Tanzania's social security registers robust growth

Social security sector has continued to register outstanding growth in terms of contributions and assets amid declining Return on Assets.

The Bank of Tanzania (BoT) Financial Stability Report (FSR) said the contributions increased to 78.3 per cent in the six months ended September last year compared to 70.8 per cent recorded in March.

The increase in contributions and number of contributing members in proportion to existing pensioners is attributed to increased employment and outreach as reflected by decline in dependency ratio.

During the period under review, return on Assets declined to 2.3 per cent in September 2015 from 3.4 per cent in March 2015 on account of increase in administrative expenses.

The decline in return on assets is attributable to slowdown in investment performance coupled with growing administrative costs. The ratio of administrative expenses to contributions increased to 15.5 per cent from 11.3 per cent during the period.

Also, the sector complied with the 2015 Investment Guidelines except for lending to government which was above the 10.0 per cent threshold.

However, the ratio of government loans to total assets increased to 21.7 per cent in September from 19.3 recorded in March, 2015 owing to accumulation of interest.

This would be addressed once the government strategy to fund the liabilities through issuance of non-cash bond is finalized and implemented.

Zanzibar Social Security Fund continued to grow on account of increased membership, collection of contributions and growth in investment portfolio.

Membership increased by 4.5 per cent to 75.3 thousand during the period ending June 2015 compared to 72.2 thousand as at end June 2014.

However, the dependency ratio increased to 3.3 per cent in June 2015 from 2.9 per cent recorded in June, 2014 which may threaten sustainability of the Fund.

The Social Security Schemes was revised in September 2015 with the objective of improving risk management in the sector.

The revised guidelines have set new permissible investment limits and allow investment within EAC region following the liberalization of capital account in the region.

Source: Daily News, reported from Dar es Salaam, Tanzania

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