Mozambique: Social security funds should be invested in productive sector – businesses

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Mozambique: Social security funds should be invested in productive sector – businesses

12:15 CAT | 15 Aug 2023

Photo: Adelino Buque/Facebook

The head of the CTA – Mozambique’s confederation of economic associations – on Monday defended the application of funds from the national social security institute (INSS) to the productive sector, in addition to treasury bonds, to improve the business environment.

“In recent times the INSS has invested more in Treasury bills and Treasury bonds, to the detriment of productive investment. CTA is ready to assist in reviewing the relevant legislation to broaden the scope of investment to improve the business environment in the country,” said Agostinho Vuma.

The head of the business confederation was speaking at the opening of the INSS national meeting, which is taking place in Beira, Sofala province, central Mozambique.

He added that the INSS’s financial reserves have doubled in the last three years, but that at the same time it is a cause for concern as this represented a higher return on investment in Treasury bills and Treasury bonds, to the detriment of productive investment.

“This choice by the INSS, despite offering guaranteed returns and no risk, has impoverished the productive sector. And we recognise that the INSS has a major legal limitation in terms of investment,” he stressed.

With the INSS at the forefront of the digital transformation process, reflected in the improvement of services to taxpayers, its expansion throughout the country and the consolidation of modernisation and computerisation processes, CTA welcomes the good working relationship with the supervisory ministry, witnessed by the recent revision of the Labour Law, unanimously approved by parliament.

“Allow me to highlight some innovations, such as the introduction of the regime of suspension of contracts for reasons of force majeure and unforeseeable circumstances,” Vuma explained of the recent legal changes.

For the CTA, this regime aims essentially to safeguard the survival of companies, since in times of force majeure they may not be working, and therefore unable to fulfil their obligations.

Joaquim Siúta, director general of the INSS, recognised the need to invest in strategic sectors in order to foster economic growth and in terms of jobs, admitting the usefulness of the suggestion of the business owners.

“What the CTA says is right. Because the INSS must contribute to the development of the country to generate more jobs (…) If we invest in strategic sectors, we will have a very large growth in terms of jobs and this means that the income from jobs will increase significantly. And this is good for workers and good for Mozambican society,” he said.

However, Siúta warned that theINSS has to weigh the risks in the application of social security resources, given past mistakes: “We have to be very careful in investments because of the history of investments, which seemed good investments, but we had situations that we can qualify as being scams. That’s why we have cases that are in the courts. That’s why we have to be careful in these investments because some of them may appear with shiny covers.”

According to data released on Monday, in six months of 2023 the INSS enrolled an additional 6,975 taxpayers, 59,141 beneficiaries and 3,157 self-employed workers in the compulsory social security system.

Source: Lusa