Return to the origins of the evils that undermine the National Social Security Fund (CNSS) with Cédric Hombouhiry, former director of collection and pre-litigation of the structure concerned. This engineer from the Polytechnic, also nominated for the Choiseul 100 Africa, was led, through this interview, to sketch some suggested solutions.
Gabon Review: To date, you are the youngest manager to have held the position of Recovery and Litigation Director at the CNSS. In your opinion, what is social security and what role should the CNSS play?
Cedric Hombouhiry: Social security is a set of mechanisms aimed at protecting the Gabonese from the consequences of certain events or stages of life called ” social risks “. We can mention: sickness, maternity, disability, death, accidents at work and occupational diseases, family and then old age. In addition to health coverage, the CNSS provides everything else. It guarantees the supply. of the right service, at the right time and to the right person.
We have long noticed that the ‘Caisse’ has a hard time honoring their commitments. What do you think this is due to?
In fact, that’s correct. But let’s put things into perspective by saying that for some time the situation has clearly improved. Efforts in this direction are continually being made, even if the greatest is yet to come. As for the causes, I identify 5 major ones with their respective incidence rates: structural imbalance in the pension sector: 90%; top management turnover: 5%; pay slips: 3%; governance: 1%; and economic situation: 1%. A widely diffused point of view points to the ” government “You can see that with these tariffs, governance only comes in 4And position. Of course, considerable efforts are still expected.
Couldn’t we protect ourselves from this structural imbalance in the pension business, which accounts for 90% of the Fund’s good functioning?
A saying in the village says that ” usually it is the one who leads the way that meets the snake “The CNSS in its current form was born in 1975 when, in Europe, models were applied as early as 19And century. We could have glimpsed a cloudy horizon 50 years later, but it wasn’t that simple and for a good reason… first of all you have to go back to the context of the era of the oil years and the idea clearly shown was: ” give the Gabonese an excellent retreat “; secondly, three parametric errors were made:
a) Life expectancy was not taken into consideration. The reasonable configuration of a pay-as-you-go pension scheme must therefore lead to compliance with this fundamental equation that links the contribution rate (TC), the pension rate (Ta) and the life expectancy at retirement (Dr). In order for the plan to remain balanced as life expectancy increases, we immediately see that it is necessary to either increase the contribution or reduce the annuity rate …
Originally, at the time of independence, the parameters of the schemes were determined on the basis of the reality of the time: the aim was to offer retirees a pension equal to 60% of the last working salary for a full career of 40 years; this is equivalent to setting an annuity rate of 1.5% (Ta = 1.5%), since 40 x 1.5% = 60%. It is therefore deduced that the contribution rate must be equal to 1.5% of life expectancy in retirement (Ta x Dr), or 15% (1.5% * 10). The link between the contribution rate, the pension rate and life expectancy is therefore clearly established.
Of course, in practice, wage and demographic dynamics complicate this simplified equation, but without altering the above principles.
Thus, in the 60s and 70s, we projected ourselves on a hypothesis in which an employee, after 40 years of contributions, received a pension with an average life expectancy of about ten years.
However, at that time, we had not been able to predict the future, that is, to put in place mechanisms of automatic adjustment of the parameters, to allow them to adapt permanently to changes in their environment, and in particular to the lengthening of life. Is it reasonable to think, in 1960, to be able to stay 50 years with the same contribution rates or annuities?
Slowly but surely, over the decades, populations have benefited from a steady decline in the average age of death: in many countries, life expectancy at 60 has jumped between 4 and 8 years.
But against their will it was unthinkable that a fund that records financial surpluses, therefore in good health – apparently – could carry out a downward revision of pension formulas.
b) On the other hand, we had not yet grasped that the initial growth was ephemeral. In fact, a pay-as-you-go system that is set up begins with the collection of contributions, and it is only after a few decades, when the first taxpayers retire, that it begins to provide benefits. The first years of this regime were therefore, by nature, prosperous and glorious: money flowed in and reserves swelled. This is the “golden age of distribution”. Such was the situation of pension schemes on the continent in the early 1960s and 1970s. In Gabon, the first retirees, completely affected by 6/75, left in 1995.
