NSSF reports impressive performance in January amidst mismanagement and corruption ‘noise’

In the first 24 days of the month of January 2023, the National Social Security Fund (NSSF) collections were up 24% t0 Ugx121bn compared to Ugx97billion that was collected in the entire month of January 2022.

A total of Ugx95billion was paid out as benefits to qualifying members in the first 24 days of January 2023 compared to Ugx50bn that was paid out during the entire month of January 2022.

Whereas the month of January 2022 was disrupted by COVID-19 lockdown measures especially in the education sector, Patrick Ayota, the Acting Managing Director Patrick Ayota said on Jan.25, that the beginning of the year performance was ‘excellent’ amidst the ‘noise’ in the market.

On the noise matter, Ayota was referring to the ongoing investigations by Parliament and the Inspector General of Government (IGG) at the Fund regarding mismanagement and corruption that has left a management vacuum for months.

Richard Byarugaba, the Fund’s former Managing Director is at the center of the investigations and could easily return to the Fund for another 5-year management term once he is cleared. 

Meanwhile, Ayota said, the Fund is on track to achieving its key performance targets for the Financial Year 2022/2023 after its contributions collections and realized income grew by 22% and 17% respectively for half year as at end of December 2022.

According to the results, the half-year contributions collected by the Fund increased to Ugx786billion, compared to Ugx643billion over the same period last Financial Year.

This performance could have been supported by the full reopening of the economy compared to the same period before.

On the other hand, realized income also topped Shs1.054 trillion in December 2022 from Ugx900 billion over the same period last Financial Year, driven by higher interest rates on fixed income investments.

Ayota explained that, “this half-year performance, which is better than what we achieved over the same period in the previous Financial Year shows that our members – both employers and workers have trust in the Fund as their social security and savings partner.”

The Fund registered 2,078 employers and 67,277 contributors respectively over the last 6 months.

The Fund Asset size also increased from Ugx17.65 trillion in July 2022 to Ugx17.88 trillion in December 2022. Although the rate of growth reduced compared to the same period last Financial Year, the reduction is attributed to increased benefits payout.

The Fund paid Ugx712 billion over 6 months in December 2022 compared to UGX 364 billion over the same period in the previous Financial Year.

“The increase in benefits payments does not surprise us because this is the trend in the first half of the year because qualifying beneficiaries tend to wait for interest rate declaration at the end of September every year before they submit benefit claims. That is why in the month of October and November following interest declaration, we paid Ugx217.9 billion and Ugx208.6 billion respectively,” Ayota said.

Commenting on the planned initiatives to recruit savers from the Small and Medium Enterprises (SME) and informal sectors, Ayota said that the Fund is ready to fulfill its mandate following presidential assent to the National Social Security Fund (Amendment) Act 2022.

He said that the Fund will roll out a recruitment plan after the issuance of the regulations by the minister of Gender, Labour, and Social Development.

Ayota said, the Fund’s plan revolves around two strategic pillars – creating the capacity of Ugandans to save and creating a willingness by Ugandans to save.

“That will enable us to achieve the overriding national goal of expanding coverage of basic social security in Uganda from 1.3m members with balances in NSSF to 15m Ugandans by 2035,” Ayota said, adding “a capacity to save will also tackle the strategic challenge of ensuring compliance with the NSSF Act as amended.”