Business
Government to borrow NSSF money through BOU bond
Publish Date: Jun 30, 2012
newvision
  • mail
  • img

By John Odyek

The Government will borrow NSSF money through a bond that will be issued by the Bank of Uganda, Chris Kassami, the finance ministry permanent secretary, has said.

“The returns of the bond will be high,” said Kassami, who is also a board member at NSSF.

A bond is a long-term debt instrument in which the authorised issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and repay the principal after the quoted maturity period. It is, therefore, a formal contract to repay borrowed money with interest at fixed intervals.

“The safest investment is government paper. Who would refuse a return on investment of 21%? It is a prudent investment,” he noted.

Kassami explained that Tanzania borrowed money from a social security institution in a similar move to what the Government is proposing.

He noted it used the money to build Dodoma University and Police barracks.

He observed that since NSSF invests in private ventures, it could as well invest in public infrastructure. He argued that the Fund’s success should not be measured on the absence of scandals, but on higher returns and benefi ts to members.

NSSF has 500,000 members, with an asset base of sh2.5 trillion compared to the country’s 30 private retirement benefi ts with 15,000 members and an asset base of sh350b.

Kassami argued that investing in public infrastructure would create jobs and multiplier benefits for savers in NSSF.

“If we were to offer a bond for the Karuma hydro power project, the public would not only get the interest, but also electricity,” Kassami noted.

During the reading of the 2012/13 budget, President Yoweri Museveni said the Government would borrow about sh1 trillion for infrastructure projects from NSSF.

This attracted concern from some people, arguing that the Government has no right to borrow workers’ money. Others said it would not repay it.

Richard Byarugaba, the NSSF managing director, said the Fund would invest in the bonds because they are lucrative.

Byarugaba said added that they would be ready to buy the bond. He said any investor institutional or individual would be allowed to buy the bonds.

Geraldine Busulwa, the NSSF deputy managing director, said although the law does not allow NSSF to lend money, it can invest in bonds, arguing “it is good investment.”

Finance minister Maria Kiwanuka, last week asked the new NSSF board to protect the Fund from fraudulent activities.

“Ensure that the NSSF contributions lead to economic growth and prosperity for all and insulate the Fund from fraud,” Kiwanuka said.

Ivan Kyayonka heads the new board, with Guwatudde Kintu, Sarah Walusimbi, Agnes Kunihira, Musa Okello, Henry Mukasa, Richard Bigirwa, Christopher Kahirita, Kassami and Byarugaba as members.

 

 

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
EADB to fund more projects in Uganda
The East African Development Bank (EADB) has received credit worth $40m (about sh104b) from the African Development Bank (AfDB) to finance infrastructure, manufacturing, tourism, agriculture, transport, education and health projects...
Quacks in construction industry a big threat to Vision 2040
Players in the construction industry have asked the Government to regulate it, saying increasing numbers of quacks will affect efforts to attain the Uganda Vision 2040....
NSSF to save Uganda Clays from collapse
It is now or never for Uganda Clays Limited (UCL). The National Social Security Fund (NSSF) has announced that it will convert a sh16.7b loan to UCL into equity in a bid to secure the company’s future....
UAE Exchange Uganda celebrates, brand turns 34 globally
UAE Exchange Uganda joins its global family in celebrating the 34th anniversary of the brand coming into existence...
Former health ministry accountant to go on trial over illicit enrichment
The Constitutional Court has ruled that the prosecution of former principal accountant, Ministry of Health, Nestor Machumbi Gasasira, should proceed in the Anti-Corruption Division of the High Court....
Martin Aliker is new NIC chief
Dr. Martin Aliker, the senior presidential adviser on special duties, has been appointed the acting chairman of the National Insurance Corporation, following the death of the chairman, Dr. Remi Olowude, last month....
Should diplomatic passports issued to ex-govt workers be with drawn?
Yes
No
Can't Say
follow us
subscribe to our news letter