This natural euphoria of the early days of any pay-as-you-go scheme was all the more flamboyant as these decades – the Glorious Thirties – were also those of enormous global economic growth that the continent has fully benefited from: in Côte d ‘Ivoire, for example, the average growth in the period 1960-1980 was 7% per annum… In this context, two management views can be distinguished: either we save now for future expenses or we spend now and we will save in the future. I specify that “saving” does not mean “digging money”, quite the contrary. It is therefore since the 2000s that these imbalances have been revealed in Gabon as for some other African funds.
c) The trust we had placed in the hope of an increase in the number of contributors in the future was not enough. Indeed, the founding fathers believed that labor force expansion would be a powerful engine of the financial balance of pay-as-you-go schemes, permanently bringing in a stream of new taxpayers, whose associated liabilities would not appear until 40 years later. .
This forecast turned out to be correct for industrialized countries, which have continued, since this period, the movement towards the generalization of wage labor that began with the industrial revolution: in France the share of wage-earners in total assets increased from 63% in 1956 to 85% in the 90s and 91% in the 2000s.
Unfortunately, this movement was unparalleled in Africa, and the opposite has also happened: it seems that the period of crisis that has rocked Africa since the late 1970s has accelerated the dominance of the informal sector and the decline in wage jobs. .
For this reason, today, more than 50 years after the wave of independence, our African pension systems remain confined to a very small minority: between 5% and 20% of the total population depending on the country. In the Central African Republic, for example, despite the constant efforts of the CNSS, social protection systems cover only formal private sector employees and civil servants, or about 60,000 people, or less than 2% of the country’s population. . 98% of the population, without dependent work, has no social protection.
In Gabon we have just over 100,000 public employees and 120,000 employees in the private sector. This is just over 10% of the population with social security coverage.
You understand that with hindsight it is easier to see failure but it is very difficult to predict it, even if it must have been announced by the “prophets” of that time. It is up to us to correct the situation now.
Exactly, obviously speaking of correction, what do you think is necessary right?
Well, nothing more than what has already been proposed by the various Managing Directors who have followed one another from the 2000s to today. Before I list them, I want to point out one more fact: it is not because we manage to pay most of the pensions that everything is fine. Each executive who relies on the CNSS is obliged to move heaven and earth at every deadline to support the pension plan. An equation worries me: every year there are more than 4,000 new retirees for how many new jobs contribute to the roof? The temperature rises considerably and the scale is logarithmic. In other words, what cost you 100 yesterday will cost you 300 tomorrow. -one of the sources of my observations. Suggested solutions:
For the structural imbalance of the pension sector : promulgate and apply the parametric reforms resulting from the latest actuarial studies (2021).
For the settlement of all arrears of pensions and other short-term benefits : benefit from a substantial loan called a restructuring loan which can cover at least 80% of the technical costs in a year.
For the large turnover of top management : improve by decree the articles establishing the organization of the Caisse Nationale de Sécurisé Sociale. For example: internal appointments will be made by the Chief Executive Officer after validation by the Board of Directors; The Chief Executive Officer is appointed by the Board of Directors; The presidency of the Board of Directors is ensured every three years, in turn, by the 3 constituent groups, namely: trade unionists; employers and employees. Why not add the retirementS. ?
For the inflated paycheck : with the restructuring loan obtained in §2, organize a social plan by economically supporting those who will leave. Goal: to halve the workforce.
For the improvement of governance : computerize all processes and apply the QMS (Quality Management System).
For the improvement of cash flow : replenish the reserves of the Fund by rebounding on the benefits of the shares §1, §2, §4 and §5.
Of course, all of this only involves my conception and is just the return of my personal experience. Other solutions that are certainly more effective have been proposed or are being implemented.
Do you speak from experience, precisely, of how you, a polytechnic engineer – far from social security – managed to manage the “cutting edge” management of the CNSS?
I only give thanks to God. I have no merit and also in this regard I must say that I was very well framed and surrounded. I have been fortunate to have employees immersed in the profession and an environment conducive to innovation.
How would you like to end this interview?
Taking advantage of the opportunity, I will recommend that the government establish an LFSS (Social Security Funding Act). It would serve, on the one hand, to improve the pension management system and, on the other, to anticipate future risks deriving from the weakness of the current pay-as-you-go and defined benefit redistributive model. Indeed, today the contributions of an active finance the retirement of an inactive person. But what will happen with the advent of strong industrial automation of places where robots will not contribute and aging populations will need “supportive” pensions, even if they have not contributed enough or never?