Regulator rejects NSSF plea to invest beyond East Africa

Kampala. Uganda Retirements Benefits Regulatory Authority (URBRA) has rejected a request by the National Social Security Fund (NSSF) to diversify its investment portfolio beyond East Africa.
Speaking during a training for Trustees in Kampala, Ms Lisa Betty Oyella, the URBRA risk and investment analyst, said the law at the moment only permits benefits schemes to invest within East Africa.
“Investments within East Africa are taken as domestic [yet those] outside East Africa are taken as offshore. It is not permitted in the regulations, even the asset limits are prescribed in the regulations,” she said.

While the sector is growing at about 20 per cent, she said, the asset classes provided for at the moment have not been exhausted.
For instance, URBRA set an 80 per cent limit of scheme assets in government securities, 15 per cent in private equities and 30 per cent in corporate bonds.
Ms Oyella explained that compliance levels of the schemes has been good because the limits are fairly higher than what they (schemes) can invest.
Total sector portfolio in government securities from all schemes, according to data from URBRA, stands at about 68 per cent.
No scheme, the data indicates, has exceeded the 80 per cent limit, not even National Social Security Fund (NSSF).
Earlier, Mr Richard Byarugaba, the NSSF managing director had indicated that the investment classes within East Africa are suffocated, requesting that the Fund diversifies its portfolio by investing in offshore markets such as US and Europe whose platforms are more productive.
“Assets under management are quite significant. If you look at the exposure we already have within East Africa, we believe that we have taken all the opportunities available because the stock exchanges are not that big,” he said.

Mr Byarugaba also indicated that NSSF was denying its members (savers) an opportunity to invest in other asset classes or equities in the rest of the world since the East African market is quite limited.
According to Mr Byarugaba, URBRA should consider diversification beyond East Africa to help members improve their returns.
Currently, NSSF is Uganda’s largest institutional investor, holding stocks in Umeme, Stanbic Bank, Uganda Clays, Housing Finance Bank and Serena Hotel, among others.
The Fund has an investment portfolio of Shs9.9 trillion under its management.

Asked if the idea of investing beyond East Africa is viable at the moment, Mr Keith Kalyegira, the Capital Markets Authority chief executive officer, said it would be a good idea for some schemes, which would in fact check the ability of Ugandan fund managers and safeguard assets against currency depreciation.
He said Kenya unlike Uganda allows 15 per cent of the schemes assets to be invested offshore.

Recorded growth

Marked improvements. According to a December 2017 CEM Investment Benchmarking survey, NSSF recorded a 20 per cent growth in assets under management from Shs6.586b in 2016 to Shs7.924b. This makes NSSF Uganda’s largest financial institution. The Fund also recorded improved-total contributions of 17 per cent from Shs785.5b in 2016 to Shs917b in 2017. This indicated that monthly contributions grew by 18.5 per cent from Shs65b to Shs77b as compliance improved from 77 per cent to 80 per cent.

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