TANZANIA INSTITUTE OF ACCOUNTANCY (TIA)

RESEARCH PROPASAL ON THE IMPACT OF SOCIAL SECURITY SCHEMES

IN ECONOMIC DEVELOPMENT OF TANZANIANS

CASE STUDY: NSSF DAR ES SALAAM BRANCH

NAME OF STUDENT:HAPPINESS MASIAGA

REGISTRATION NUMBER: DSM/BAC/19/66745

DEPARTMENT: ACCOUNTANCY

SUPERVISOR: MR. JUMANNE MAGAYANE

A RESEARCH SUBMITTED TO TANZANIA ISNTITUTE OF ACCOUNTANCY

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD
OF A BACHELLOR DEGREE IN ACCOUNTANCY (BAC)

31st /DEC/ 2021

 ACRONYMS

NSSF_ National Social Security Funds

TIA_ Tanzania Institute of Accountancy

ILO_ International Labor Organization

1
 ABSTRACT
This study is intended to find out whether social security schemes in Tanzania bring
about social development while carrying out there activities. As we all know that every
organization or company is aimed at making profit, but when making these profits as far
as social security schemes are concerned these profits should not be high such that
individual citizens suffer the consequences, therefore there must be optimization whereby
the social security organizations benefit while making individual citizens satisfied.
Therefore this research will be aimed at finding out whether these social security schemes
bring about economic development to their members. The study will be conducted in Dar
es salaam and will use both quantitative and qualitative research approach. This study
will use observation, interviews as data collection methods.

2
 TABLE OF CONTENTS

CHAPTER 1 PROBLEM SETTING...............................................................................6

1.1. General Introduction………………………………………………………………….6

1.2. Background of the study……………………………………………………………...6
1.3. Statement of the problem……………………………………………………………..7
1.4. General Objectives……………………………………………………………………7
1.5. Specific Objectives…………………………………………………………………...7
1.6. Research Questions…………………………………………………………………...7
1.7. Significance of the study……………………………………………………………..8
1.8. Limitations of the study………………………………………………………………8

CHAPTER 2 LITERATURE REVIEW........................................................................10

2.1. Definition of key concepts...…………………………………..…………………….10

2.2. Social security and underlying issues……………………………………………….15
2.3. Theories relating to the study……………………………………………………….16
2.4. Empirical review…………………………………………………………………….18
2.5. Research Gap………………………………………………………………………..21
2.6. Conceptual Framework……………………………………………………………...21

CHAPTER 3 RESEARCH METHODOLOGY........................................................... 23

3.1. Research Paradigm…………………………………………………………………..23

3.2. Research Design……………………………………………………………………..23
3.3. Data collection……………………………………………………………………....24
3.4. Data analysis………………………………………………………...………………25
3.5. Ethical issues………………………………………………………………………..26

CHAPTER 4 FINDINGS AND DATA ANALYSIS..................................................... 27

4.1. Introduction………………………………………………………………………….27
4.2. Demographic characteristics of the respondents…………………………………….27

CHAPTER 5 : CONCLUSION, SUMMARY AND RECOMENDATIONS............. 30

5.1. Introduction…………………………………………………………………...….….30

3
5.2. Summary of the findings…………………………………………………………….30
5.3. Implication of the findings…………………………………………………………..30
5.4. Conclusion…………………………………………………………………………..32
5.5. Specific Recommendations……………………………………………………….…32
REFERENCE……………………………………..…………………………………….34
APPENDIX…………………………………………………...…………………………35

4
 LIST OF TABLES AND FIGURES

Figure 1: A summary of NSSF investments as at June 2011…………………7

Figure 2: Respondents gender distribution………………………….……….23
Figure 3: Respondents age in years……………………………….………....24
Figure 4: Respondents years of experience………………………………….25

5
 CHAPTER ONE

1. PROBLEM SETTING
1.1.General introduction

Tanzania as one of the members of the International Labor Organization (ILO), follows
rules and regulations posed by ILO as far as labor is concerned. Among those rules and
regulations some of the constitute rules and regulations concerning Social Security
Schemes. The International Labor Organization has several objectives including, to
promote rights at work, encourage decent employment opportunities and enhance social
protection. Therefore in this report we shall see in what extent the social security schemes
in Tanzania case study in NSSF bring about economic and social development to
Tanzanians.

This chapter looks into the introductory part of the study where we shall see the
background of the problem, statement of the problem, some preliminary literature and
objectives of the study. Also the chapter talks about the research questions that guided the
study and also the methodology that was employed plus the time frame of the study.

1.2.Background of the study

The concept of social security schemes refers to the schemes imposed and controlled by
the government units for the purpose of providing social benefits to members of the
community as a whole, or a particular section of the community. The government
through social security schemes provides services to the community such as health
insurance, old age pension and many others. In Tanzania there are several social security
schemes where some of them include National Social Security Funds (NSSF), National
Health Insurance Funds (NHIF), Public Service Social Security Fund (PSSSF), and many
more. It is the governments arrangement to provide benefits where by those without
means of livelihood are supported financially, Social security schemes are there to
provide benefits to individual members who pay monthly contribution to the schemes at a
fixed rate that is deducted from their monthly salaries, among the benefits normally
provided by the schemes are health insurance, old age pension, unemployment benefits,
maternity benefits and so on. These benefits are provided to any member individual who

6
has criteria that make him/her entitled to them for example, maternity benefits are given
to pregnant women or women who have just given birth, old age benefits are only given
to retired employees and so on. In this study we shall see social security schemes by
referring to NSSF as our case study.

