Towards extending social security to farmers and self-employed in rural Kilimanjaro

Social security to farmers and self-employed people is a new idea in Tanzania. Since the introduction of social security schemes in 1960s, the focus and coverage has been mainly to civil servants and formally employed people. In Tanzania, the number of those in formal employment is approximately 3% only of the whole population. The working population (i.e. age between 15-64) is 52.2%. This means that about 49.2% of 45 million Tanzanians are working in informal sector. In Tanzania, more than 80% of population is rural and 95% of the rural population engages in small-scale agriculture.  Thus since the social security schemes in the country has been focusing only on the formally employed people, it means that almost all of the rural population does not have social protection. This is a serious development issue. The question is: who will pay for their welfare when these people stop working either out of elderly reasons or disability?

Disturbed by the question, BUMACO has joined in the efforts towards extending social security to farmers and the self-employed in rural Kilimanjaro. This is done through its RUFIP program, which envisions ‘having in place vibrant communities whose social and economic activities are supported by community-owned, sustainable and conveniently accessible financial institutions’.  Since 2005 with support from Cordaid, the Netherland, BUMACO’S RUFIP has mobilized the formation of 20 SACCOS in rural Kilimanjaro. 17 of these SACCOS are now standing on their own and have a total membership of approximately 14, 000 people.  Members of these SACCOS are farmers and self-employed people. BUMACO plans to mobilize these members into joining social security funds so as they can protect their future.  Since all of the 17 SACCOS were formed around the existing AMCOS, BUMACO is also incorporating the AMCOS into the plan.

Rationale for Extending Social Security to the informal sector
Social security is a development policy. It is a policy that aims at improving and maintaining people’s living standards. It is protection against declining living standards due to failure to earn income as a result of death, disability, and/or age (elderly group).  Social security has been linked to Amartya Sen’s definition of development, which focuses on capability. In that respect, social security ensures development even in the absence of capability to work.  Furthermore, scholars such as Karl Ove Moene, has related social security to the promotion of Schumpeter’s concept of creative destruction. This is because when people are assured of social protection, they are ready to take more risks and become innovative.

Social security schemes have options to incorporate different insurances such as health, rainfall/drought, and stabilization fund.  These are ways of managing risks. The World Bank and other development stakeholders have recognized this and are now putting forward risk management as a development agenda (see World Bank- World Development Report- Risk and Opportunities, Managing Risk for Development, 2014). Evidence shows that risk management is one of the key variables to ensure sustainable development. Uncertainties brought about by issues such as climate change have to be dealt with prior to their happenings.

Social security schemes have loan provisions to its members. Such provisions are much needed to farmers in Tanzania. It has been reported, in Tanzania’s Poverty and Human Development Reports, that one of the main setbacks for farmers in Tanzania is the lack of credit. Small-scale farmers cannot finance their production activities on a cash basis particularly at the start of the season.  Availability of loans at the start of the season can increase productivity. Farmers would be able to produce more if they have credit to buy quality seeds, fertilizers, and other key farm inputs.

Social security promotes a saving culture. This is because members have to contribute to the funds every month. The contributions are for future investments.  The saving culture is related to BUMACO’s view. The reasons RUFIP choose to work through SACCOS, instead of other financial arrangements, is because SACCOS promote saving culture while many other arrangements are credit-mechanism only.

Working with the National Social Security Fund (NSSF)
Inspired by RUMAKO- a coffee farmers’ cooperative society in Kigoma, BUMACO decided to collaborate with NSSF towards extending social security to its SACCOS members in rural Kilimanjaro.  Being sensitized and educated by their area MP, Zitto Kabwe, 750 members of RUMAKO enrolled in NSSF early this year. RUMAKO members who enrolled are already enjoying short-term benefits such as health insurance and low-rate loans from NSSF to boost capital in their small businesses and also in buying farm inputs.  BUMACO wishes to see its RUFIP SACCOS members joining the scheme and enjoy both short-term benefits and long-term benefits.

On 5th November 2013, BUMACO co-organized a seminar/workshop with NSSF for the representatives of SACCOS and AMCOS. In total the seminar attendants were 40 representatives from different districts in Kilimanjaro including Hai, Moshi Rural, and Rombo.  The seminar was facilitated by:

1.    Mr. Michael Kimemeta- BUMACO, RUFIP Officer
2.    Mr. Daudi –NSSF, Kilimanjaro Operations Officer,
3.    Mrs. Delfina Masika- NSSF, Kilimanjaro Manager
4.    Mr. Salim Kimaro- NSSF Headquarters, Senior Operations Officer

The seminar covered the following:

Reactions
Seminar participants were grateful and excited about the idea of having social security to farmers. The response was positive. Participants raised a number of questions, which enabled critical look of the idea and its feasibility. NSSF facilitators answered the questions well and clarified any points that were not properly understood.

Way forward
Participants agreed to go and explain the idea to their respective board members. Following that, members of the cooperatives will be sensitized and mobilized.

BUMACO will assist the SACCOS in mobilization of members’ meetings and NSSF will conduct the meetings.