Under the new National Social Security Fund (Amendment) Act 2022, the National Social Security Fund (NSSF) was put under the dual supervision of the ministries of Gender, Labour and Social Development on one hand and Finance, Planning and Economic Development on the other. The former would take the lead on supervising the social security component of the Fund while the latter, would supervise matters of finance and investments.
This reversed years of management by the finance ministry, under whose regime the Fund has seen a scandal-free rapid growth, compared to the pre-2010 scandals, when the fund was under the gender ministry.
The dual management policy environment received a lot of resistance from the state finance minister, Hon. Dr. Eng. Gabriel Ajedra Aridru who argued that splitting the oversight of a large institution like NSSF is a recipe for disaster because it puts the fund at risk, saying this will create “a stalemate in decisions” and “supervisory loopholes.”
Less than a year, after the National Social Security Fund (Amendment) Act 2022 was assented to, by the President on 2nd January 2022, the first stalemate is here, and as usual, it is the workers’ funds under siege.
A mother of all gridlocks has emerged over the reappointment of Richard Byarugaba as Managing Director pitting the Minister of Gender, Labour and Social Development, Hon. Betty Amongi, against the NSSF Board, the Ministry of Finance and the Attorney General. Not even advice from the President to Minister Amongi to “go slow” is helping the situation yet.
The UGX6 billion irregular request by the Minister that started it all
Everything seemed to be going right between the Minister and the NSSF Board and Management- at least as per the 16th June 2022 letter by the Minister to the Board Chairman, Dr. Peter Kimbowa (ref: ADM/84/154/02).
In the letter, the Minister starts by applauding the board and management for their great performance.
“From our engagement and the projections you had earlier provided in the 2022/23 budget document, I observed the progress made by the Fund towards achieving the 2025 strategic Plan. The Fund projects to grow the asset size by 9.2% to UGX 17 trillion by 30th June 2022, to grow capital investments from UGX 15.56 trillion, and to grow capital investments by UGX 1,446 trillion. This is despite the introduction of the mid-term access which has depressed returns and increased cash outflow from The Fund. Customer satisfaction is projected to close at 86% against the target of 85% by June 2022 I applaud you for this progress,” the Minister wrote.
The Minister, in the letter, goes on to make some suggested changes to Fund’s budget for 2022/23 and everything looks okay. But towards the end, she requests that UGX6 billion be allocated to her Ministry from the Fund’s operating budget to among other things, enable her ministry to “undertake budget monitoring and oversight of the key activities of the fund, diaspora mobilization to facilitate their voluntary savings under the fund, media engagements and benchmarking for skills development.”
According to Amongi, the money would also be used to “enhance partnerships and collaborations through stakeholder engagements.”
“These stakeholders include, but not limited to; Parliament, Federation of Uganda Employers’ Association, Private Sector Foundation, Uganda Manufacturers Association and Labour unions among others,” the minister further wrote.
She further said the money would be used to “strengthen inspection and compliance of the implementation of the National Social Security Fund Act by employers in respect to contribution through peer-to-peer enforcement and technical support to the employees on standardisation of contracts for workers to incorporate NSSF contribution.”
According to a source who is very familiar with the matter, Amongi’s request followed an earlier meeting at the Ministry on 13th June 2022 between her and the NSSF Board at which the Fund unsuccessfully tried to convince her that such a request was irregular since there was no any provision for the Fund to finance the operations of the Ministry. Upon her insistence, the Board then advised her to put it in writing thus the 16th June letter. The Fund had also expressed reservations that once the Funds were sent to the Ministry, there would be no way to verify value for money and quantify a return to the members, but their pleas fell on deaf ears.
To safeguard her demands, according to the source, she also deferred the Fund’s planned investment in the acquisition of land at UGX400,000,000 as well as another real estate project on Yusuf Lule Road- until her demands were met. This is despite the fact that investment matters of the Fund do not fall under her docket.
We are meant to understand that left with no option, upon the Minister’s letter, the Board then wrote to the NSSF Management asking them to provide for this irregular request.
Amongi strikes back; Attorney General rules her actions illegal
CEO East Africa Magazine understands that while Amongi’s UGX6 billion was apportioned in the 2022/23 budget, the Fund was still grappling with how to legitimately transfer the money to the Ministry. According to our sources, while it was suggested that the Ministry submit an activity plan that would be funded directly from NSSF as and when the activities fell due, the Ministry insisted the money be sent to the Ministry directly in a lump sum. The Fund, however, kept dragging its feet, further infuriating the minister.
Then she got an opportunity to strike back.
