What you need to know:
- Even as equities have exposed NSSF to huge foreign exchange losses, they remain one of the fastest growing revenue streams for the Fund
National Social Security Fund (NSSF) earned more money from its shareholding in MTN than any other stock for the year ended June, the Fund’s annual report shows.
The report, which highlights performance of the Fund, indicates that MTN, Safaricom, Equity Group Holding, CRDB Tanzania and National Microfinance Bank, were the top earners for NSSF in terms of dividend income for the 2022/23 financial year.
During the period, NSSF earned Shs31b from its shareholding in MTN, which was an increase from Shs9.3b earned in the year ended June 2022.
NSSF is the second largest shareholder in MTN, holding a percentage stake of 8.84 percent.
The Fund benefited from a huge turnover posting, in which MTN profits for the year ended 2022 rose to Shs409b.
Similarly, NSSF’s dividend income from Equity Group Holding rose to Shs19b, from ShsShs14.1b, while Shs16.1b, Shs14b, and Shs10.6b was earned from Safaricom, CRDB Tanzania, National Microfinance Bank, respectively.
NSSF holds at least 12.51 percent of its investments in equities, among which include stocks and securities.
Other investments – 78.4 percent and 9.01 percent – are held in fixed income and real estate, respectively.
During the period ended June, NSSF reported a 15.11 percent increase in revenue due to fixed income investments from Shs1.9 trillion to Shs2.2 trillion.
Revenue due to dividend income increased by 45.42 percent to Shs145.12b from Shs99.7b in the year ended June 2022, registering the largest growth among the Fund’s investment vehicles.
However, income due to real estate slightly dropped to Shs11.94b from Shs11.97b, while revenue from fixed income rose to Shs2.04 trillion from Shs1.8 trillion.
Revenues from fixed income investments, which grew by 13.57 percent, remain NSSF’s largest source of revenue.
NSSF has identified cross-border equities as worth investing in, holding a stake in at least 10 companies within East Africa, of which, all returned a dividend in the year ended June 2023.
For instance, four of the top five contributors to its dividends are outside Uganda, which during the period contributed 41.32 percent of the Fund’s total dividend income.
MTN is the only Ugandan company among the top five with the rest being Equity Group Holdings, Safaricom, CRDB Tanzania and National Microfinance Bank.
Mr Andrew Mwiima, a financial markets analyst, said yesterday the Uganda Securities Exchange, compared to markets such as Nairobi Securities Exchange, was still less active, given that it has few listed companies.
“There are few investors, who are dominated by institutions that hold most shares. This stalls liquidity since they buy more than 50 percent of shares in local firms,” he said.
Similarly, Mr Martin Nsubuga, the Uganda Retirement Benefits Regulatory Authority chief executive officer, indicated majority of the companies on the USE have not been performing well, which has pushed away investors in search for alternative.
“Investors want to go where money will grow. So, if you invest in equities like those of Kenya of course you encounter market risks but it depends on how you manage your investment,” he said.