Thriving Social Security Fund Looking for New Opportunities

Uganda’s National Social Security Fund (NSSF) aims to live up to its slogan, ‘A better life’. Managing Director, Richard Byarugaba, explains, “Our mission truly is to secure a better life for our growing membership by providing quality products, great customer service and competitive returns in a transparent and efficient environment.”

The NSSF has seen outstanding success over the past 18 months. It has boosted its asset base from €514.8 million (UGX1.6 trillion) to €878.4 million (UGX2.7 trillion) and increased employer compliance from 40% to 69%. In addition, the NSSF has increased its monthly average benefits payout from €2.05 million (UGX6.4 billion) to €3.21 million (UGX10 billion). At the same time, the organisation has trimmed its employee count from 638 to 455.

The NSSF plays a major role in the Ugandan economy. In addition to its asset base of €878.4 million, it now contributes 5.5% of Uganda’s GDP and accounts for 80% of the traded securities in Uganda’s securities exchange. The NSSF has also invested €429.4 million (UGX1.334 trillion) in government securities.

Richard Byarugaba explains, “We decided to move to a three-tier approach where we used our members’ contributions towards investments into fixed assets and bank bonds. Our profits on investments were used to cover company overheads and the rest to redistribute back to the contributing members. We now have €220.8 million (UGX686.2 billion) in fixed deposits in local banks and €856.4 million (UGX2.6 trillion) in member funds.”

Focus on strategic long-term investments

In fact, the NSSF cannot find enough investment opportunities for the funds it has at its disposal. Richard Byarugaba says, “The local investment options are not deep enough to absorb NSSF’s investment potential, so what is needed is strategic domestic long-term investments which can absorb the huge local savings pool.”

The NSSF’s policy is to provide reasonable returns on investments for its members without compromising the safety of members’ savings. The NSSF has developed a number of programmes designed to increase returns, including rebalancing its fixed-income portfolio from short-term to long-term investments with higher yields. “We are also trading in the regional equity markets and, starting in 2013, we will embark on the construction of the Lubowa and Temangalo housing projects,” Richard Byarugaba points out. He adds, “The NSSF is gearing up for competition in the future, but our aim is still to offer the best value to our customers and the best and most consistent service delivery.”