PATRICK BYABAKAMA KABERENGE: This is why NSSF is in a better position than ever before, to continue delivering exceptional performance! Patrick Byabakama Kaberenge, has been the NSSF Board Chairman, since 2015. During this time, he and his board have presided over healthy growth of the Fund, with assets growing by more than 102 percent from UGX6.6 trillion in 2015/16 to UGX13.3 trillion in 2019/20. Profit after tax has also more than doubled, from UGX491 billion to UGX1.16 trillion in the same period. In this opinion, he assures NSSF Members that his board is committed to continue steering NSSF to greater heights.

By Patrick Byabakama Kaberenge

It has been a year of mixed performance, amidst uncertainty and the Fund has remained resilient even in these turbulent times. On a happy note, head-line inflation remained low at 4.1%, thus members’ funds are not unduly eroded. This supports the Fund’s minimum commitment to pay an interest which is 2 basis points above the 10-year inflation.

The Board remains committed to fulfilling its mandate of providing an enabling corporate governance framework and supporting the Fund’s management to deliver on its 10-year Strategic Plan. Our 10-year Corporate Strategy is in its 5^th year and is anchored on 4 pillars of:

• Growing the Fund’s asset base to Ushs 20 trillion by 2025;
• Improving operational excellence and ensuring members are paid their benefits in less than one week, and ultimately within 24 hours;
• Becoming the employer of choice and attaining a 95% staff satisfaction rating and;
• Delighting our members and attaining a 95% customer satisfaction rate.

Delivering on our purpose

We are on course to deliver our performance targets and as at 30 June 2020:

• Our total assets stood at UGX13.2 trillion against a target of UGX13.7 trillion;
• Customer satisfaction stood at 88% against a target of 86%;
• Benefits payout averaged 7 days against a target of 7 days and;
• Staff satisfaction was 93% against a target of 85%.

This shows that the Fund is performing well across most fronts.

During the year, the Board was also fully constituted, with new members. They include: Dr. Magoola, Mr. Mugole and Mr. Werikhe, who are serving on the Board for the first time. With proper governance structures in place, the Fund is committed to preserving members’ savings, and under our leadership, the 11th Board will continue to leverage on the opportunities presented by the real estate projects and other opportunities for the Fund. The Fund remains the biggest financial institution in Uganda and the biggest pension Fund in the East African region. In financial performance, and the many challenges notwithstanding, we continue to pay qualifying members way beyond what the law stipulates.

It is of great importance to add that the Fund was purposely set up to cater for the private sector savings. It is meant to collect savings from the private sector, invest the funds and pay its qualifying members their benefits together with a decent return earned. The Fund is not an emergency fund. It is a pension fund looking at limited life-cycle interventions, but not all personal challenges. We would love to do all but we cannot do everything. That’s why in the proposed law amendments, we hope to start offering annuities as an additional product choice to our members. This will go a long way in addressing challenges created by the lump-sum payment made to qualifying members.

To our stakeholders, the Fund is in a better position now, more than ever before. The able professional leadership coupled with a competent team of staff members continue to deliver exceptional performance.

The integrity exhibited by our staff has led to zero frauds in the Fund. The Fund continues to choose investments that are relatively safe and provide a reasonable return that safeguards the value of members’ savings. The benefit payments process has also improved. This year, the Fund paid UGX496 Billion to qualifying beneficiaries within an average time of 7 days, reducing the payout time by 1 day.

Evolving NSSF regulation

The NSSF Act has been in existence for the last 35 years and needs a thorough review for a better service to our members.

More products and appropriate amendments including midterm access to qualifying members, among others, will make life better for our members.

In August 2019, the NSSF Amendment Bill was tabled before Parliament. We expect that it will be passed in 2020 or early 2021 to address several bottlenecks that were limiting our performance.

The Board is in support of the amendments because the Fund will be better positioned to play a more pivotal role in this country. I therefore urge our stakeholders to support the amendment to the current law.

Furthermore, the decision to preserve NSSF as the mandatory scheme is the best decision government has made in the interest of Ugandans and, will go a long way in expanding social security coverage.

National development and real estate projects

NSSF remains one of the few strategic entities owned 100% by Ugandans and contributing to the national development at the same magnitude. We must be proud of this entity which should be protected and supported, rather than unduly criticized. Our idea is not only to save but to participate in the national development Vision 2040. We envisage to invest in infrastructure development in Uganda including housing, power and roads under a government guarantee.

