‘Nigeria Urgently Needs a Good Social Security Structure’

04 Feb 2013

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Alhaji Munir Abubakar, 

Managing Director and Chief Executive of the Nigeria Social Insurance Trust Fund (NSITF), Alhaji Munir Abubakar, spoke to Abimbola Akosile and Damilola Oyedele on the Employees Compensation Scheme and also the need to expand the Fund’s mandate to include a good social security structure, with inherent benefits to Nigerians, among other issues. Excerpts:

The Employees Compensation Scheme is the cardinal programme of the NSITF, what makes the scheme different from prior ones and why should a Nigerian worker be part of it?
The Workmen’s Compensation Act. (WCA) 1942 (88 amended in 2004) was repealed by the Employee Compensation Act (ECA) 2010. The ECA is different from the WCA in the following ways: while the ECA provides for speedy and adequate compensation, resolution of dispute without recourse to the Court, virtually all categories of compensation have to be resolved via Law Courts in the WCA; whereas the ECA ensures that funds maintained centrally are always available to pay compensation, regardless of the financial position of the employer at the time of need. The WCA had no such provision; under the WCA, only large organised employers took insurance cover for their employees; others did not.

Even when the insurance was taken, disputes took a long time to resolve, subjecting the injured worker to untold hardships. But the ECA is for all categories of employers, including the informal sector employers and employees even self - employed persons; whereas, under the WCA, the injured employee had to prove that he/she was not negligent in sustaining the injury; the ECA provides a “no fault scheme”, it is a social insurance scheme whose primary objective is to provide a fair and speedy process of payment of compensation and other services to victims of employment injury or occupational disease.

Does this compensation cover only injuries in the workplace?
No, in fact this is another reason that the ECA is different from the WCA. While the WCA accepted actual place of work only as incidental to employment; the ECA accepts the following places, in addition to the actual place of work as incidental to employment: to and from work; principal and secondary place of work and usual place where meals are taken. The ECA also negates the insurance principal of “no premium no cover, the practice under the WCA, in that it provides cover for employees of registered and contributing employers, who temporarily have difficulties in paying contributions.

The onus is on NSITF, the scheme managers, to purse defaulting employers for payment of such outstanding arrears of premiums/contribution and whereas, the WCA provided only cash benefits paid once as lump sum, the ECA provides for both cash and non-cash benefits. The non-cash benefits components are, vocational rehabilitation for any injured employee to assist in getting him or her back to work, even if it has to be another kind of job suitable for his/her new condition, counseling service to dependents of the affected employee, while the employee is being rehabilitated in addition to the cash compensation, medical surgical, hospital nursing and other care or apparatus including artificial members that are necessary at the time of injury and thereafter are supplied, and purchase, replacement and repair of artificial appliances that may be needed by an injured employee among others.

The cash benefit component of the ECA includes compensation for injury temporary /permanent partial or total disability, compensation for mental stress. compensation for occupational diseases, compensation outside normal work place where the business of the employer extends beyond the usual work place or the nature of employee is required to work both in and out of the usual work place; allowance to the injured employee where necessary for sustenance and compensation for death arising out of work relate injuries or occupational disease.

You recently went to the National Assembly to canvass new mandates for the NSITF. Do you think that the Fund has delivered on its present mandates enough to ask for new mandates, and can the present NSITF deliver on the mandate?

The antecedent of NSITF in the sphere of provision of contingent social security to Nigerian employees, the social security advocacy awareness programmes embarked on by NSITF, the educative books on social security titled to NSITF, the establishment of the Centre for Social Protection Studies at the Kaduna Business School, the development of the Programme of Action for Implementation of Social Security in the States (PAFISS), first Nigerian membership of International Social Security Association (ISSA) and the implementation of pilot basic social security services in Nigeria by NSITF coupled with the unambiguous provisions of Section 71 (2) of the Pension Reform Act, 2004, amongst others factors, are indicators of the preparedness, capability, ability, competence and readiness of NSITF to undertake this task of provision of other basic social security services to the citizens of Nigeria by the amendment of the present NSITF Act, Cap 88, LFN 2004.

