Uganda’s President Yoweri Museveni has agreed to legislation allowing some workers early access to 20% of their savings held by the state pension fund, to help them absorb the economic blow from the COVID-19 pandemic, he said.

Consumers in the East African nation have been hit hard by the impact of the pandemic, forcing some of them to demand that the legislature allows them to access part of their retirement savings.

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“I have agreed in principle that workers that qualify access 20% of their savings,” Museveni tweeted late on Wednesday.

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Parliament had changed the law earlier this year but Museveni had opposed the changes saying he was concerned about their potential impact on pensions.

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His change of heart followed consultations with workers’ representatives and the minister of labour, who agreed to make some unspecified amendments, the president’s spokeswoman Linda Nabusayi told Reuters.

The state’s National Social Security Fund (NSSF) had opposed the changes, saying it would be forced to sell its government securities at a discount to raise enough funds to meet the expected volume of withdrawals.

NSSF is the largest pension fund in Uganda, with assets of 13.3 trillion shillings ($3.76 billion).

The changes to the law limit the eligibility for early withdrawals to those of 45 years and above, who have been saving for 10 years or more.

Still, some analysts said the NSSF would be negatively impacted by the move despite those restrictions.

“There will be some liquidity pressure on NSSF,” said Fred Muhumuza, an economics lecturer at Makerere University.

The move to allow early access to savers could also harm their overall welfare, said Kwame Ejalu, chairman of Zamara, an East Africa-focussed private pensions fund, describing the clamour for pre-term access as “an emotional argument.”

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