Richard Byarugaba, the Managing Director of NSSF and the accounting officer, whom the minister believed was frustrating her funding request, had turned 60 years- the official retirement age for all management staff- according to the Public Service Standing Order and the Human Resource Policy of the NSSF. This was her chance to avenge.
In a 22nd July 2022 letter (ref ADM84/1S4/02) to Mr. Byarugaba, Hon Amongi, accused Byarugaba of failing to step aside, having clocked 60 years.
“You have, however, not yet officially retired although, by law, your retirement is mandatory and automatic upon attainment of the retirement age of 60 years. Note that all actions you take now, on behalf of the Fund, are not protected by any law and can be challenged. This is dangerous for the operations of the Fund and I cannot continue to put the Fund at risk without addressing the matter. I, therefore, direct that effective 26th July 2022, you stop exercising the mandate and functions of the office of the Managing Director, NSSF. The Deputy Managing Director who has retired and has been appointed on a contract will act as Managing Director,” Hon Amongi wrote.
“I have already written to H.E the President notifying him of the position of the law and seeking his guidance on how to handle your appointment on contract within the law. I will, upon receiving evidence of your retirement, take appropriate action,” she added.
However, the minister’s understanding of the social security law was put to the test and her moves Byarugaba, were cut short by a more knowledgeable and authoritative interpretation of the law by the Attorney General.
Article 119 of the Constitution of the Republic of Uganda 1995 mandates the Attorney General to give his opinion/advice in respect of all contracts, agreements, treaties, conventions or any document to which Government is a party.
On receiving a copy of Amongi’s letter, the Attorney General, Mr. Kiryowa Kiwanuka instructed the Deputy Solicitor General, Pius Perry Biribonwa, to write to Amongi, advising her on the illegalities in her letter.
In a 22nd July 2022 letter (ref ADM.7/172/01, Mr. Biribonwa, told the Minister that Section 39 (1) of the National Social Security Act provided that the Managing Director was appointed on “the terms and conditions specified by the Minister” and not according to the NSSF HR manual.
“Therefore the duration or term of appointment duly specified in the instrument of appointment is premised on and backed by statute. i.e. S.39(1) of the NSSF Act. In the event of a conflict between any term specified in the instrument of appointment and any other policy or contractual document, such as the manual, the former would and must prevail over the latter,” the Deputy Solicitor General, wrote on behalf of the Attorney General.
“The said five (05) year term, having taken effect on 1st December 2017, shall lapse, on or about 1st December 2022,” the Deputy Solicitor General emphasised.
The Deputy Solicitor General also said the reference to the Public Service Standing Orders that mandated public servants to automatically retire at the age of 60, did not hold any water, since “the Managing Director is not an employee serving in a civil capacity on the Government or Local Government within the context of Article 175 and 257 (1) of the Constitution and is not subject to the Public Service Act under which the Standing Orders are made.”
“In light of the above, this is, therefore, to advise that the five (05) year term of the current Managing Director is valid and will continue in force until its lapse on 1st December 2022 in accordance with the instrument of appointment unless his employment is lawfully terminated earlier,” the Deputy Solicitor General, further advised, warning Hon Amongi not to act outside the law.
“Further, we advise that the re-appointment of the Managing Director is subject to the provision of the law,” he concluded.
The letter was copied o the Attorney General and his Deputy, as well as the Minister of Finance, the Gender Ministry Permanent Secretary, the Solicitor General, the NSSF Board and Managing Director, as well as the Deputy Managing Director.
President Museveni gives a stamp of approval to Byarugaba, cautions Amongi
Amongi’s inflated ego would get another puncture- this time from her own boss, President Yoweri Kaguta Museveni, to whom Amongi had written to earlier, on 20th July 2022, hoping, she would be heard.
In a 6th August 2022 letter (ref PO/10), the President accused Hon Amongi of acting in a rush and without doing the necessary consultations.
“I have seen your letter of the 20th of July, 2022, appointing Mr. Patrick Ayota as Deputy Managing Director, NSSF, because we need a new group, because the current one have both attained the age of 6o years,” the President wrote.
“It is better one consults quietly about these appointments before deciding. In the case of NSSF, the present group seem to have done a good job, of growing the fund from Shs. 1.7 trillion in 2010 to Shs.17.2 trillion currently. Good performance is not very common in parastatals. Where it occurs, the actors should be appreciated,” The President further advised.
“Therefore, let us discuss this in my top-management team of Vice President, Prime Minister, Finance, Attorney General and yourself around the 20th of August, 2022. I have been told that Mr. Byarugaba’s term ends in December 2022. Hence, there is still time. By copy of this letter, our Principal Private Secretary is directed to arrange that meeting,” Mr. Museveni concluded.
