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Monica Cheru Creative Editor

There were three topical issues concerning the welfare of teachers that were dominant this week.

There were teachers asking parents to pay fees for extra lessons and levies in foreign currency.

Then of course, the Government Employees Mutual Savings Fund (GEMS), which is coming into effect next week.

There has been an outcry on social media with some voices calling this an unbearable tax on civil servants who are earning way below living salaries.

The word “compulsory” has infuriated many, while a few readers bothered to read the part which states that those who wish to opt out can do so.

In reality, no civil servant will be forced to join GEMS and those who do can exit at any point.

With teachers making up the bulk of civil servants, this scheme will have an impact on their welfare, one way or another.

In this article, I will attempt to unpack the pros and cons of such a scheme.

How it will work

In simple terms, the Government will inject $100 million to kick-start the ring fenced fund. This means that money from the fund cannot be diverted to any other projects.

Members’ monthly contributions will grow the fund, while also growing their individual portfolios.

The member’s contributions will represent the member’s share.

As it is a flat 2,5 percent rate, it means that each member will contribute according to what they earn.

Benefits will also be according to contributions made.

Members can access emergency personal loans, salary advances, medical and educational, asset acquisition and personal improvement, and home improvement loans and mortgage loans with limits set according to their earnings.

The loans will attract low interest. Repayments will be monthly through direct debit or stop orders.

Dividends will be declared once or twice a year and they will appear as statement on the pay slip so at any given time, a member will know exactly what they are entitled to.

When members exit the scheme through opting out, retirement or death, all their entitlement will be paid out.

On paper, this is a fund that should grow and keep on growing while creating tangible benefits for members.

But it is the implementation that will determine whether or not it succeeds.

Why it might not work

Let us get to the bad news first.

For GEMS to really take off, there is need for a buy-in from the majority of civil servants.

In my opinion, this will be difficult to get for various reasons.

First, when it comes to money, trust is the cornerstone of any project’s viability.

The National Social Security Authority (NSSA) issue immediately comes to mind. Senior management repeatedly looted the fund while pensioners who contributed to the fund receive pittances.

The social welfare fund was a great idea. It provided security for workers who had no pensions.

It should also have provided a fund that could stimulate the economy through investment into projects that would create jobs and bring about development. Unfortunately, such positive effects have been severely limited.

Even for teacher organisations themselves, there is the perception that there is an inherent culture of looting and self-aggrandisement at the expense of the intended beneficiaries.

Stories of high salaries, dubious financial management and conflicted interests are just a tip of the iceberg when it comes to the rot alleged in some teacher associations.

That will probably affect the uptake for GEMS as civil servants may opt out to avoid the risk of enriching a few.

In my view, the biggest challenge could be inflation.

From the information put out, I did not get any part which explains how the effects of inflation will be countered.

Many civil servants, serving and retired are still smarting from the total loss of savings in the form of pensions and insurances that happened at the end of the first decade of this century.

Naturally, everyone will be worried about loss of value for any savings that they put up.

Silver lining

Many teachers, like other civil servants, are in debt. They are the biggest market for loans of all kinds.

When one looks at the interests and service charges for that debt, it becomes clear that this is a legitimate cause for concern for the Government.

Various loans are eroding the teacher’s real earnings which are meagre in the first place.

The Government injection, which is set to act like a revolving fund if managed prudently, can allow many civil servants to reach for and attain various personal goals without paying an arm and a leg to financial institutions.

We have many success stories when people pool their resources, and housing cooperatives that went up around the country are a case in point.

Until land barons destroyed the market, housing cooperatives conferred home ownership on many people who would never have been able to own a property if they had tried doing so on their own.

If administered with transparency and full accountability and financial prudence, GEMS will be a success story.

Even with limited incomes, civil servants can start building wealth instead of living from hand to mouth and becoming destitute on retirement.

Save GEMS from looters

For me, the worst case scenario is whereby there is low uptake of the scheme.

A few well connected civil servants will jump in and access loans from the Government seed money.

They will then pay back at the concessionary rate. Meanwhile the fund will earn a bad name and might be dissolved.

Government needs to draw a line in the sand.

With GEMS, there is an opportunity to set a new trend where public funds can bring about real meaningful change instead of just serving insatiable thieves.

One way of doing this is to have strong anti-corruption mechanisms with things like accessible real time reporting platforms backed by speedy responses. Any allegations must be fully investigated with full prosecution where warranted.