The history of social security shows that previously there was no need of social security
schemes as people lived socially as a community whereby the needs of social security
where provided by extended families, but currently due to the rise in population such
system of social security no longer exists there the government had to look for alternative
ways to helps its people and this is where modern social security schemes came into
existence, Tanzania as one of the members of ILO have worked hand in hand in order to
provide good services to people several improvements have been made but the question
is that, do these social security schemes bring about economic and social development to
their members?

1.3.Statement of the problem

As we have seen above the National Social security Funds provides a wide range of
benefits which are into two categories some being long term benefits and others being
short term benefits. Payment of benefits is a key function of NSSF in Tanzania and it has
to be done precisely and consistently because it is the main reason to why people decide
to contribute to this fund and also it touches individual interests so it has to be done in the
manner that does not harm any individual who is entitled to receive such benefits.

However, the extent on how such social security schemes bring about economic and
social development to Tanzanians is our problem or the statement of the problem which
has been addressed in this study. It is therefore the objective of this study to analyze the
benefits offered by NSSF and to measure the impact they bring in economic and social
development.

1.4.General objective

The general objective of this study was to find out the impact of social security schemes
to employees in economic development.

7
1.5.Specific objectives

 In order to meet the above general objective the research relied on the following
specific objectives:

 To determine different kinds of investments that NSSF conducts.

 To determine what amount of interest is added when giving old age pension
 To investigate on how social security schemes bring about economic growth.
1.6.Research questions
This research study was guided by the following research questions:
What are some investment projects that NSSF conducts?
What amount of interest is given when providing old age pension?
How do social security schemes bring about economic growth in Tanzania?
1.7.Significance of the study
This study has several significance in both to the government and to individuals. These
significance are as follows: -
This research study is important to the Social Security Schemes department as it enables
them to know different weakness of their schemes and how to improve on providing
services to members.
The study enables individuals to understand their rights concerning benefits to be
provided by the Social Security Schemes, the study clearly elaborates all benefits that are
supposed to be paid to individuals eligible for the said benefits.
Apart from that, also the study acts as a mirror to social security schemes in Tanzania in
making sure that they operate in accordance with the requirements needed so as the aim
of reducing poverty in Tanzania is attained.
Furthermore, the study stands as a literature review to other researchers who wish to
research on the same topic
1.8.Limitation of the study
This research study was faced by a number of limiting factors that lead to delay; the
following are some of the limitations which faced this study.
 Limited number of resources

8
 Cost to be incurred in the process of collecting data for example transport fee, typing
fee and others
 Limited time of conducting the research study

9
 CHAPTER TWO

2.0.LITERATURE REVIEW
2.1.Definition of key concepts
2.1.1Social Security

According to Social security (Minimum standard) convention (1952), Social security

refers to the protection that a government provides to individuals and house holds to
ensure access to health care and to guarantee income security, particularly in cases of old
age, unemployment, sickness, invalidity, work injury, or maternity. Maghimbi et al,
(2002) has defined social security as protection provided by society to its members
through public measures against the economic and social distress which otherwise would
be caused by stoppage or reduction of earnings arising from contingencies. The
International Social Security Association (ISA 2012) defines social security as program
or system of social protection established by the legislation that provides individuals with
an assistance of income security when faced with the contingencies of old age,
survivorship, incapacity, disability, unemployment or rearing children. Social security is
a system set by government authorities where members make monthly contributions to
various security funds; individuals get paid back after specific periods of time in most
cases after retirement. Social security came into existence to reduce poverty upon
retirement of individuals at old age.

The ILO (2008) argues that social security has a powerful impact at all levels of the
society as it provides workers and their families with access to health care and with
protection against loss of income, whether it is for short period of unemployment or
sickness or maternity or for long time due to invalidity or unemployment injury.

ILO (2008) goes further and says that Social Security is the protection that a society
provides to individuals and house holds to ensure access to health care and to guarantee
income security, particularly in cases of old age, unemployment, sickness, invalidity,
work injury, maternity or loss of a breadwinner. It discusses Social security as an
economic necessity in developing countries. This is because where there is availability of
social security schemes various problems like poverty sickness are solved.

10
Social security schemes make different kinds of investments for example the NSSF’s
investment policy requires the fund to invest 75% of its total annual sources. Such
investments include loans, government securities, real estate, fixed deposits and equity
and large percentage of income of the income comes from interest collections. Recently,
the NSSF has begun to invest heavily in real estates and have undertaken multi-billion
shillings construction projects in various part of the country. It is through such kinds of
investments that the fund is able to acquire profits and pay back money to its members as
benefits, the money paid back always contains interest there fore members get bonus
amount of money when they contribute in NSSF. The interest is not fixed but rather it
depends on the amount of profit that has been attained in a specific year of income.

