Factors Affecting the Uptake of Voluntary Mbao Pension Savings by Informal Sector Traders in Nairobi City County, Kenya
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Date
2022-10
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journal of Economics and Finance
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 pvalues 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
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Journal Article
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Citation
Omwombo, F. O., Abdul, F. (2022). Factors affecting the uptake of voluntary MBAO pension savings by informal sector traders in Nairobi City County, Kenya. International Academic Journal of Economics and Finance, 3(8), 47-78