One of the objectives of the Fund is to develop a national social security framework for a safety net against poverty and crime in the country. How has it worked to fulfill this mandate under your leadership?
In fulfilling its mandate of developing a national social security framework to serve as a safety net against poverty and crime in the country, NSITF has taken the following steps. One is social security advocacy. In view of the changes necessitated by the enactment of the Pension Reform Act 2004 as earlier explained and effective from year 2007 to 2009, NSITF pursued as one of its major programmes, social security advocacy.

In 2007, NSITF in collaboration with the International Labour Organisation (ILO) and the International Social Security Association (ISSA), an affiliate association with the United Nation’s organ for Social Security matters to which NSITF belongs, held a conference on ‘The Imperative of Social Security for Economic Development and Poverty Alleviation in Nigeria’. The communiqué issued at the end of the conference was signed by representatives of Government:  the Permanent -Secretary, Federal Ministry of Labour & Productivity and Labour Unions including Nigeria Labour Congress (NLC) and Trade Union Congress of Nigeria (TUC), employers - Nigeria Employers Consultative Association (NECA) and the Civil Societies - Civil Liberties Organisation (CLO).

Secondly, we have also established a National Working Committee on Social Security Policy for Nigeria. In April 2009, NSITF, with the backing of the federal government, initiated the processes that led to the inauguration of a National Working Committee on Social Security Policy for Nigeria headed by General Dr. Yakubu Gowon. Membership of the committee was drawn from all sectors of Nigerian society, Labour employers, Civil Society Organisations, professionals and the three tiers of government. Key officials from presidency, including National Planning Commission, National Pension Commission and National Governors’ Forum and ALGON participated in the Committee.

The committee submitted its report to the federal government for consideration in August 2009. The federal government’s white paper on the report is still being awaited. We have also initiated follow up activities to ensure that the policy eventually comes to life for Nigeria and this has been on the front burner of NSITF’s progamme since I assumed office first as Acting Managing Director/CE, then as the substantive Managing Director/CE. It is gratifying to note that the Federal Ministry of Labour and Productivity has established a fully-fledged department in charge of social security matters.

Why do you think Nigeria should expand its social security nets at this time?
Social security is a social and economic necessity for development and progress of every nation. A functional social security system is therefore a veritable tool for engendering the bond between government and her citizens, thus promoting political stability and patriotism. Hence, security of life, shelter, food, guarantee of minimum living wage, care of dependant citizens and senior citizens (aged), unemployment benefits and welfare for the disable and disadvantaged should form a core course of government. This is why we are pushing for the expansion now.

Can you explain the issue of social security more?
Social security is largely a collective care arrangement to meet contingencies and other conditions of insecurity due to either deprivations or contingencies or both. Simply put, social security arrangements are collective remedies against adversity and deficiency. The adversity aspect is addressed through a contingent social security (CSS) such as the recent Employee Compensation Act in Nigeria. The problem of deficiency is directly addressed through the provision of a basic social security. Both dimensions (deficiency and adversity) are complementary and closely related to the problem of poverty reduction and development.
However, the problem of human deprivation for the majority of the population addressed by the basic social security needs urgent attention. In developing countries, a large percentage of the population is absolutely poor, so the greatest challenge is how to introduce the basic social security. The National Bureau of Statistics put the latest figure (2010) of the poor in Nigeria as over 65 per cent.