Figure 1, A Summary of NSSF investments as at 30 June 2011.

2.1.2.Benefits

Benefits can be defined as a payment or gift made by an employer, the state, or an

insurance company (Free dictionary, 2000), it is not necessary for a benefit to be in

11
monetary value, a benefit is like a thanks giving for positive results done previously by
the one entitled to receive the benefit.

In social security perspective, benefits means payments made to qualified and disabled
people, and to their spouses, children, and survivors. Benefits are payment or favors got
by an employee or retired employee just because he or she is a member of the social
security fund. Such kinds of benefits include old age benefits, survivor’s benefits,
maternity benefits, unemployment benefits and so on. An individual must pay into the
social security program during their working years and accrue a specific number of
credits in order to qualify a specific number of benefits. The benefits always depend on
someone’s earning history during his/her working period (Investopedia, 2021).

In Tanzania specifically NSSF social security scheme provides two kinds of membership
which are voluntary membership and statutory member ship. Voluntary membership is
where a person decides for him or her self willingly to join and make monthly
contributions so as to get benefits associated with that contribution. Statutory
membership is where a person starts contribution soon after he or she is employed on a
certain sector, it is the law of the United Republic of Tanzania that any body who is
employed in the private sector has to join NSSF and that’s why it is referred to as
statutory membership. Therefore it is correct to say that contributions are the pillars
towards the benefits

2.1.3.Types of benefits provided by NSSF

In the social security scheme, there are two kinds of benefits which are long term benefits
and short term benefits. Long term benefits are the ones that an individual will receive
retirement or death, they take a long period of time to be received. For example old age
benefits where as short term benefits are the ones that do not depend on the persons
retirement or death, these are benefits which an individual can receive when he or she
need them. For example maternity benefits unemployment benefits, health benefits. An
individual can receive these kinds of benefits any time that he or she needs them. Below
are some of the benefits that are provided by NSSF.

12
2.1.4.Old Age Pension

The main objective of the retirement pension is to guarantee income security to the
elderly members by providing periodic payments. Retirement Pension is always payable
to an insured person who

 Has attained pensionable age

 In respect of whom not less than 180 monthly contributions have been paid

 Who has attained the age of 55 or above

2.1.5.Survivors’ Pension

This is payable to defendants of a deceased NSSF member. The benefit is intended to

compensate for the loss of economic support previously provided by an insured person
who has died.

2.1.6.Invalidity Pension

The aim of invalidity pension is to guarantee income security to the insured person who
has permanently lost his earning capacity, resulting from accident or illness. An invalidity
pension is given to an insured person who:

 Is suffering from permanent validity.

 Is under pensionable age.

 Either has made 180 contributions or at least 36 monthly contributions have been
paid in respect of him of which twelve or more were paid in the period of 36 months
immediately preceding the date of commencement of invalidity.

2.1.6.Unemployment Pension

This benefit is paid to an insured person who is below fifty five years old and ceased to
be employed; the member must have the following qualifications.

 The member has contributed to the fund for a period not les than eighteen months.

13
 The member must be terminated or ceased to be employed in the circumstance other
than resignation.

 The member must be a citizen of the United Republic of Tanzania.

 The member does not qualify for pension, gratuity or any other long-term benefits
payable under NSSF act.

 The member must proof to the director general that he has not secured another
employment.

 The member is below fifty five years.

2.1.7.Social Health Insurance.

This benefit is provided to the insured person together with the maximum of four of
his/her dependants whose age must not exceed 18 years or 2 years if they are still
students. A member must have the following qualifications:

 A member must have made at least 3 months contributions near to getting health
treatment.

 6% deduction of pension to retired people who need to get health treatment after
retirement.

2.1.8.Maternity Benefits.

The purpose o maternity benefit is to ensure that a female insured person is able to
sustain and care for herself and a newly born child during a specified period before and
after confinement. Maternity benefits are paid to the female insured person who has met
the following conditions:

 The insured person has made at least 36 monthly contributions to the fund, of which
12 monthly contributions must have been made in the 36 months prior to the
expected week of confinement

14
 Upon the receipt by the director general of the medical certificate from a accredited
medical provider, certifying that the woman expects to delivery of a child

 After three years from the day when the last payment was made to the insured person
unless the child dies within the period of twelve months.

 To an insured person, for one month only, in the case still birth proof that the insured
person has delivered a child as certified by a medical doctor.

 The claim must be lodged within 84 days from the date of confinement.

2.1.9.Funeral Grant

Funeral Grant is paid as a reimbursement to a family member who has incurred the burial
expenses of the deceased NSSF insured person. The following are the qualifying
conditions:

 The decease person must be an active insured person.

 The deceased person must have made at least one contribution to the fund.

 Burial expenses must have been incurred for the insured person.

 The claim must be made within 60 days from the date of death

2.2. Social Security and underlying issues

In many parts of the world the concept of social security has been a debate, some people
argue that it is against development as it diminishes or reduces people’s personal income
due to monthly contributions, some consider the system as too expensive and as the result
it harms economic growth of the country, in the other way around other people support
the system by saying that in times of unemployment, sickness or death social security is
very important than ever particularly in developing countries due to low standards of
living and challenging family structures where people tend to have many children in an
extent that they are incapable of taking good care of them therefore leading to lack o
enough funds.