We do understand this meeting was held, and the meeting was all in praise of Mr Byarugaba and Mr. Patrick Ayota’s performance. It was however resolved that the issues of reappointment, be left to the board to decide, in line with the law.
Byarugaba’s performance and good governance is not a secret. Most of his predecessors, if not all of them, did not finish their terms largely to either poor governance or poor performance or both. It was not until 2010, and the appointment of Byarugaba that the elusive security in social security returned to the Fund.
Under good governance and prudent investments, the Fund has flourished, with assets growing at an impressive compounded annual growth rate (CAGR) of 20% over the last 12 years (11 of which have been under Byarugaba) from UGX1.7 trillion in 2009/10 to UGX17.3 trillion as the end of 2021/22! That is a growth of 10.2 times of 917.6%!
At this rate, the Fund is on course to hit its UGX20 trillion target by 2024/25.
With growth, workers have also been assured of a decent return on their savings- the Fund has over the last 10 years consistently paid a rate that is above the 10 years average rate of inflation.
And the members are happy- customer satisfaction is 86%. NSSF staff are happier- with reported satisfaction at 94%.
The board is happy too and it is, therefore, no surprise that in its letter to the Minister of Friday, 25th November 2022, ref: ATI/CONF/02-22, the NSSF Board Chairman, Peter Kimbowa (PhD), recommended to the Minister that both Richard Byarugaba and Mr. Patrick Ayota, his deputy be given another term of 5 years.
This is in line with the amended NSSF Act that says the Managing Director is appointed by the Minister, “on the recommendation of the board.”
Under the old Act, the Minister could appoint a Managing Director “for such a period and on such terms and conditions as the Minister, may deem fit.”
Despite the advice of the President and the Attorney General as well as the recommendation of the board, Amongi wasn’t budging an inch. On 23rd November 2022, the Gender ministry re-wrote to the Attorney General requesting legal guidance on whether Richard Byarugaba was eligible for reappointment, now that his term was expiring on December 1st 2022.
The Attorney General, Mr. Kiryowa Kiwanuka, in response, vide letter ref AG/2022/12985, dated November 24th 2022 reiterated his earlier advice on the matter, with a resounding yes!
“This is to advise as follows: Under section 39(1) of the National Social Security Act, Cap 222 (as amended by Act No.1 of 2022), the Managing Director of NSSF is appointed b; the Minister on the recommendation of the Board, and serves for a period of five (5) years — which may be renewed for one more term on satisfactory performance. This represents a departure from the previous position of the law where the tenure was determined by the Minister,” the Attorney General wrote.
“Thus, the tenure of the Managing Director presently is fixed by statute and not by any other type of instrument. The NSSF Act (as amended) does not prescribe any age limit to appointment as Managing Director. Therefore, nothing in the law bars the minister from re-appointing Mr. Richard Byarugaba as Managing Director, if the Board Recommends so,” the Attorney General concluded.
Plot takes another twist as Byarugaba is now accused of alleged misconduct
In a not-surprising move, a vengeful Amongi, reappointed Patrick Ayota, for another 5-year term, effective 30th November 2022. Nothing was said about Richard Byarugaba, despite the fact that both names were recommended by the board at once.
Abhorring a vacuum, the Fund’s board also went ahead to appoint Mr. Ayota as caretaker Managing Director.
In an interview with the Daily Monitor newspaper on December 04th 2022, Hon Amongi appears to have now changed tact, saying there are some allegations of impropriety on Byarugaba that need to be investigated first before he could get his job back.
“There are petitions with allegations of financial impropriety in relation to the Fund, which require further consultations at higher levels before I can sign [the renewal of the contract]” Amongi is quoted as saying.
Some of the claims, according to the newspapers include a USD10 million increase in the construction of the Pension Towers, a high-rise building being put ups by the fund. It is also alleged that President Museveni’s name had been irregularly invoked to initiate the purchase of land, at UGX400 billion, by NSSF from one of the biggest sugar producers in the country.
The paper also claims that investigators also want to establish if all employers already enlisted by NSSF have registered all their eligible employees and are actively contributing, or whether some money is leaking through collusion by some Fund staff. It shall be remembered that some of the money that Amongi wanted from the Fund was partly to fund this.
Daily Monitor further says that there are questions being “raised about the way the Fund management went around with its intention to contract out the construction of a commercial/office development on Yusuf Lule Road”, without saying who is raising the questions.
However what both Hon. Amongi and the newspaper don’t say is why the claims being put on Byarugaba are also not being put on his Deputy, whose contract has been renewed yet they are both senior managers at the Fund.
Knowledgeable sources, however say this could be an all-too-familiar ploy to delay or even thwart Byarugaba’s appointment.
Whatever it is, it looks like Hon Amongi is not yet done with Byarugaba.