The Minister of Finance, Matia Kasaija Tuesday declared a 10% interest rate for National Social Security (NSSF) members for the 2022/2023 financial year, arguing that this is consistent with the Fund’s commitment made in 2013 to pay savers a real annual return, that is, at least 2 percentage points above the 10-year rate of inflation.
According to the minister, the new rate which is equivalent to Shs1.591 billion in total, will be calculated and credited to the balance outstanding on the members’ accounts as of July 1, 2022.
“Last financial year, the 10-year average rate of inflation was 4.2 percent. The rate I have just declared is 5.8 percent above the 10-year average, which means that the Fund has once again delivered on its promise and surpassed it by almost 3.8 percent. To the members, thank you for trusting the NSSF with your money. The Fund is an institution we are proud of,” Mr Kasaija said during the NSSF 11th annual members meeting in Kampala.
During the meeting, the management of the Fund reported assets growth from Shs17.26 trillion in Financial Year 2021/22 to Shs18.56 trillion in Financial Year 2023/24.
“Many naysayers did not imagine the possibility of growing this Fund to Shs20 trillion. That you will achieve that strategic objective a year ahead of schedule is laudable,” the minister remarked seeming to thwart members’ fears and anxiety in the aftermath of media reports of a poorly managed Fund which saw the former managing director Richard Byarugaba clash with one of his supervisors, Minister for Gender, Labour and Social Development, Ms Betty Amongi.
Byarugaba served as the NSSF managing director since August 1, 2010, and his second appointment, which began on November 29, 2017 expired on November 30, 2022. Ms Amongi, however voted not to renew his contract citing various allegations, including financial impropriety, collusion with contractors, defiance of presidential directives, and corruption, among others. She instead appointed Byarugaba’s deputy, Patrick Ayota to replace him as managing director of the Fund which currently boasts of over 2 million members.
Mr Byarugaba has since petitioned the High Court challenging Ayota’s appointment. He argues that Ayota’s appointment as MD in the August 18, 2023 letter should be invalidated due to his ineligibility for the position.
Mr Kasaija however, told guests at the Tuesday annual meeting that he was happy with the Fund’s performance.
“ The second KPI I am interested in is the money you generated during the year because that shows the productivity of the investments that I approved during the year. I am therefore glad that the total realised income earned increased by 15 percent from Shs1.9 trillion in the Financial Year 2022/22 to Shs2.2 trillion in the Financial Year 2022/23.
This is very commendable given the turmoil in Europe due to the Russia-Ukraine war, investor flight from most of the developing markets back to the US, reduction in value across all East African stock markets and the increased scrutiny that the Fund underwent in the 3rdquarter of the just concluded Financial year,” he said.
Earlier, the Fund’s Chairman Board of Directors, Peter Kimbowa reported that member contributions had increased by 15.4 percent from Shs1.49 trillion in Financial Year 2021/22 to Shs1.72 trillion in Financial Year 2022/23.
“Total Realised Income earned increased by 15 percent from Shs1.9 trillion in the Financial Year 2022/22 to Shs2.2 trillion in the Financial Year 2022/23. Benefits paid to qualifying members increased by 1 percent from Shs1.189 trillion in the Financial Year 2021/22 to Shs1.199 trillion in the Financial Year 2022/23. The cost-to-income ratio improved from 11.7 percent in the Financial Year 2021/22 to 9.4 percent in the Financial Year 2022/23,” he said.
According to him, the Fund’s cost of administration reduced from 1.18 percent of total assets to 1.02 percent.
Ms Amongi tasked the Fund managers to change in the way “we are conducting business at the Fund” and innovate solutions for its members based on the three dimensions, during the three lifecycles so as to provide actual social protection.
“We must keep doing what we are doing very well but be brave enough to embrace and seek out new opportunities. How can the Fund play a more active role in providing opportunities to the farmer, a market vendor, women, and youth groups to improve their ability to access social protection? Fortunately, the law gives the NSSF Board of Directors latitude to provide solutions to the challenge I have put forward. In the next few weeks, I will issue Regulations to operationalize several benefits the Managing Director has talked about in his presentation. In conclusion, I would like to thank the Board and Management for steering the Fund in the last Financial Year, despite the challenges. The disruption to the Fund business many people feared did not materialize because of your dedication and professionalism. I pledge, on behalf of the Ministry and on my own behalf, to provide the support required. It is also our duty to challenge you to do better and look at things through a different lens. That is how the Fund will continuously improve to achieve Vision 2035,” she argued moments after Mr Ayota’s presentation.
The Fund declared an interest rate of 9.5 percent in the financial year 2021/2022 down from 12.5 percent it declared in the previous year and the lowest in recent years.