15
The major issue in social security is the assumption that social security is a saving
account; this assumption is incorrect as it discourages personal saving for emergency
situations only because they have social security accounts that have a large sum of money
in fact, the main purpose of social security is to provide retirement funds, it is not an
account that you can withdraw money any time you feel like, there are specifications that
make a person to be able to get money from security funds. for example retired
employees, unemployed people, pregnant women and so on unless you have
qualifications there is no way you can claim money from security funds therefore it is
wrong to take social security funds as saving accounts.

Another issue is the contribution in gender equality, most security where previously
structured for families with a male breadwinner, but as a result of change in life style this
scenario does no longer exists , a large proportion of people don’t live in such kinds of
families. Therefore there came a need to respond to this situation which led to the change
of the system to enable gender equality. Part of the challenge for social security is to
respond to these changes by guaranteeing equality of treatment between men and women.

2.3.Theories relating to the study

2.3.1.The life cycle model by Cremer (2009)
The life cycle model stipulates that all persons live under the two phase’s model of
utilization while the first phase is the saving phase and the second phase being the
utilization phase. Under this theory, people need to save in the first phase and utilize out
of the savings in the second phase. The model goes on by stipulating that, in the first
phase, people are young and do work hard so as to maximize their saving for the future
which is the second phase of living. Under the first phase, people are being paid wages in
return of their labor supply. Whether the wage is high or low will determine the amount
of savings in the second phase. In phase two, all the individuals are retired and utilizing
the savings made under the first phase (Modigliani, 2005).
However, the life cycle model as per Cremer (2009) has its own limitations such as, the
problem of uncertainty between the current situation and lower benefits. These conditions
may affect the amount of savings to be utilized. The situations in any country do change
in terms of tax systems and other monetary situations. Any changes on the tax system

16
will eventually affect the utilizations of the savings by an individual. Another limitation
is that, the model works on the assumption that all people have a specific awareness of
their economic future lifetime earnings. Other people are different.
2.3.2Daykin theory 2009
Another theoretical argument under the study of social security schemes is whether the
schemes should be funded or not. Majority of people argues that funding pension
liabilities may increase the amount of savings in the economy of the country. The
increase in economy will later bring good outcome to people who have lost their working
ability whether by being old or because of anybody incapability.
The funded pension schemes may motivate investments which may later increase the
growth of the national economy. So it much worth if the pension schemes would be
funded whether by the government or the world bank so that the social protection could
be manifested. Daykin (2009) in his paper argues that funded complementary pension
arrangements will be better able to cope with the pressures caused by an ageing
population. He is also of the view that, the returns from investment done by the funded
pension schemes will later reduce the costs of running a particular pension scheme.
The theory of funded or not have its strength and weaknesses. Starting with the strength,
the theory concentrates on the welfare of the individuals that upon funding a particular
pension scheme, the savings will increase something which leads to the real social
protection. Also, strength is that, the action of funding pension schemes makes the
government to have a real participation on providing social protection to its individual
because it prays a party rather than when the pension schemes were to fund itself and the
individual’s contribution only.
Also it is advantageous that when the government will decide to fund the pension
schemes, the individuals will have trust to their government that it is taking part in
making sure that the welfare of individuals is well maintained. It is also advantageous
that the act of funding the pension schemes leads to the increase in economic growth and
investments in the nation.
However, as per Daykin (2009) the theory has its own weaknesses which include the
following; the theory will only be applicable to developed countries because developing
country will fail to fund each and every pension scheme due to their financial situations

17
being not stable. So the theory has not focused on the developing countries. Also, another
weakness is that, the theory has not mentioned the source of the income to be given to the
pension schemes. It is not clear if it is the government or the World Bank. Furthermore,
the theory concentrates more on funding the pension schemes so as to increase economic
growth rather than concentrating on funding the pension schemes for the purpose of
upraising the life of people who have stopped working. The primary objective of the
pension schemes is making sure that people continue enjoying better life even if they
have stopped working. Increasing the economic growth is a secondary objective so the
theory should concentrates on its primary objective rather that secondary objective.

2.4.Empirical Review
Olivier et al (2012) in Informality, Employment and Social Protection: Some Critical
Perspectives For/From Developing Countries provide for a short guideline on social
security on the informal sector especially on definition, extent and the nature or character
of social security in developing countries. In this paper the authors also venture on the
challenges of making an extension of social security coverage to workers of the informal
sector focusing on some conceptual limitations and constraints of the same.
Apart from the standards of social security, Olivier, et al (2012) adduces some causes for
limited coverage of social security in developing countries. In particular the authors
challenge the insufficiency found in the traditional concept of social security systems in
developing countries. They argue for example that; Social security coverage is extremely
insufficient particularly in the developing countries. It is recorded that whereas, in the
industrialized nations more than 90 per cent of the population is covered by various forms
of state or market-organized social security systems, in sub- Saharan Africa and South
Asia only 5 to 10 per cent of the active population are covered by social security schemes.
Olivier, et al (2012) on the other hand, challenges the ILO (1952) minimum standards on
the fact that the convention contains some conditions which on the other hand cannot be
implemented by developing nations because of the claw back clauses in it giving room
for developing countries to adopt lower standards and even apply the standards to certain
categories of people only, leaving majority uncovered.

