NSSF boss speaks out on the institution’s future

What you need to know:

With the pension sector set for liberalisation in the near future, the Ugandan government has moved in to prepare the National Social Security Fund (NSSF) for the battle ahead: competition. It started by appointing a man who has thrived in a competitive environment—Mr Richard Byarugaba, as the Fund’s managing director. A couple of weeks ago, the government made another statement by appointing a new board chairman who knows what it means to play in a competitive business environment. The new NSSF board Chairman, Mr Ivan Wambuzi Kyayonka, spoke to Prosper’s Ismail Musa Ladu about how he intends to steer the institution in his three-year tenure at the helm.

Not many who served in the top NSSF position end their term without controversies. How prepared are you to rise above such controversies?
Our intention is to do our work and ensure that those who save with the fund get the best return possible. I am aware about what you are talking about. But the most important thing in business is to learn from past experience and make sure you avoid similar mistakes in the future.

Our plan is to prepare this institution into one that will attract people into it without coercion. And that cannot be achieved with controversies of any sort.

What do you bring to the Fund?
Statutorily, the Fund must have a board just like any other company that sets a strategy and gives oversight directions to the Fund managers. National Social Security Fund (NSSF) has turned around from the days when it was struggling with bad investments, and corruption-related issues to a better and well-managed Fund.

Our next big task is to prepare the Fund for the competition. The Pension sector is being liberalised and that means that the monopoly the NSSF enjoys until now is going to disappear. So the Fund must be prepared for that competitive environment.

With experience in the private sector where competition is an everyday thing, we hope to restructure the NSSF such that it can compete within the market.

We also hope to improve on the return that the Fund gives its members. Our target is to give a return that is slightly better than average inflation. This means that we will have to look for the best investment opportunity that is not only secure but also gives the best return. This is the balance we will be looking for.

Is that achievable within your three-year term?
There is an opportunity for renewal if we still want to. But one can do a lot within three years. It is also important to note that this will be a journey. You just have to do a good job and when the time comes, you hand over to another board, but in a better state than you found it.

What do you plan to implement in the short, medium and the long term?
The immediate task will be preparing the Fund for liberalisation. Then, we shall work on better returns on investment, which is already ongoing. So, we need to look for opportunities that will give us the best return going forward.

How will you want to leave NSSF?
If we can ultimately make NSSF the members’ pension Fund of choice, where people are not being compelled by law to save with the Fund, but choose it because they trust that their money will be well looked after and prudently invested to give them a good return, then that will be our first measure of success.

Won’t that be a tough call?
My targets are always that high. It may not look easy but it is achievable.

Government has expressed interest to borrow about a trillion shillings of the workers savings, and on the other hand, some workers say they do not trust government enough to do business with it. How do you intend to balance between the two competing interests?
Not many people realise that NSSF has to look for avenues to invest money. Our aim is to look for low risk and high possible returns. Worldwide, the safest area to invest money for pension Fund is what they call government paper. People who lend government worldwide have the best security of return because it will be guaranteed by the Central bank. In fact, we already lend money to government through buying of treasury bills and bonds.

If you look at the other options, they also have risks. For example, you can buy shares in a company, but the company may not perform well or the shares may go down—and that is a risk. You may put up building as we have been doing, but the risk is that you may not get tenants that you had targeted to give you the returns you had anticipated.

But with government papers, you are safe because you will be guaranteed of the percentage you’re bound to get. If you look at all the options, which one is the safest? It is the government paper. As long as the government floats a paper, we shall be prepared to lend for infrastructure development because it will be the safest means for us to invest our money—the returns may be slightly lower but the risks are less.

The fact that sometimes government comes short in supervising its projects properly is not our problem. If we lend to government, we cannot guarantee how it will handle the project. All I need to assess is your risk on whether you can pay back the debt.

So we have no fear lending to governments as long as the structures are fine and guaranteed by the Central bank and the return is good, then we think we will be in business.

On the other hand it is in the interest of government that people who save have a good return and safe future when they retire and that is why the fund was established—by the government. And if this savings can be used in infrastructure development and it gives good returns then we have a win-win situation.

Has the one trillion shillings already been transferred to government accounts?
No. That is not true. The mechanism for lending for government infrastructure bond has not been set up. It is a proposal that was brought in the recent budget. Maybe the confusion is around the treasury bills that we already buy from government. And that has been there for so many years.

When will this deal begin?
When government floats infrastructure bonds, it will not only be targeting NSSF alone but also those with excess money. The only difference is that NSSF has a lot of excess money and we will be able to participate aggressively. But my hope is that it will be opened to everybody else.

What challenges do you anticipate?
The biggest challenge is adjusting to competition after years of monopoly. We need to change the mindset of the institution. People who work there must be able to appreciate that with liberalisation of the sector, employers and employees will choose where they want to save their money. We have to win the business because of performance and competence, and that is a real task.

Did this appointment come as a surprise?
Yes. I didn’t expect to chair the board, although I was already involved in advisory work with the Fund. But I was consulted before the decision to appoint me was made. The Minister (of Finance) consulted—you cannot just be appointed like that.

Who is Kyayonka?
I am an engineer by training and I have spent my life working in the downstream oil industry—both here and abroad.

I am a sportsman. I used to play cricket for many years, including playing for the Uganda team. I later become the Chairman of Uganda Cricket Association. And I am currently the trustee of the association and advisor.

I am also interested in advising young people about business —I like guiding them into entrepreneurship. I sit on several boards of Non-Government Organisations.

As a leader, you must be patient and empower people or else you will not get the result.

My strength lies in selecting the right people for particular tasks, then training, empowering and motivating them. I then show them the vision and the direction to take and then let them do it. So, all this is about building a shared vision for a group of people.

And if you sum it all, you could say my strength is being able to work through people.

The NSSF Numbers
5%: Percentage that the employer must deduct from the employee’s total gross monthly wage plus an additional 10 per cent of the total gross monthly wage to amount to a total monthly contribution of 15 per cent.

16 - 55: The age bracket of employees that NSSF covers with exception of employees under the Government Pension Act.

Board Members
The new Board of Directors is composed of the following.
1. Mr Ivan Kyayonka, Chairman
2. Mr Chris M Kassami, Permanent Secretary/ Secretary to the Treasury, Min. of Finance, Member
3. Mrs Christine Guwatudde Kintu, Permanent Secretary, Min. of Gender, Labour & Social Development , Member
4. Mr Okello Musa, National Organisation of Trade Unions (NOTU), Member
5. Mr Henry M Mukasa, National Organisation of Trade Unions (NOTU), Member
6. Ms Agnes Kunihira, National Organisation of Trade Unions (NOTU), Member
7. Mr Christopher Kahirita, Central Organisation of Free Trade Unions (COFTU), Member
8. Mr Richard Bigirwa, Central Organisation of Free Trade Unions (COFTU), Member
9. Mrs Sarah Walusimbi, Federation of Uganda Employers (FUE), Member
10.Richard Byarugaba, NSSF Managing Director, Member