Inefficient money lenders

Feb 14, 2015 Editorial

When Forbes Burnham fashioned the Guyana National Insurance Scheme back in 1969 there were many critics. The then political opposition saw it as a means of further oppressing the working masses because every cent that was deducted from the wages and salaries of workers represented a smaller take home pay.
To its credit, the government withstood the storm. It made those deductions mandatory. There was also the stipulation that a contributor must have at least 750 contributions before that contributor could qualify for a pension. This meant the first contributors had to work for at least fifteen years before they could lay claim to their contributions.
Those who would not have worked for the fifteen years would have been able to collect a lump sum. In time there were no complaints although there were those attempted to access the scheme through fraudulent means. There were the sugar workers who dismembered themselves just to get accident benefits. Sometime later, medical officers noticed a striking similarity in the nature of the injuries sustained by cane farmers. Somebody was paying a colleague to remove a joint from a finger.
Today, the scheme has come a long way from those early days when contributions were marked by stamps in books. The contributions are counted in billions of dollars. The time did come when the scheme had to find ways of investing its money. And invest it did, even going so far as to make a billion-dollar investment with Colonial Life Insurance Company that it can never recoup.
Private individuals sought loans from the NIS and secured these loans with the stroke of the Finance Minister’s pen. When Guyana pursued certain infrastructural development, one of the first entities to which the government turned was the National Insurance Scheme. It was the scheme that helped fund the construction of the Caricom Secretariat and more recently, the Berbice River Bridge.
We watched the once much maligned scheme provide financial support to local businesses, offering them sums that no commercial bank would at comparable interest rates. We watched certain people trying to use it as a slush fund and now we see some borrowers taking the NIS for granted.
How else can one explain the refusal of the Berbice Bridge Company to pay dividends due to the NIS when these became payable? These dividends are the rates of return on investments that make the NIS pay its pensioners. To refuse to pay monies due to the NIS is to deny the pensioners their just deserts and to attempt to defraud the government.
The Berbice Bridge Company is just one of those who owe the government and is reluctant to pay when due. There are others who would have taken advantage of the interest rate and who are now in default.
Chairman of the National Insurance Scheme, Dr Roger Luncheon, admitted that the scheme could do much better with its outstanding debts. Surely, it is most unfair for people who were once critics of the scheme to now borrow from the same scheme that was considered a burden.
Yet the failure of the National Insurance Scheme to manage monies owed to it is common to Government’s action. Governments are poor managers and are therefore the most exploited of the employers. This shortcoming is what makes the capitalist world beseech governments to get out of business.
In Guyana, when the government was the largest employer productivity was not what it should be. People knew that supervision was lax. It was the same with the Socialist countries that did not really explode economically until they began to expand the private sector which is strictly profit driven and therefore pursues every penny due and owed to it.
The International Monetary Fund, cognizant of Governments penchant to employ its people and so record relatively low unemployment rates, always insisted that governments retrench. The National Insurance Scheme fits perfectly into this mould and the result is that people are reluctant to honour monies borrowed from the scheme.

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