Go slow on forced and opaque saving schemes


The Finance Bill 2023 is seeking to impose daily remittance of excise duty on firms with a history of falsifying actual sales through self-declaration. FILE PHOTO | POOL

The government's efforts to promote a culture of savings among Kenyans are commendable.

The country's savings rate of 13 percent, which is way below the over 20 percent in neighbouring Uganda and Tanzania, means that a majority of Kenyans are often a month's wage away from financial trouble.

In the latest government effort, a draft Gambling Control Bill seeks to force punters to save with every bet placed.

But like the savings component of the Hustler Fund, this government-backed scheme raises concerns about transparency and civil liberties too.

In the proposed law –the Gambling Control Bill— punters will automatically be deducted a yet-to-be-specified amount to go into savings.

While saving for a rainy day is widely accepted and a noble aim, it is misguided for the government to assume all citizens are financially irresponsible and need to be protected.

More importantly, there already exist formal and informal savings channels which the government should allow to continue doing their job.

These include the mandatory National Social Security Fund (NSSF), employer-backed schemes, savings and credit cooperative societies, and community-based organisations. Some are voluntary and others are mandatory.

The precedent set by the forced savings in the Hustler Fund microcredit service does not offer confidence to the public to sign for more opaque schemes.

It was launched before a full disclosure on how the money will be invested, among other pertinent issues.