NSSF is still in the limelight for the wrong reasons even though its top officials were suspended. The acting managing director Grace Isabirye spoke to Business Power about the new path that the Fund is paving out of the woods:
Why does the Fund attract so much criticism about its inefficiencies in delivering easy access to members’ saving?
Some of the people who complain sometimes don’t even qualify to access the benefits by law. NSSF strives to pay all qualifying beneficiaries within the shortest time possible. Benefit processing now takes an average of 28 working days down from 80 days in 2007 and 40 days in 2008. It is evident and we get to hear or read about our members appreciating.
Workers are not happy about the current interest rate of three per cent. Should they be optimistic for next year?
This year will be better because most of the factors that impacted our performance last year have not been evident this year. Last year‘s performance was affected by the drop in share prices, suspension of investments and costs that were incurred by the fund. When the new Board came in place, some of the expenses were deferred. We opted to run on two fronts: Driving a very aggressive business outlook within a framework that depends on accountability and secondly to achieve cost control. This has been complemented by improved trends in the stock market. We hope to give a better interest rate for this financial year.
What is the fate of the various NSSF housing estate projects?
Our priority as management is to ensure that all the projects and investments which had stalled take off again, are completed and become profitable. NSSF currently holds 563 acres in Lubowa, 0.7 acres in Mbuya and 463 acres in Temangalo. For Lubowa we are in the process of getting a consultant on board. 3,000 houses for mid and high income earners are to be constructed and the project to kick off by end of next Financial Year 2010/11. Houses will be built and sold. For Nsimbe, our priority is to unlock the value by either buying out the other partner or buying us out.
For Mbuya we are finalising the procurement of a contractor to start construction of apartments to be sold. We have all the titles of Temangalo land which are now in our names. The land value is appreciating; however our ultimate goal is that we have properties there.
How about the Pension Towers project; the last we heard was that KCC had given NSSF permission to resume construction?
We fulfilled a number of conditions which were recommended after the accident. KCC, Nema and the Ministry of Works gave clearance for construction to go ahead. The project is going to be done in two phases. The first one will take 22 months and I must tell you that we are on schedule. The first phase involves construction of three levels of basement and is being done by Roko Construction within their current approved contract terms. Phase two will be tendered at an appropriate time and will involve construction of the three towers.
Parliament will soon start debating the Retirement Benefits Authority Bill that will lead to liberalisation of the Pensions sector. What is NSSF’s position on the liberalisation?
The RBA aims at opening up the sector to other players to enhance the savings rate in the country and develop the capital markets, just as it in Kenya and other countries. The RBA will provide regulation for the sector and NSSF supports government’s efforts to reform the Pension Sector and extend social security to more Ugandans.
It is good for the country because it will help to improve on the saving rate which is currently at six per cent, five per cent of which is saved in NSSF. The legislation will also improve service delivery in the pensions sector. However none of the players will provide Social Security which is the mandate of NSSF under the ILO conventions.
How have you prepared for a possible competition with the private players once the sector is opened up?
We have experience in the business since 1967 and the Fund has continued to grow and improve. We have a large asset base and investments and a net worth of over Shs1.5 trillion. We have a large and growing membership and we continue to consolidate our membership of over 400,000, regular update and issuing of statements through employers, email and individuals at our offices, follow-up on defaulting employers. We have also decentralised services to all our 24 offices across the country.
NOTU and other workers’ unions are pushing for a medical benefit to be provided by NSSF within the current rate of contributions. How far has NSSF gone with this plan?
Our view is that every Ugandan is entitled to proper health care as a basic human right. NSSF requested International Labour Organisation to carry out an actuarial assessment with a view of determining the viability of providing the medical benefit. ILO carried out a preliminary fact finding mission and held consultations with several stakeholders. ILO’s preliminary view was that a medical is a good idea and generally possible. However, the final decision and design of the product can only be taken based on findings of a comprehensive actuarial assessment. We have plans to undertake this assessment in future. In principle, the Fund is committed to respond to needs of our members by giving them more relevant benefits
What role can Social Security or Pension Savings play in an economy like ours?
Social Security protects individuals against the risk of loss or substantial reduction in income due to invalidity, occupational injury, sickness, maternity, old age, death, unemployment, children and family obligations. In fact the ILO, Universal Declaration and other labour laws look at social security as a human right for any successful market economy. In Uganda today, the current savings rate is at 6 per cent, implying that Ugandan Marginal Propensity of Ugandans is very, very low.