18
Another author, Frye (2005) unveils the concept of universal provision of social security
by the state. She is of the view that thinking of universal social security access; “The first
question that needs to be addressed is whether there is consensus that the optimal system
of social security provisioning should be that the state should be the provider of free
universal access to social security benefits, funded from state revenue.”
She then draws attention to Article 71(1) of Social Security (Minimum Standards)
Convention (ILO 1952, No.102) which states that; The cost of the benefits provided in
compliance with this Convention and the cost of the administration of such benefits shall
be borne collectively by way of insurance contributions or taxation or both in a manner
which avoids hardship to persons of small means and takes into account the economic
situation of the Member and of the classes of persons protected.
Finally Frye (2005) poses a question as to whether it should be necessary for developing
countries to include a total commitment towards ultimate assurance of the minimum
standards for universal social security ensuring every person benefits from social security.
Bandawe (2008), Deputy Director General, National Social Security Fund Tanzania on
her presentation on the adequacy of the current social security benefits, she is of the view
that, benefits are the contract between the insured who is an ordinary individual and the
Social Security Institution(SSI). In her presentation, Bandawe (2008) has listed the
benefits offered by the social security institutions both short term and long term benefits.
According to the presentation, the benefits offered by the schemes are not adequate due
to the reason that the coverage is only on formal sectors while the informal sector is left
uncovered. Bandawe (2008) also argues that, the benefits are not adequate due the fact
that the immediate needs such as shelter, clothing and schooling are left uncovered while
the schemes in Tanzania have put emphasize on most non immediate needs.
Bandawe (2008) then goes further by giving the challenges causing the benefits offered
by the social security schemes be inadequate. The challenges given by the author are;
Benefits offered are not relevant to Africa. Covariance risks like HIV/AIDS, famine,
Civil wars are not covered, immediate needs not given the requisite priority, Benefits are
too small to meet the basic needs, Short-term benefits cease after retirement, and
maintaining the value of benefits against inflation.

19
Another author Baruti (2008) provides an overview of the Tanzanian social security
system and examines the benefit offered by the current social security Institutions and the
challenges facing the institutions in providing the required services. The author does not
end there, he goes on giving the different strategies which can be used by the social
security institutions in facing the challenges as well as fighting poverty issue in Tanzania
as poverty being the central issue in Social security system in Africa. Apart from that, the
author also gives a focus to the benefit packages that are most preferred by members
before and after retirement.
Mattoo (2000) is another Author who has wrote about social security, this Author apart
from defining the term social security, the Author is also of the view that the concept of
social security has developed from man kind’s mission for security or protection from
different risks of nature which may disturb the whole life style. Also the need for
protection arose from the fact that one may not work for his or her life time, it will come
a time when this man will not be able to work again but still need to have the entire
necessary requirement for life so social security came in place to resolve the mystery.
Mattoo (2000) also discusses the concept of social security under different perspectives
such as the South Asian perspective and the Indian perspective. Under the above two
perspectives, the Author is of the view that, social security in the developing countries in
South Asia faces a lot of challenges which makes it difficult to persist. In South Asia, the
availability of primary education and health care is poor and there is very low levels of
social development which make social security schemes remain dormant and not helpful
to the citizens. Social security is the key to social development of any nation. So if there
is poor social security then social development will remain a mystery.
It is important that social security schemes be given first priority in any nation so as to
foster the development of such nation. Mattoo (2000) argues that social security is one of
the important dimensions of the development process. It assumes a place of special
significance in the developing countries, where poverty, destitution and income
inequalities abound in large measure.
Finally, Mattoo (2000) gives the different strategies on how to foster the development of
the social security in any developing country. She is of the opinion that, there should be a

20
stronger teamwork among the different departments and ministries. Also, savings should
not be performed by banks only. Social security schemes should do such task too.
Isaka (2011) in her paper which was presented during Regional social security forum for
Africa in Arusha was of the view that, in order to have an adequate social security system,
universality is needed. Isaka (2011) is of the view that, formal sectors and informal
sectors should be provided with an equal opportunity to participate in social security.
This means that, the coverage of social security should be extended to people working on
informal sectors as well. The extension to informal sectors results to a fair and equal
social security system in the Country.
Isaka (2011) went on saying that, benefits being provided by the social security schemes
in Tanzania will be considered adequate if they pray a role in achieving the social
security policy outcomes which are to provide basic needs to people in demand of the
protection. Therefore, the social security schemes should always strive to make sure that
they provide adequate benefits to individuals as the social security policy requires.
2.5.Research Gap
The study examined the social security benefits offered by Tanzanian social security
organizations to find ether they bring about economic development to Tanzanians. Many
Authors investigated and written about the social security schemes and the benefits they
give but they did not write whether these benefits have satisfied Tanzanians and have an
impact in economic development of the insured people
Many of these studies have analyzed the benefits, how the schemes operate, the extent to
which those schemes cover in terms of sectors whether Government or not. Other
Authors wrote on the disparities of benefits given other being short term and other being
long term. The focus of the past studies have been on the developed world, very few
studies have focused on Africa. It is now the time to study the social security schemes of
Tanzania and see whether they bring about economic development of Tanzanians.
2.6.Conceptual Framework

