P&D Network meets with Tanzanian representatives

16-Feb-2010    On February 13th, 2010, representatives of the Pension & Development Network met up with 10 Tanzanians currently studying at the Institute for Social Studies (ISS) in The Hague, to discuss the possibilities of setting up a micro pension scheme in Tanzania.

For this meeting the Dutch consultancy bureau Actor generously placed one of their conference rooms in the company's headquarters at the disposal of the P&D Network.

The meeting started with a presentation on the work of the P&D Network, and a introductory workshop on the basics of pension systems, given by Jos van Ophen and Jacques van der Horst (both members of the P&D Network). Explaining the basic characteristics and operations of the different existing pension schemes gave the participants sufficient knowledge to debate on the possibilities of implementing micro pension schemes in Tanzania.

Tanzania does have pension schemes, but these are only open to people working in the private sector or to those who work in the Public Sector in Tanzania. The majority of the Tanzanian population works in the informal sector (agriculture, manual labor), and has no access to an official old age beneficiary system (pension scheme). Although there are micro finance projects carried out by citizens based on voluntary savings and credits, the so called SACOS (Savings and Credit Cooperative Societies), saving traditions in towns and rural area’s are minimal, and poor people in rural area’s have no savings perspective.

This raised several questions: how to incorporate informal workers in a pension scheme, when they have no employer, and in the case of income loss caused by shocks (sickness, accident, drought, etc.) no possibility to pay the contribution fee of the pension scheme? And how to invest the funds from the pension scheme, when it is most likely that members of the pension scheme are not going to agree on investing their funds outside of the country (because of lack of institutional trust)?

However, currently there are developments taking place within Tanzania that might simplify these circumstances. The Tanzanian Government is currently working on setting up a social protection framework within the country, which aim is to reach all of the inhabitants of Tanzania, and on minimizing the informal sector by formalizing it. These two developments might improve the chances for developing, designing and implementing a micro pension scheme within Tanzania in the coming years. 

At the end of the meeting the representatives of the P&D Network agreed with the Tanzanian participants to study the developments within Tanzania and research the possibilities for setting up and implementing a micro pension scheme in informal sector within Tanzania.

 

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