NSSF unveils ambitious 5-year plan

Kampala. The National Social Security Fund (NSSF) yesterday unveiled a turnaround strategy that seeks to transform the pension Fund’s fortunes.
Speaking at the NSSF media dialogue in Kampala, Mr Richard Byarugaba, the Fund’s managing director said part of the plans is to grow its 800,000 membership to 5 million, invest in real estate, shut down all physical branches and deliver an IT enabled access to services.

“Our intention is to make sure that our delivery channels are digital and wireless, moving away from branch offering to a system whereby we can offer services anywhere on a 24/7 basis to our customers. That would mean that they would be able to access services on the mobile, over the Internet,” Mr Byarugaba said.
The new plan will also effect a switch in staff interface with NSSF members.

Currently, its customer-facing-staff constitutes about 40 per cent of the enterprise.
By bringing the biggest drivers of the Fund’s business closer, Mr Byarugaba said: “We would like to drive this ratio to 70 per cent so that we do not have back office staff because we have automated all the systems and they will be able to deliver within that environment.”

The Fund showed positive performance with revenue increasing to Shs912b in 2016/17, cost to income ratio (money spent for every income made) collapsing to 12.5 per cent, numbers that resulted in a growth in interest rate paid to members to Shs81b in 2016/17.
Mr Byarugaba announced a move to grow the Shs8.5 trillion financial assets to Shs20 trillion by 2022, a task he called “monumental” as the Fund has been growing at a rate of Shs1 trillion per year instead of Shs1.5 trillion.
He indicated that completion of real estate projects such as in Temangalo and a growth in voluntary contributions should help meet this target.
The legal reforms currently before Parliament are expected to enable the Fund to introduce new products.
Research by NSSF revealed that membership could be increased by three to four times if it is able to offer mid-term products.
The new products, if given a nod, would be mid-term access products such as maternal, housing, critical illness and funeral benefits.
According to the plan, should the law change, NSSF will be able to drive voluntary contributions by providing more products to members.

This will be done through the Internet and integrating with government agencies such as National Identification and Registration Authority and Uganda Registration Services Bureau to improve member registration, with the target of giving a product whose benefits are withdrawn within 24 hours.

The plan also recommends that NSSF dips its toes in the oil and gas sector as it improves on its investment portfolio. Traditionally, the Fund has put its finances in fixed income investments which are reliant on a high interest rate regime.
However, given that interest rates within East Africa are on the way down, and that some countries have either imposed an interest rate cap or the case of Uganda where liquidity has improved to an extent where interest rates have tumbled, the Fund would like to diversify.

With 70 per cent of its investments in Uganda, 23 per cent in Kenya, 8 per cent in Tanzania and 1 per cent in Rwanda, investing in the equity space should give a reasonable return, although there is a huge risk, according to the Fund.
“In the emerging oil and gas sector, we would like to participate in structures currently being talked about by government and being set up to create value in the oil sector for example, the refinery and the oil pipeline,” Mr Byarugaba said.

NSSF recently invested in UMEME stock but now aware of the fact that the stock exchange is not growing as quickly as the Fund projected, private equity is regarded as the next area of opportunity.
In this space (private equity), the Fund has found, there would be good value especially where companies are taken to the stock exchange having performed well.
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