According to the ILO (2010), despite the fact that Tanzania has tried to put in place safe
working environment, equal opportunities and treatment of employees, the government
still offers low pension benefit as most of the Tanzanians are not satisfied therefore they
tend to take termination benefits before their retirement age. This explains that the impact

21
of social security schemes in bringing economic and social development is still low as
people have not yet recognized the importance of such schemes.

Further more there is an issue of delay of benefits when a person needs them, this makes
people dissatisfied with these schemes as most of them are statutory members therefore
they do not see the worth of such schemes but rather they contribute because the law
requires so. Also inadequate officers in NSSF offices lead to delay in providing services
to individuals, person wastes a lot of time in NSSF office instead of using that time in
production activities.

The above issue is one among the common and disturbing issues that need immediate
attendance so many people become discouraged and therefore they fail to make follow
ups concerning to their monthly contributions, if this is worked upon things will be much
better and social protection will be realized as well as increase in economic growth
because people will be working free of worrying of how tomorrow will be.

22
 CHAPTER THREE

3.0.RESEARCH METHODOLOGY
3.1.Research paradigm

There are several categories of research in the world, the main categories include
quantitative and qualitative research categories quantitative research is the one that deals
with quantity of something, this type of research deals with numerical data. The other
category is qualitative research, this category deals with collecting and analyzing non
numerical data, it is the one that deals with the quality of a certain phenomenon. Basing
on the above definitions this study is a qualitative research because it is intended to show
the impact or quality of social security funds in economic and social development, the
study has investigated on quality rather than quantity. As the Research title speaks the
impact of social security schemes in economic and social development, so the study is a
qualitative research.

3.2.Research design

This research is an evaluation type of research. Evaluation research is the one intended to
measure the effectiveness of a certain program. Evaluation research uses systematic
assessment of the worth or merit of time, money, effort and resources spent in order to
achieve a goal. Therefore basing on the definition above, this study is an evaluation
research as it is intended to measure the effectiveness social security programs in
economic and social development.

3.2.1.Area of the study

This research was conducted in Dar es salaam. This is because the study is an evaluation
research therefore it involves interviewing different kinds of people of different
profession including both customers and NSSF officers in order to obtain enough data,
the data was obtained from the National Social Security Funds Office (NSSF).

23
3.2.2.Sample and Sampling Techniques

In research terms a sample is a group of people objects, or items that are taken from a
large population for measurement. The sample should be representative of the population
so as to generalize the findings from the research sample to the population as a whole.
Due to the large population researchers cannot collect data from the whole population
because it is expensive and time consuming; therefore researchers decide to choose a
representative portion to represent a general population this system is known as sampling.

This study employed simple random sampling. Simple random sampling is where every
individual of the population has an equal chance of being selected. The sampling frame
included the whole population where by a sample of 40 NSSF employees were required. I
assigned random numbers to the whole employees in the NSSF database who were 80 in
total from 1 to 80, there after I took a pen, using closed eyes I pin pointed my sample
randomly.

3.3.Data collection

Data collection is the process of gathering and measuring information on variables of

interest, in an established systematic fashion that enables one to answer stated research
questions, test hypothesis, and evaluate outcomes Wahl, P.W. (1998). In this study data
was collected from National Social Security Funds (NSSF).

3.3.1.Type of data

The study being analytical and qualitative research, secondary data were employed
mainly. However, some primarily data was also collected in order to support the
qualitative nature of the work. Therefore both secondary and primary data were used.

3.3.2.The primary data collection methods

In collecting primary data the study employed mainly two methods which are interviews
and field observation.

24
3.3.3.The use of field observation

During the process of collecting primary data the researcher employed field observation
was used where by information was gathered through observing and participating in
various kinds of activities, the focus was to see the human behavior and human
interaction between customers and NSSF officers in order to see whether customers are
satisfied or not. The researcher used field observation because it is the method where the
researcher can easily interact with customers and NSSF officers at the same time through
participation.

3.3.4.The use of interviews

The researcher also collected some primary data using face to face interviews with
number of personnel working in NSSF and some customers. The researcher used
interview because it helps to explain, better understand, and explore research subjects’
opinions, behavior and experiences because it involves talking to the respondent face to
face.

3.3.5.Secondary data collection

Secondary data refers to data that is collected by someone other than the primary user. In
this study secondary data was collected from review books, websites, organizational
records, journals where relevant information is found. Secondary data was important for
the study because apart from that it compliments the primary data it also saved time and
money.

3.4.Data analysis

Data obtained from secondary and primary data was summarized, sorted, interpreted
gathered through by the use of analytical and logical reasoning in order to determine
patterns and relationships of trends in relationship to the research questions and
objectives of the study.

