The board and management of Uganda’s National Social Security Fund (NSSF) have spoken out for the first time, about the Parliament Select Committee report on the status of the National Social Security Fund (NSSF) that was adopted by Parliament last week, March 09th 2023.
The board Chairman, Dr. Peter Kimbowa, flanked by the Ag. Managing Director Patrick M. Ayota said that while they welcomed the report, most of its findings and therefore conclusions lacked context and in some cases were inaccurate as well as ignored key facts and figures shared with the committee by the Fund.
This is the first time the NSSF is speaking out formally about the report that was released to Parliament on March 01st 2023. The report among others recommended that the Gender, Labour and Social Development Minister, Hon. Betty Amongi resign for her alleged role in trying to influence the Fund to allocate her ministry UGX6 billion as well as directing that the Fund invest another UGX40 billion in Uganda Grain Council.
While the Committee noted and appreciated the Fund’s board and management for their efforts in growing the Fund from UGX 1.7 trillion in 2010 to UGX 17.3 trillion at end of the 4th quarter of 2022, it faulted the board and management on a number of expenses, it said were wasteful. One such example is a budget allocation of UGX1.8 billion for Corporate Social Responsibility.
A candid talking Kimbowa said that the acknowledgement of the Fund’s growth was proof that there was good governance.
‘This acknowledgement should give comfort to our members because growth cannot happen where there is poor governance. The mere fact that the Fund is growing and has continued to grow reiterates the good governance structures at the Fund and the experienced team of technocrats at the Fund,” he said.
He went on to say that “from the report, there is neither evidence nor conclusion that any individual at the Fund had stolen member funds, despite the numerous allegations in the media purporting bribery and mismanagement of Funds”.
“In effect, the committee report brings to light the fact that the famous UGX6 billion was never disbursed, nor was the UGX1.8 billion shared among board members. The work plans had not been approved by the board,” he adds, saying: “This is not only a vindication of the integrity of the Fund’s board and Management but also an affirmation that members’ savings can be trusted with the Fund”.
“In some instances, we find the report devoid of important context and contains inaccuracies, especially regarding investments. For instance, the Fund has a total of 210 investments, however, only one, the West Nile Golf Club, has lost value. In our opinion, the fact that the Committee had to go back almost two decades to find one investment that has lost value shows that the Fund has had a stellar performance over the years,” he said.
Patrick M. Ayota, the Ag. Managing Director also said that whereas the report highlights areas where the Fund must improve, the Committee did not consider the context or information provided in many instances.
“For instance, our investment philosophy is guided by the Investments Policy and Guidelines, as well as the URBRA Investment Guidelines. One key component is the principle of investment diversification – both in terms of asset class and sector. This basic rule behind the principle of diversification is a realization that not all investments will perform well all the time.”.
Uganda’s Corporate Finance and Capital Markets Luminary, Miriam Ekirapa Musaali, Passes On“Therefore, any fund’s investment performance must therefore be analyzed in terms of the entire portfolio, rather than cherry-picking as the committee did. An analysis of the Fund’s investment portfolio over the last 12 years shows consistent growth of the assets and a competitive return,” Ayota said.
Mr. Ayota also pointed out that the Fund noted instances where the committee appears to not have considered the facts availed by the Fund.
“For instance, the issue of onboarding of Geomapping technology to help the Fund easily trace employers. We clearly demonstrated that the technology is fully operational and there is value for money. Other areas where the committee did not consider facts include payment of performance bonuses, Corporate Social Responsibility, penalty waivers, and legacy investments like West Nile Golf Club and Workers House land title,” he said.
Ayota said that the committee agreed that the facts about the Fund’s performance are indisputable and assured NSSF members and the public of the Board and Management’s commitment to ensuring the security and safety of members’ savings.
On the alleged wasteful expenditures, Kimbowa said the Committee ought to have considered the larger picture- by factoring the expenditure against the return on investment, as well as benchmarking on other peers.
He reiterated that focusing on expenditures alone without considering that within 12 years, the Fund had grown by more than 9 times from UGX 1.7 trillion to UGX 18 trillion, would misrepresent the efforts of the many hard-working Ugandans at the Fund.
“NSSF has consistently grown the value of members’ savings by paying a real return, better than our peers in the region. NSSF has the lowest cost of administration at 1.17%, not only among peers in the region but better than the global benchmark of 2.20%,” he said.
Asked if they would step aside, Mr. Kimbowa said that it was up to the Executive to decide, following the adoption of the report by Parliament last week.
The NSSF Board and Management have spoken out against the just-adopted report by Parliament on the Fund saying that most of its findings and therefore conclusions lacked context and in some cases were inaccurate, as well as ignored key facts and figures shared with the committee by the Fund. The Fund insists that consistent growth and value to members is proof of good governance.
