The National Social Security Fund (NSSF) has registered a 23 per cent growth in its assets, hitting Shs8.7 trillion in 2017, up from Shs7.1 trillion recorded in 2016. This now makes the NSSF Fund the largest in the region.
Mr Richard Byarugaba, the managing director NSSF, in a phone interview with Daily Monitor attributed the advance to growth in the collection figures which contributed Shs900 billion over the period between June and December 2017. Interest income also rose by 22 per cent despite the declining interest rate in the Ugandan market.
Mr Byarugaba said interest incomes increased because the long-term bonds that the Fund bought had finally matured and as such, were not affected by the new declining interest rates.
“So although the interest rates fall, it affects the newer bonds rather than the old bonds which we might have invested in at a higher rate,” he said.
NSSF has also diversified their investment by buying bonds in Kenya and Tanzania where the rates are still higher because in Kenya and Tanzania, the interest earnings on bonds don’t incur Withholding Tax like it is in Uganda.
Speaking during the 5th Annual Members Meeting at the Kampala Serena Hotel last year, Mr Byarugaba said the Fund is reliant on the fixed income asset classes which takes up most of the Fund’s investment portfolio.
NSSF’s investment portfolio is in three major areas: 78 per cent fixed income asset class, 16 per cent equities and only 7 per cent in real estate.
“This is because we have very few opportunities outside this asset class and one of the risks we are now running is that the yields are falling. Therefore, the payments to this asset class will continue to decline and that is one of the reasons we need to continue diversifying,” he explained.
The Fund recorded Shs73 billion in profit in the six months from June 2017 which is mainly attributed to the rising stock prices across the East African. This is an improvement from the Shs110 billion loss the Fund made in the same trading period in 2016.