Why the rulers must raid NSSF

There has been a big uproar over the National Social Security Fund (NSSF). No surprise, nothing new.

For the uninitiated, the NSSF is the most liquid institution in Uganda with assets valued at close to $5 billion in a national economy currently estimated at about $40 billion.

The $5 billion is private individuals money but under the control and direction of public officials and politicians often operating with impunity. The NSSF is a statutory body collecting largely involuntary contributions from private citizens who have little say in how their money is used, misused, invested and misinvested.

There are good reasons to have a compulsory retirement plan. The average human being is predisposed to spend everything today and the next day, nothing for the time when they retire from productive work or from earned income. A retirement savings scheme is a universal solution to this problem.

A national compulsory retirement scheme is also important for purpose of pooling national resources and creating capital to fuel the economy through long-term investment. This is where the NSSF gets into trouble. It’s a humongous fund, a pool of capital that can go towards national investment to help the economy but also generate profit and pay dividends to savers.

I maintain an account, with some modest cash, at the NSSF despite not being employed in Uganda and thus ordinarily eligible to take out my savings. Every year, I receive a message of good news, informing me of interest payments to my savings.

For many years, it has been a decent return, always above annual inflation, which is all I need to keep the money there. As a saver, I only need the NSSF to pay an above-inflation interest, and I will keep my saving there for as long.

Whatever the merit of the current noise in the air, and regardless of the wrongs committed, the NSSF under outgoing Managing Director, Mr Richard Byarugaba, has over the years done a terrific job.

As a saver, all I care about is my savings growing and not getting crashed by reckless investment decisions or outright theft. Mr Byarugaba may well end his professional career in the most unpleasant way, the same way as previous MDs at the NSSF.

Whatever his indiscretions, warts and all, the bottomline is the $5 billion fund. This is not just in any poor country but in Uganda where the rulers are hungry for cash and there are all manner of scavenging vultures waiting for the moment to pounce.

The thing is that we have a patently corrupt and greedy group of people with the political (really military) power to commandeer the NSSF. And there are different ways to do that including using utterly shady and shameless machinations that would be outright criminal, but also seemingly legitimate investment ventures. In the past, the NSSF got into the spotlight over land purchases over and above the market valuation, perhaps the most controversial being the Temangalo scandal.

Yet, given the ever rising cost of land around Kampala, Temangalo being strategically located for long-term real estate investment, in hindsight the deal wasn’t as bad as it appeared in 2008 when the matter almost buried the political career of then super minister, Mr Amama Mbabazi, accused of influence peddling to get the NSSF buy his land at a rate considered inflated.

The NSSF made a few other questionable and controversial real estate investments, but all have had something to show for and not mere dump of savers money in a deep pit. More importantly, the bulk of investment decisions have been prudent. That is precisely why we have consistently received a decent annual interest payment.

Then comes a dubious proposal to get NSSF cash into something called Operation Wealth Creation (OWC)! This operation to ‘create wealth’ is actually commanded by military man, albeit nominally retired, Gen Salim Saleh. I have noted here that Mr Saleh is for all intents and purposes Uganda’s defacto vice president, deputising his brother, Mr Museveni. So little wonder that on an issue as critical and consequential as a raid on our retirement savings, Ndugu Saleh has to be the mastermind or at least the invisible architect.

The idea that wealth creation can be reduced to a kind of military operation is itself incredible, but in reality it is difficult to make out what OWC is about, beyond being a political project to throw money around for purposes of maintaining the current regime of rule.

To be sure, the NSSF does business with government through buying treasury bills, bonds and other securities used as tools to manage supply of money in the economy. It is good business, but which happens between the Fund and technocratic folks at Bank of Uganda whose job is to ensure macroeconomic stability and a healthy economic environment.

This is far different from getting NSSF cash into something as amorphous and political as OWC.

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