Kudzanai Gerede Business Correspondent
National Social Security Authority (NSSA) intends to set up a voluntary social security services provision package for the informal sector in the economy likely to be in full swing by year end, Post Business has learnt.
The Informal Sector Scheme at first will be financed by funds extended from various NSSA programmes such as the National Building Society housing scheme launched last year and once it’s in full swing will be self-sustained through voluntary payments by informal sector players willing to secure social security cover.
As the country has predominantly turned informal over the years, concerns have been raised over lack of social security cover for the majority of the country’s workforce which operates informally.
According to NSSA, 72 percent of people in the informal sector do not contribute to any social security scheme.
Speaking to Post Business on the sidelines of informal sector representatives meeting in Harare last week, NSSA Regional Manager Agnes Chikwavaire said the authority was tailor-making products that suit the needs of the economic status quo in the country that is characterized by high levels of informality.
“It’s a pension scheme as you are aware NSSA has been covering the formal sector but now we want to extend coverage to the informal sector where they will voluntarily contribute NSSA contributions to cover for their future.
“As NSSA we are in the process of tailor-making products to suit this new exciting reality (informal sector) to ensure socio-economic coverage to everyone. NSSA would like to collaborate with representative organizations such as Zimbabwe Farmers Union, Cross border associations and small scale miners among other members,” she said.
She also said the scheme would cover retirement packages, survivors’ pension, funeral grants and injury at work compensation.
“It’s something in the pipeline but we are at an advanced stage. Certainly by end of this year we should be already in the market and registering people.
The scheme is more or less the same with the formal sector and members will contribute a certain amount of money depending on how much they get from their income. The only difference is that this one is not compulsory,” said Chikwavaire.
Analysts have welcomed the idea to provide social security cover for informal players who are caught wanting when they encounter work related hazards citing that this has grave implications on their business operations.
“It’s vital and it’s been a long waiting for us because informal sector is not cushioned in any way so we find these are some of the disadvantages of being in the informal sector. Much resources are drained from the informal business incase tragedy strikes so having a package set for us will help our members to be prepared for any work related hazards or incase of death and other misfortunes that may befall both the employer and employees,” an informal sector representative with Harare Informal Traders Council Agnes Magunje saids.
The realization of the scheme by year end is also expected to spur formalization for most businesses in this sector in line with Government policy to have a formalized SMEs sector.
However analysts have also called on authorities to speed the ease of doing business reforms placing emphasis on easing the tax regime which has kept many SMEs away from formalization citing multiplicity of fees and taxes.