. She is one of the 60 million or so workers who are not covered by Social Security or old-age benefits in Pakistan.
Far away, tucked in the savannas of the Rift Valley, Kenya is leading a revolution in digital transactions and providing old-age and Social Security benefits to all its citizens. Called the Silicon Valley of Africa, Kenya’s MPesa, a branchless banking service, allows users to instantly deposit, withdraw, transfer and pay for goods and services, all with an ordinary mobile phone. Linked to their bank accounts, every individual, shop and department has a unique number to enable instant cashless transactions. On the contrary, Pakistan continues to remain an informal cash economy, where the cash holding is as high as 40% of bank deposits. Pakistan could easily turn around 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 old-age benefits to 100% of its workforce. Pakistan in comparison has registered just about 10% workers under the Employees Old-age Benefit (EOBI) scheme, leaving the rest in a state of vulnerability and dependence. The Kenyan scheme, the National Social Security Fund (NSSF) requires every employee and employer, corporate or individual, to register under it. The employer ensures that NSSF is deducted, matched by an equal amount and electronically deposited by the 15th of each month. Any citizen above the age of 18 can voluntarily register with NSSF and begin to make payments. Workers can check their latest NSSF account balance and report to the authorities if a payment has been missed out.
Every Kenyan worker, whether employed formally or informally, is bound to open an NSSF account. An employer must contribute towards NSSF even if there is just a single person employed. This enables millions of people working in irregular, informal or part-time jobs such as maids, guards, gardeners, waiters or helpers to be also included in the NSSF scheme.
For 70 long years, clueless bureaucrats and corrupt labour inspectors in Pakistan have colluded with employers to deprive workers of their EOBI and Social Security benefits. Kenya overcame this by a simple and widely advertised policy: “Any employer who fails to register with the NSSF or fails to register their workers within 21 days of employment is guilty of an offence and liable to prosecution in a Court of Law. Employees, please contact the nearest NSSF office immediately, if your employer is not registered with NSSF. Our Compliance Officers will do the rest.”
With less than 5% workers registered, Pakistan’s four provincial Social Security organisations which cater to health needs of workers may well be considered non-existent. Kenya with one-fourth the population of Pakistan has four times more workers registered in its National Health Insurance Fund (NHIF). Unlike Pakistan, it is the employees in Kenya who are required to contribute to the NHIF. The registration of a member ensures that a spouse and all declared children are also covered for their healthcare needs.
Pakistan needs to disband its disappointing and dysfunctional EOBI and Social Security structures and replace them with an organisation that is small, highly digitised and linked to NADRA’s database. If Kenya is a country too advanced to emulate, could we learn from Pakistan’s own NCOC that has proven how small, professional and technology-driven teams can outclass large and fossilised bureaucratic systems?
Published in The Express Tribune, June 6th, 2021.