25
3.4.1.Ethical issues

When conducting research ethical issues always have to be considered, the ethical issue
which need to be considered in the due course of conducting research are being provided
under the research ethics framework. Some of them are.

 Clear confirmation should be given to research staff and subjects.

 Confidentiality must be considered carefully throughout the process of research.

 The research should not harm the people involved in any way.

 The research should be one of a high quality that it should bring positive impact to
the society.

 Participants in the research should be chosen without bios.

In this study all the above ethics have been considered so as the research brings positive
impact to the society.

26
 CHAPTER FOUR

4.0.FINDINGS AND DATA ANALYSIS

4.1.Introduction

This chapter involves the presentation and interpretation of data gathered. The data was
collected from National Social Security Funds (NSSF) in Tanzania in their Dar es salaam
Offices and also through review of various documents containing relevant data.

4.2.Demographic Characteristics of the respondents

4.2.1.Respondents gender distribution

This study involved 40 respondents who were NSSF customers based in Dar es salaam.
This section will explain various characteristics so as we can get the general picture of
the respondents.

Figure 2 below, show the respondents’ gender distribution

It was realized from the field that majority of customers of Dar es salaam who make
follow ups in their contribution are males. Because of that it was necessary to have a
75/15 ratio so as each group is equally represented according to their total number.

27
4.2.2.Respondents’ age in years

Age was an important factor in this research as the researcher wanted to know the
relationship between the customers’ age and their knowledge in social security funds.
Figure 3 below shows the respondents’ age distribution. The pie chart below shows that
majority of customers are between the ages of 30 and 50. If we consider the age factor
alone we can conclude by saying that majority of them are old enough to give collect
information.

4.2.3.Respondents’ education levels

The researcher had to consider the level of education by assuming that educated people
know more about social security schemes therefore they give more accurate and collect
results compared to the less educated or uneducated people. The findings in this study
showed that 45% of respondents were degree holders they are followed by 40% diploma
holders and the others had least education level as shown in figure 4 below

28
4.2.4Respondents years of experience

In this study it was necessary to find the respondents’ years of experience this was
necessary in order to know how NSSF conducted its activities since way back until to this
date. Experienced people have more details since they have more years with NSSF.
Figure 4 below shows the respondents’ years of experience where the majority of them
have worked between 10 and 15 years in the working. Those who have worked for less
than 10 years was about 20% and the group which had worked between 10 ,15 and 15+
years constitute 30%,25%,25% respectively.

29
 CHAPTER FIVE

5.0.CONCLUSION, SUMMARY AND RECOMENDATIONS

5.1.Introduction

This chapter summarizes the findings of the study, it gives the implication of the findings
the chapter gives the conclusion and also gives the recommendation for further study as
well as for improvement of the condition of the social security schemes performance.

5.2.Summary of the findings

As we have seen above NSSF offers a variety of benefits which include old age pension,
survivorship, invalidity benefit, maternity benefit, funeral grant, health care benefit and
employment injury benefit therefore it complies with standards set by ILO.

5.3.Implication of the findings

The implication of the findings are that, according to the respondents and the
information obtained through secondary and primary data, findings indicate that
approximately 60% of the insured members are not satisfied with social security
schemes . Although much effort has been put so as to provide quality services a large
portion of people is not happy. Below are some of the problems faced by members of
security funds in getting social security services.

5.3.1.Limited number of NSSF workers in relation to number of customers.

Through field observation in this study, the researcher observed that there was a high
population of customers who wait for al long time to be served by a low number of NSSF
workers. This problem has made customers to be dissatisfied as it causes delay for them
to attend their work places or in sometimes due small serving rate in NSSF offices they
live there work places unattended meaning that they fail to work therefore leading to
economic problems.

30
5.3.2.Network problems.

Also customers face the problem with the network sometimes when they attend to social
security offices. Network problems have large negative impact in economic development
as they lead to delay of people to go to their work places as they tend to wait for network
so as they can be attended, this also leads to increase in length of the queue that becomes
a burden to NSSF workers. This also has led customers to be dissatisfied by social
security schemes.

5.3.3.Low contribution capability.

Levels of income for most of the informal sector and even the large part of the formal
sector employees are quite low. Their income is just enough to provide for subsistence,
making it difficult to meet the immediate needs as well as paying contributions to social
insurance schemes for their future protection, this discourages the customers as they see
social security funds as a burden.

5.3.4.Irrelevance of the retirement age.

Workers in the informal sector do not have a specific age for retirement, they tend to
work continuously as long as they are healthy and their activities are profitable. They
may retire at an early or late age depending on their health and business environment, and
not on the pensionable age as defined by the law, this factor discourages some old people
who wish to continue working.

5.3.5Permanency and consistency

Some informal workers have no permanent place for business or their business are
seasonal based for example Agricultural business therefore charging such kinds of people
with monthly contributions may be overwhelming as they may be forced to pay
contributions in the period where they are not even producing, incase they delay
submission still they pay penalties therefore it discourages people.

