Ecocash launches micro-pension fund for informal sector workers in Zimbabwe

from Zimbabwe the dual economy, the formal and informal sectors, have become two distinct economies in Zimbabwe. The former being vulnerable to complex tax regimes and inconsistent monetary policies, the latter has no regard for both.

In some circles, the informal sector has been referred to as the gray economy, shadow economy, underground economy, informal sector and cash economy.

  • Econet Life, a EcoCash Holdings Zimbabwe insurance unit, launched a unique micro-pension fund product that allows people in the informal sector to save for their retirement
  • The new product, called Dura/Isiphala Pension Fundwas launched in Kariba this weekend and is expected to boost uptake of pensions by informal sector workers
  • Meanwhile, on March 27, 2019president of nigeria Muhammadu Buhari launched the Micro Pension Plan (MPP) as part of his administration’s efforts to ensure that Nigerians who have worked hard during their active years in the service of their motherland live in dignity and retire without any reason to s ‘alarm

According to national statistics, the contribution of the informal sector to the gross domestic product (GDP) is estimated at less than 50%. According to world Bank, from Zimbabwe the economy grew by 5.8% to reach US$19.2 billion in 2021 after contracting by 6.1% in 2019 and 6.2% in 2020.

The 2022 Labor Force Survey published by the Zimbabwe National Statistics Agency (Zimstat) points out that 3.3 million people are employed locally, pointing out that more than 2.8 million Zimbabweans live in the informal sector against 495,000 in formal employment.

According to an article in The Independent dated July 22, 2022the level of formalization in the country is now estimated at between 65% and 70% due to several push and pull factors such as high inflation, low remuneration in the formal sector, punitive foreign exchange regulations, weak institutions and high levels of corruption, low tax morality, high levels of unemployment, over-regulation, limited automation in tax collection, and increasing levels of poverty in the country.

Defining the informal sector The International Labor Organization (ILO) defines the informal sector as the set of economic activities of workers and economic units that are not covered or sufficiently covered by legal provisions.

Formal arrangements include contract enforcement in business transactions, enforcement of labor regulations, social security contributions, banking products, payment of required municipal taxes and levies, and compliance with legal import channels. and export of goods.

Therefore, people employed in the informal sector are not subject to national labor laws, income tax, social protection or the right to certain employment benefits such as maternity leave.

Econet Life, a EcoCash Holdings Zimbabwe insurance unit a launched a unique micro-pension fund product that allows people in the informal sector to save for their retirement. This is a game changer as workers in the informal sector now have something to add as social protection.

EcoCash Holdings Zimbabwe is a diverse technology group that leverages digital solutions to have a social and economic impact on the lives of all Zimbabweans.

The new product, called Dura/Isiphala Pension Fundwas launched in Kariba this weekend and is expected to boost the uptake of pensions by informal sector workers.

Dura/Isiphala positions Econet Life as the only innovative pension company using technology to drive financial inclusion. The new product is intended to empower SMEs, cooperatives, civil servants and people in formal and informal employment aged 18-70.

Speaking to the Zimbabwe National Cooperative Federation International Day of Cooperatives celebrations in Kariba, where the product was unveiled, the Deputy Minister of Women Affairs, Communities, Small and Development of medium enterprises, Jennifer Mhlanga praised Econet Life for launching innovative products that provide ordinary people with affordable products.

“We appreciate you (Econet Life) for your continued support and innovations focused on improving the lives of our SMEs,” said the Deputy Minister.

Life Director and Chief Executive Officer of Econet Life, Godwin Mashirisaid Dura/Isiphala would leverage smart systems and technology to ensure broad inclusion of all workers.

“We continue to rethink effective ways to serve our communities. Retirement should never be the preserve of formal employees; everyone should have access to equal opportunities that help them live a better life, whether they are employed formally or informally,” he said. said.

Emmanuel Pfupa, head of Econet Life Fund Business, said the micro-pension fund will promote inclusive growth in the pension sector by enabling people in the informal sector to open retirement savings accounts which, up to now, were only available to formal sector employees. sector.

“With Dura/Isiphala Pension Fundthe first of its kind in Zimbabwe, we want to ensure that every employee in the country enjoys a great life after retirement. With this product, anyone can make monthly contributions to their Dura/Isiphala. When the need arises after a year, two or even 10 years, they will enjoy the benefits of their investment,” he said.

Although the informal sector accounts for a large share of from Zimbabwe gross domestic product, industry players have been largely excluded from financial services offerings.

However, with Dura/Isiphala, people in the informal sector can contribute anything from $10 towards their retirement. They will also be able to use the investment as collateral to access short term loans, earn interest and access a portion of their investment after 12 months.

Econet Life said registrations and contributions can be made at Econet Shops, AFC Bank, Stewardship Bank, or at any EcoSure point of contact across the country. He added that contributions will soon be payable through the EcoCash FCA wallet.

Meanwhile, in a related This Day article posted on June 5, 2022on March 27, 2019president of nigeria Muhammadu Buhari launched the Micro Pension Plan (MPP) as part of his administration’s efforts to ensure that Nigerians who have worked hard during their active years in the service of their motherland live with dignity and retire without cause for alarm.

The MPP was launched by the National Pension Commission (PenCom) and also aimed to integrate workers in the informal sector of the economy.

Since the launch of the scheme by Buhari, a total of 72,846 contributors have been registered by pension fund administrators (PFA). The micro-pension scheme targets the vast majority of from Nigeria active population which, incidentally, operates in the informal sector of the economy.

At the launch, Buhari said the scheme was part of his administration’s efforts to ensure that Nigerians who have worked hard during their active years in the service of their motherland live in dignity and retire without any cause for alarm. .

He said the federal government understood the importance of the pensions industry, adding that was why the micro-pension scheme was designed to give informal sector operators something to fall back on when would retire from active duty.

The president added that his administration had, over the past three years, provided grants, technical support and loans to small businesses, resulting in positive changes in their way of life.

In Nigeriainformal sector workers include market women, members of road transport workers, textile, garment and tailoring associations, tricycle operators and commercial motorcycle riders associations, butcher associations , workers in the film and performing arts industry, mechanics and workers in the automotive industry as well as individual professionals such as lawyers and accountants, among others.

Previously, these categories of workers and organizations employing less than three employees were not covered by the contributory pension scheme and, as such, were not necessarily covered by any pension scheme.

But with the amended Pension Reform Act 2014, section 2(3) now provides that employees of organizations with less than three employees, the self-employed and people operating in the informal sector can participate in the pension scheme. contributory pension under the Micro-Retirement Scheme.

Copyright The Africa Exchange. Distributed by AllAfrica Global Media (allAfrica.com)., source English press service

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