By David Mugabe
THE National Social Security Fund (NSSF) is calling for government and the financial market to structure and deliver infrastructure bonds and other instruments to enable large fund pools like those held by the fund to invest in them.
Speaking at the second annual members meeting, acting managing director Geraldine Ssali noted that such financial instruments would meet the fund’s and members long term investment aspirations especially for young workers coming on board.
“They are high yielding and long term-15 to 30 years, we want to make money for our country but also build our country,” noted Ssali.
Uganda is grappling with funding the massive infrastructure projects that have been identified as necessary to improve the country’s competitiveness and business environment. Most of NSSF’s cash pool is invested in fixed income (about 81%) and equity and technocrats believe structuring the over sh.4 trillion cash would help push these projects forward.
But infrastructure bonds analysts observe still require an enabling legal framework like the recently passed public-private-partnerships bill although government says having parliament oversee its implementation will slow down business.
State minister for finance Matia Kasaija hailed the fund’s performance over the past few years. He clarified that the recent withdrawal of the retirement benefits liberalization bill is to allow more consultation.
“We discovered there was a mismatch and we were not talking on the same wavelength and we needed to exhaustively consult all the sectors,” noted Kasaija.
He cautioned young people against poor time management and the wasteful lifestyle that deters them from saving. Kasaija said one of the major purposes of the ID project is to ensure that those doing business formalize to raise the country’s tax to GDP which is currently the lowest in the region (about 14%) compared to the region’s average of 18%.
“Your area of catchment will increase,” noted Kasaija.
Kasaija praised former managing director Richard Byarugaba for laying a solid foundation that the current team is pushing forward.
The fund’s board chairman Ivan Kyayonka has projected that before he leaves office, the Fund’s asset base should have grown to about sh6 trillion by 2017, making it by far the largest Fund in East Africa.
Kyayonka says the fund is projected to grow further with or without the liberalization of the retirement benefits sector.
The Fund’s asset base has grown from sh4.4 trillion ($1.7 billion) as at June 30, 2014 to sh3.4 trillion in 2009 outstripping NSSF Kenya which is at $1.6 billion and NSSF Tanzania at $1.3 billion.
“NSSF Uganda has become the benchmark for the industry both within and outside the East African region,” Kyayonka noted adding that the fund will re-engineer and automate business processes and improve access to our services by rolling out a smartcard. Kyayonka took issues with the never ending investigations and negative media saying it is taking 20% of the fund’s time.
“Yes we are interested in investigations but we would not like to take up 20% of our time in investigations that will result into nothing, everybody expected rot and scandal but we have not had scandal,”
“How can you say Umeme was a bad investment, you have to be mad. We want you to come out and challenge us and we show you with facts. But not just say Kyayonka was bribed, that is not fair,” noted Kyayonka.
“The result she (Ssali) has presented are not the results of a company that is collapsing, we don’t want people to destroy our image without facts including parliamentarians,” noted Kyayonka.
Kyayonka said the fund is now focusing on research to deliver new products including housing, education among others. Kyayonka said NSSF is now the bank of choice.
Kyayonka said the fund will optimise its real estate portfolio to 10% from 6% and unlock stalled real estate investments,” Kyayonka added.
Compliance levels improved from 52% in 2010, to 77% in 2014 while annual total contribution more than doubled from sh295 b in 2010, to sh638 b in 2014.
“The Fund’s assets are more than adequate to cover member liabilities. We don’t have significant external liabilities,” Ssali said.
Geraldine acknowledged that there still exists challenges around real estate and litigation although their dream is to drive real estate investments to 10%.
NSSF recently announced interest rate of 11.5%, an increase from 11.23% paid last year. During discussions, workers wondered why a new managing director has not been appointed.
They also wondered whether government would stop interfering on NSSF affairs with the continuous investigations.
During the meeting, NSSF recognized and awarded the best employers in terms of compliance with Centenary Bank taking gold for collecting over sh500m.
Vision Fund was one of the winners taking the Bronze Category for collecting about sh100m monthly contributions.
NSSF collects sh55b per month