FACTORS AFFECTING THE UPTAKE OF VOLUNTARY MBAO PENSION SAVINGS BY INFORMAL SECTOR TRADERS IN NAIROBI CITY COUNTY, KENYA
Florence Adhiambo Omwombo - Masters Student, Kenyatta University, Kenya
Dr. Farida Abdul (PhD) - Lecturer, Department of Accounting & Finance, School of Business, Economics & Tourism, Kenyatta University, Kenya
ABSTRACT
Africa's coverage of contributory private sector pension scheme of the working population age is still low with Mauritius having the highest private-sector coverage of 70 percent, and a range between 10-20 percent in East African countries. In Kenya, the pension system reforms include the establishment of Retirement Benefit Authority in 1997 to regulate the pension schemes, amendment of the National Social Security Act in 2013 to allow voluntary membership to all citizens above 18years and the launch of the Mbao pension scheme in 2011 to ensure pension coverage of the informal sector which accounts for an average of 80 percent of jobs created in Kenya yearly, however, the overall pension coverage in Kenya is still low ranging between 20% and 22.2% and the Informal Sector Skills and Occupation Survey reported that as at 2020, about 6.9% of the informal sector workers were members of National Social Security Fund while only around 1% was in Mbao pension scheme. The general objective of this study was to evaluate the factors that influence voluntary Mbao pension savings uptake by informal sector traders in Nairobi City County, Kenya by targeting the traders in Gikomba market categorized into small-scale traders in food, clothes, shoes, artisans, and small scale kiosk owners. Specifically, the study assessed the effects of Mbao pension scheme design incentives, demographic factors and the traders’ attitude towards voluntary retirement savings with Mbao pension savings scheme. The study was guided by institutional savings theory, lifecycle savings theory, theory of planned behaviour and prospect theory. Descriptive research design and probability sampling technique was used to select a representative sample by classifying the traders according to the sector of trad. Questionnaires were used to collect primary data from a random sample of 384 traders and the data analysed using descriptive statistics and inferential statistics of Binary logistic regression analysis aided by Statistical Package for Social Sciences software version 28. The results of the binary logistic estimation model showed that scheme incentives are statistically significant with a p-value less than 0.05,demographic aspects of age, education level, income level, number of children and years in business were also found statistically significant with p-values less than 0.05 while gender and marital status were found insignificant with p-values greater than 0.05.Behavioral aspect was also found statistically significant with a p-value less than 0.05.Retirement Benefit Authority regulator support was found statistically insignificant in moderating the relationship. Thus, scheme incentives, age, education level, income level, number of children, years in business and behavioral aspects significantly influence the uptake of voluntary Mbao pension savings by informal-sector traders in Nairobi City County, Kenya. The research suggests that Mbao pension scheme administrators together with the Retirement Benefit Authority engage in periodic and continuous awareness campaigns on Mbao pension scheme and consider setting aside funds yearly for this sensitization in their annual financial budget.