As we pursue the other carefully selected investment avenue of development of real estate projects, we are cognisant of two complimentary but at times conflicting objectives, and therefore trade-offs:

• Ensuring that the real estate project provides a good gross return to the member (our minimum commitment to our members is to preserve the value of their savings by paying 2 percentage points above the average 10-year inflation);

• Contributing to the reduction of the residential housing deficit in Uganda, which currently stands at 2.1 million housing units.

We do acknowledge that the challenge remains to address the affordability of the NSSF real estate housing projects. We have embarked on conducting feasibility studies for Temangalo and Nsimbe projects which will provide more affordable housing units targeted at the middle-and lower-income segments of our society.

However, the key challenge in real estate development, remains the cost of developing the basic infrastructure including land, roads, telecom, water, electricity among other things. All these increase the fixed costs of real estate development and at the end of the day affect the price of the final house to the consumer.

Demonstrating resilience through the global pandemic

For every dark cloud, there is a silver lining. With the outbreak of the global pandemic of Covid-19, we were able to perfect our already initiated remote working practices with over 80% of our staff working from home while the remaining 20% commuted to the office only for crucial functions. This has demonstrated resilience and provided us with an advantage from an Information Technology (IT) perspective.

With the Board, Management and all staff able to operate from anywhere, our IT Systems have proved to be reliable, flexible and relevant to support our operations and enable us to deliver on our strategy. This will be further demonstrated with the launch of the Pension Administration System (PAS) in the next few months from now. From a financial perspective, we anticipate Covid-19 to have a relatively minimal value eroding impact on the Fund because of the Fund’s robust investment strategy. More impact will be felt on the contributions side especially with stress on the employers. The Fund remains in a better position to weather the storm because of our largely long term investments’ strategy, mainly in long term fixed income investments.

To deliver on our promise – Strategy 2020-25, the Fund is adapting to the new normal and changing ways of work and leveraging on the current capability of our IT Systems to deliver. The set targets are achievable, and all the necessary tools are in place to enable execution of our strategy. With most core functions of the Fund moving to online platforms that are automated, high speed, safe, reliable, cheaper, enabling self-service, the Fund will be able to pay the members within less than 1 week, satisfy our customer and staff to the desired levels, as well as grow our asset base to the UGX20 Trillion mark.

Challenges that kept the Board awake in the FY 2019-20

• Covid-19 and the lockdown in the last six months since March 2020: Most of the economic activities came to a standstill because of the lockdown thus affecting our Members and subsequently contributions collections;

• Deferment of contributions by our customers/employers: This led to a slight reduction in members’ contributions during the period;

• Review of the law has certainly not made life easy for the Board as it has been slow, keeping us in suspense in relation to the right direction to follow. For example, requests for midterm access are put before us but we have no answer because of the pending law or rigidity of the law;

• Some nationals bringing disruptions to some of our planned investments especially in the real estate section, yet such investments help Ugandans.

Focus areas for the next 12 months

• Completion of the NSSF Amendment Bill within the next 12 months;

• Completion of various real estate projects milestones including Pension Towers up to 80%;

• Lubowa Housing estate – 310 units are ready for sale and occupation;
• Ability to continue paying good interest into members’ accounts, consistently paying 2 basis points above the 10-year average Inflation. At least UGX500 Billion to members shared amongst themselves;
• Upgrade our IT infrastructure with the new Pension Administration System (PAS) which will bring more meaningful interaction of the members with the Fund through a virtual system;
• Continue delivering and maintaining resilience to shocks especially the Covid-19 challenge;
• Keep our staff safe by working from home via our virtual network and interacting with our members with minimal risk to members’ fund. We believe a large portion of our members will equally be working from home in a bid to stick to and follow the SOPs by Ministry of Health;
• Continue adhering to our 10-year strategic plan and sustaining the achievements of our 4 goals- growing the Fund, happy customers, happy staff and benefits turnaround time in record time as earlier highlighted.

We shall continue to monitor and promote the good performance of our investee companies within the East African region. Together with maintaining and growing our fixed-income investments in the East African Government Bond market. This will support our strategic target of paying a reasonable return to our members.

Patrick Byabakama Kaberenge is the Chairman, Board of Directors, NSSF Uganda