How will the social security system you are advocating work?
It will establish and implement a Non-Contributory Social Security Scheme to provide a social protection floor containing basic social security guarantees that will ensure that over the life cycle all citizens of Nigeria in need can afford and have access to essential health care and have income security at least at a nationally defined minimum level.
All persons ordinarily resident in the country will have the financial protection to access a nationally-defined set of essential health-care services including maternal health care, all children enjoy income security at least at a nationally-defined minimum level through family/child benefits in cash or in kind aimed at facilitating access to nutrition, education and care, all persons in old age ordinarily resident in the country enjoy income security at a nationally defined minimum level through benefit in cash and/or kind; and all persons in active age groups ordinarily resident in the country who are unable to earn sufficient income enjoy minimum income security through social assistance, maternity benefits, disability benefits, other social transfer in cash or in kind if the NSITF Act is amended accordingly.

Global economic recession is still on and the national economy is not too encouraging; how timely is this new initiative the NSITF is promoting?
We have given deep thought, reflections and consideration to the prevailing economic realities that we find ourselves in the country at present and have to come to the ultimate conclusion that Nigeria needs, as a matter of urgency, a good structure of social security to be put in place for her citizenry in order to achieve great feats at alleviating and reducing social ills in the nation. Many Nigerian youths have taken to crime and other vices such as organized crimes in the society, the result of which we are all living witnesses. This is more particularly so because employment opportunities into  the public and or private sector of the economy has turned out to be a mirage to many educated yet unemployed youth, thereby putting many in a state of dejection and frustration.

What value can this new initiative add to the life of the average Nigerian?
The passage of this amendment Bill will see to the provision of at least minimal social security for the unemployed, aged, disabled and disadvantaged persons in our society. More so, the government would be seen as progressing in performing part of its duties as enshrined under Chapter II of the constitution with regards to the Fundamental Objectives and Directive Principles of State Policy; particularly described in Section 14(2) (b, 16 (2) (d) & 17(3) (f) of the 1999 Constitution of the Federal Republic of Nigeria as amended.

What benefits would be provided by NSITF under the social security system?
First, the Basic Social Security Floor, that will be provided by NSITF consists of a basic and modest set of social security guarantees, implemented through social transfers in cash and in kind- for all citizens ensuring that ultimately; all residents have access to basic or essential health care benefits through pluralistic delivery mechanisms where the state accepts the general responsibility for ensuring adequacy of the delivery system and its financing; all children enjoy income security at least at the poverty level through various family/child benefits aimed at facilitating access to nutrition, education and care.
Also, some targeted income support is provided to the poor and the unemployed in the active group age and all residents in old age or with disabilities enjoy income security at least at the poverty level through pension for old age, disability and survivors. The new benefits that will come with the new social security system include old age benefits, unemployment benefits, child benefits; survivors’ benefits, death benefits, invalidity benefits, disability benefits, and such other benefit as may be approved from time to time by the Board.

Do you foresee adequate funding for this social security system?
First, I want to state emphatically that social security services are affordable. We know that the world can afford to make the right to social security a reality not just a dream. According to ILO calculations, less than 2 per cent of the global Gross Domestic Product (GDP) would be necessary to provide a basic set of social security benefits to all of the world’s poor (ILO 2006). Six per cent of global GDP would be needed to provide a basic set of benefits to all who have no access to social security. That investment in people is less than 10 per cent of the total global investment in tangible assets.

And where will the money to fund this programme be sourced?
It will come from contributions paid on an annual basis at the rate prescribed by the Employees’ Compensation Act, 2010; annual subvention from the federal government for social security schemes; 10 per cent of all taxes collected by the Federal Inland Revenue Services to be set aside and remitted to the Fund yearly for provision of social security services in the country; fees, fines and commissions charged by the board; and income from any investments of the board. Most of the resources we need will obviously have to come from national resources, and our findings show this can be done.

Can the federal government afford this?
The question of affordability has to be considered in the context of the fiscal and broader economic environment at the national level. In addition, it is important to consider national institutional capacities and governance aspects. However one has to consider the international context with respect to the need to ensure that global competition does not drive countries and their population below agreed minimum labour and social standard, and to obtain international support in financing provisions of minimum basic social protection in low-income countries during the transitory period until these countries have the necessary domestic fiscal capacity to do so themselves.

