How NSSF Revenue Increased by 15% to 2.2Trillion as it Eyes 50Trillion Asset Capital

by Christopher Kiiza
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Despite recent allegations of mismanagement, abuse of office and corruption at the East Africa’s biggest pension Fund, the National Social Security Fund (NSSF) that resulted into the Inspectorate of Government (IG) ordering former Managing Director, Richard Byarugaba and former Director of Finance, Stevens Mwanje to jointly refund 5 billion shillings’ loss they caused to the Fund, the Fund’s revenue has increased by 15% in 2022/23 financial year.

The Fund announced on Wednesday last week that in the Financial Year ending on June 30, 2023, there was a 15% rise in revenue, going from 1.9 trillion shillings to 2.2 trillion.

The Fund’s Managing Director, Patrick Ayota attributed the growth to increased earnings from interest income from 1.79 trillion to 2 trillion and dividend income which grew from 84 billion to 139 billion.

Income from the Fund’s real estate projects also slightly increased from 13.4 billion to 14 billion and 16 billion was earned from other income.

NSSF recorded the above progress despite the investment environment in Uganda and the region being challenging over the last Financial Year.

According to Ayota, the Fund was able to increase its revenue owing to strategic asset allocation which he said enabled the Fund to remain profitable, despite a generally depressed market.

“Although inflation remained under control at 4.8%, the reduction in the value of the stock markets in Uganda and Kenya, the appreciation of the Uganda Shilling against the regional currencies, and the reduction in long-term bond yields increased pressure on the Fund’s performance. For us to post a 15% increase in revenue shows our resilience and an astute investment risk balance,” Ayota said.

Overall, the long-term bond yields dropped compared to the last Financial Year. For instance, on a year-on-year comparison as of 30th June 2023, the 10-year bond yield dropped from 15.600% to 14.788%, the 15-year bond yield dropped from 16.194% to 15.291% and the 20-year bond yield dropped from 17.6345% to 15.313%.

In addition, the stock markets in Uganda, Kenya, Tanzania, and Rwanda suffered a reduction in value. The Uganda Securities Exchange Local Index reduced by 11.47% the Nairobi Stock Exchange All Share Index reduced by 14.04%, the Tanzania Stock Exchange Share Index reduced by 4.02%, and the Rwanda Stock Exchange reduced by 2.27%.

There was a significant appreciation of the Uganda shilling against major currencies, mainly the Kenya Shilling which depreciated by 22.2% against the Uganda Shilling.

Ayota, however, said that the Fund’s financial position is stable and the Assets Under Management continue to grow.

“Our Assets Under Management (AUM) increased from Ush17.26 trillion in Financial Year 2021/22 to Ush18.56 trillion in Financial Year 2022/23. This growth was driven by an increase in member contributions, increased realized income, and a cost management strategy that enables us to create more value for the member at a lower cost compared to the previous Financial Year,” he said.

“In fact, with the current asset base, we project that the strategic goal of growing the Assets Under Management to 20 trillion shillings by 2025 will be achieved by June 30, 2024, one year ahead of schedule,” Ayota added.

The Fund’s member contributions increased by 15% from 1.49 trillion in Financial Year 2021/22 to 1.72 trillion in Financial Year 2022/23, while the cost of administration reduced from 1.18% to 1.02%.

Ayota assured NSSF members that the Fund is in a better financial position going forward, saying that the focus has now shifted to ensuring its long-term sustainability.

NSSF Plan to Grow to 50 Trillion & Cover 50% Of Working Population

Ayota unveiled what he called “Vision 2035”, targeting to increase the Fund’s enrollment of the country’s total workforce from 10% to 50%, and grow the Fund to 50 trillion shillings.

“Our new “Vision 2035” is the bedrock of our long-term strategic focus– where we want to grow the Fund to 50 trillion shillings, cover at least 50% of the working population, and achieve 95% and both customer satisfaction and staff engagement,” he said.

This is hinged on the Fund’s 10-year Strategic Plan developed in 2015, anchored around growing the Fund to 20 trillion by 2025, improving Customer Satisfaction to 95%, improving Staff Satisfaction to 95%, and payment of Benefits within 1 day, which Ayota said is on course to meet.

To achieve its “Vision 2035”, the NSSF will deliberately introduce new initiatives to create the capacity and the willingness of Ugandans to save.

“Creating a capacity to save simply means that the Fund will roll out a sustainability strategy focusing on job creation, intervening in the agriculture value chain, and supporting the innovation ecosystem. On the other hand, creating a willingness to save means that we shall implement empowerment programmes for our members through financial literacy, increasing compliance, and innovating value-adding products,” Ayota said.

How Easy Will NSSF Achieve Vision 2035?

In July this year, the Inspectorate of Government (IG) ordered former NSSF Managing Director, Richard Byarugaba and former Director of Finance, Stevens Mwanje to jointly refund 5 billion shillings’ loss they caused to the Fund.

The IG made the order after conducting joint investigations with the Auditor General into allegations of mismanagement, abuse of office and corruption by Byarugaba as requested by the Minister of Gender, Labour and Social Development, Betty Amongi in January.

The IG report pinned Byarugaba and Mwanje for causing NSSF, a financial loss of 4.4 billion shillings when they authorized irregular payments to staff who exited under voluntary early retirement.

The IG also pinned the two for illegally engineering the resignation of two NSSF Board members this causing a financial loss of 687 million shillings.

Furthermore, during the COVID-19 when the country was under total lockdown which caused massive economic challenges, Ugandans cried out for accession of their savings with NSSF, but to no avail.

The above factors caused lack of trust in NSSF by its on savers.

Will the above mentioned cases of mismanagement, abuse of office and corruption not hinder NSSF from achieving its Vision 2035?

Ayota responded that savers still trust the Fund.

“Despite some turbulence over the last 8 months, members still trust the Fund going by the good performance numbers to be released at the upcoming Annual Members’ Meeting,” he said.

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