31
5.3.6.Delay and complicated procedures in providing benefits

Also social security members face a huge problem in the time of getting these benefits as
they have to pass several procedures to prove that they are qualified to earn these benefits.
These kinds of procedures discourage people from funding in these schemes.

5.4.Conclusion.

Findings from this study indicate that, the existing social security schemes in Tanzania
have done there best to provide quality services. However, they are not satisfactory in
bringing economic development of customers as they are faced by several challenges as it
has been portrayed above, the major ones being low income ability.

These challenges are common in developing countries where most of the employees have
low salary therefore contributions become a burden, this is because of high dependency
ratio as people tend to give birth to children in an extent that they cannot take care of.

5.5.Specific Recommendations.

Various procedures have to be taken so as to improve this sector, the reforms are
necessary in the social security in Tanzania. These reforms have to be done in such away
that they encourage customers to see the worth of these funds. The following are some of
the recommendations to improve social security funds.

5.5.1.Employment of more social security workers

The responsible authorities have to improve this sector by employing more workers to
enable fast provision of services. This will solve the problem of delay of services as
people will be served in time and will get time to go and conduct their economic
activities.

5.5.2.System Restructuring

The new system regulator should be established for the entire social protections sector
where by pension calculation have to be improved so as to enable a retired person get
enough funds to sustain him or her self after retirement age also. Other problems such as

32
informal employer failing to submit contributions of his or her employees the social
security organization has to give maximum cooperation by providing them with
knowledge on how to claim their benefits.

33
REFERENCES
Daykin, C. (2009) privately managed old-age pension schemes, theory and reality, United
Kingdom, London.
Gaya, C. (2011) Why Social Security in Tanzania is vastly inadequate, Dar es Salaam,
Tanzania.
Cremer H, et al (2009) Social Security, Retirement Age and Optimal Income Taxation,
paper presented at NBER IFS TAPES Conference on 21 April, 2009 accessed on 11th
May, 2014 from http://dev3.cepr.org/meets/wkcn/5/589/papers/cremer.pdf
Dijkhoff, T (2012) the Contested Value of International Social Security Standards in
the European Union European Journal of Social Security, Volume 14
(2012), No. 3.
Frye, I (2005) Extending Social Security to Developing Countries, Particular
Emphasis on Healthcare and Informal Economy Workers, Global
Union Research Network (GURN), Geneva.
Isaka I (2011), Improving Adequacy of Benefits; The Role of Social Security, A
paper presented during Regional Social Security Forum for Africa,
SSRA, Arusha.
Maghimbi S, Mchomvu A and Tungaraza F (2002), Social Security Systems in
Tanzania, Journal of Social Development in Africa, Vol 17, Tanzania.
Mattoo, N (2000), International Conference on Social Welfare, 29th, Cape town,
South Africa.
Modigliani F (2005), Franco Modigliani and the Life Cycle Theory of Consumption,
Princeton University Press, Rome.

34
Appendix I: Questionnaires
TANZANIA INSTITUTE OF ACCOUNTANCY (TIA)
Questionnaires
Dear Respondent,
This questionnaire aims at collecting information concerning the study of the impact of
social security schemes in economic development of Tanzanians.
The purpose of this questionnaire is to request you to express your thought to the
researcher about the impact of the benefits offered by the NSSF in bringing economic
development to Tanzanians.
From your responses, the researcher will be able to analyze and understand the benefits
being given by the NSSF and understand what impact they in economic development of
Tanzanians. This information is for academic purposes only. I therefore request you to
freely fill in the questionnaire below.
Instructions
Choose the correct answer from the multiple choices and put a tick in the brackets. If you
feel you need extra information to be filled attach plain paper at the back of the
questionnaire
Other instructions are indicated as per requirement of the question.
Section A
General Information
1. What is your gender?
a) Male
b) Female ( )
2. What is your age group?
a) Below 20 yrs
b) Between 20 – 35 yrs ( )
c) Between 35 – 55 yrs
d) Above 55
3. What is your level of education?
a) Certificate
b) Diploma course

35
c) First degree ( )
d) Postgraduate diploma
e) Master Degree
4. What is your position at work?
a) Junior officer
b) Senior officer
c) Principal Officer ( )
5. How many Years of working experience?
a) Less than five (5) years
b) Between 5 and 10 years
c) Between 10 and 15 years ( )
d) Between 15 and 20 years
6. Where do you work?
………………………………………………………………………………………………
………………………………………………………………………………………………
Section B
Objective; to examine what are the benefits provided by NSSF.
1. Do you know anything about NSSF?
a) Yes
b) No ( )
2. If your answer is yes, what are the benefits provided by NSSF?
……………………………………………………………………………………………
Objective; to examine the extent to which the Social security Schemes in Tanzania do
meet the minimum standards set the ILO Convention (ILO, 1952).
2. Are the benefits being provided by NSSF do meet the minimum standards provided by
the ILO Convention, 1952?
a) Yes
b) No ( )
Objective; to analyze the impediments towards the provision of benefits by NSSF
3. What are the impediments towards the provision of benefits by NSSF?

36
……………………………………………………………………..………………………
………………………………………………………………………………………………
……….. …………………………………………………………………….
4. How can the impediments be dealt with?
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
……….

37