What is the difference between the new NSITF and the former that dealt with pension issues?
NSITF is still the same in terms of Act 73 of 1993 that established it. However, from between 1994 to 2004, NSITF was charged with the responsibility of managing a contributory private sector pension scheme for employees who are employed by a company incorporated (or deemed to be incorporated) under the Companies and Allied Matters Degree 1990; or employed by a partnership irrespective of the number of persons employed by the company or partnership; or in any other case where the number of persons employed is not less than five.
The scheme then was based on contribution rate of 10 per cent of Basic Salary plus housing allowance plus transport allowance in the ratio of 6.5 per cent and 3.5 per cent respectively by employer and employee.

What were the benefits the body provided to contributors?
The benefits included retirement grant, retirement pension, or reduced pension, or transitional basic pension, invalidity grant, invalidity pension, survivor’s grant, survivor’s pension, funeral grant and emigration benefit, that is grant and pension paid as lump-sum. It is very important for me to state at this point that following the Pension Reform Act 2004, which deregulated the pension industry by creating Pension Fund Administrators and Pension Fund Custodians, the NSITF, by virtue of Section 42 of the PRA 2004, established the Trustfund Pensions Plc and transferred its pension management businesses and asserts thereto between 2005 and 2006 accordingly.

So, NSITF is no longer a pension organisation?
You are very correct. In fact the new NSITF is mandated by the Employees’ Compensation Act 2010 to implement the Employees’ Compensation Scheme; in other words a work injury benefit scheme. The Act repealed the Workman’s compensation Act of 1942 as amended in 2004.

Under the Act what specifically does the NSITF do?
The Act mandates the NSITF to provide for an open and fair system of guaranteed and adequate compensation for all employees or their dependants for any death, injury, disease or disability arising out of or in the course of employment; to provide rehabilitation to employees with work- related disabilities as provided in the Act; to establish and maintain a solvent compensation fund managed in the interest of employees and employers; to provide for fair and adequate assessments for employers; to provide an appeal procedure that is simple fair and accessible with minimal delays; and to combine efforts and resources of relevant stakeholders for the prevention of workplace disabilities, including the safety enforcement of occupational safety and health standards.

What is the cardinal mandate of the new NSITF and who will benefit from its intervention?
The new NSITF has the cardinal mandate of implementing the Employees’ Compensation Act, 2010, which makes comprehensive provision for prevention of accidents at work place medical treatment in case of accident involving no disability, payment of compensation for disabilities & death due to work place or outside work related injuries, that is, occurring at workplace or outside work place and rehabilitation for the injured employee who suffers disability.

The mandate also covers treatment of and payment of compensation to employees who suffer from occupational diseases contracted in the course of employment. According to Section 2 of the Act, all employers and employees in the private and public sectors of the Federal Republic of Nigeria will benefit from the Scheme.

What has been the major achievement of NSITF under your leadership?
Most gratifying is the enactment of the ECA 2010 and the commencement of its implementation nationwide which started under my leadership in July 2011. Today, the scheme has successfully taken off with 1,020 employers, having estimated employees totaling 295,000, who have joined the scheme from the private sector of the economy.

Over 10,000 civil servants with the Federal Government have also joined the scheme as the federal government has shown good example for other tiers of government at the state and local government, followed by meeting its obligation of paying contribution for the civil servants. In tandem with the provisions in the ILO Recommendation on National Social Protection Floor, which the International Labour Conference (ILC) recently adopted at its 101st Conference in Geneva, NSITF is collaborating with the supervisory Ministry – Ministry of Labour and Productivity to actualise a progressive ratification of Convention No. 102 of 1952 – (Social Security Minimum Standards).

The efforts may on the long run involve appropriate amendment to the NSITF Act 1993, (as partially amended by the Pension Reform Act, 2004 with respect to Pension Matters and which still remains the law establishing NSITF 

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