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I have been judged unfairly, says sacked NSSF


For the workers who save with NSSF, the substantive issue is whether I made smart investments that would increase the return on their savings. When I joined NSSF, I found it overly conservative in its investment policy. For example, 80% of the portfolio was invested in very low risk, low earning assets such as treasury bills, treasury bonds and some unnegotiated fixed deposit accounts; accounts that were below market. There were lines of credit with DFCU, HFCU that were not gaining market value. They were lent out at fixed rates yet market prices had gone up. When I reached NSSF, only 5% of the portfolio was invested in equities and the remaining 15% was in mostly defunct real estate investments like Nsimbe and loss making investments like Workers’ House.

Thus, in 2008 NSSF had already written off 50% of Nsimbe as an investment. In accounting, until you have exercised all possible means of recovery you cannot write off anything as an investment. At the end of this financial year, after trying to recover from James Mugoya, we discovered that that amount was not recoverable. So this year it will be written off 100%. Yet it is so easy to sort out this Nsimbe problem.

Mugoya has 860 acres. It is all his. However he is persona non grata in Uganda. His name has been tarnished. He cannot come to Uganda because there is an arrest warrant out for him. Under these conditions, he can negotiate. Currently, that land could be Shs 15 million an acre. When you multiply it by 860 acres, it is about 13 billion. We can ask him to discount money NSSF paid him, around 8 billion and NSSF pays the balance of Shs 5 billion and takes the land into its names. Having something is better than nothing. The value of that land exceeds the money he ate off NSSF. Then once he has paid back all this money, the rest of these things would fall off. He could come back to Uganda and see his relatives and enjoy the liberties of life.

By the time of my suspension, I had made tremendous progress on NSSF plans to develop a modern 3,000 houses housing estate in Lubowa. The plans were going to the board for approval. These houses would have been sold before we put foundation. The plan is to build apartments (like those in Bugolobi), bungalows and mansions. Three bed-roomed apartments would go for Shs 160m; four bed-roomed bungalows for Shs 260m each and five bed-roomed mansions for Shs 360m.

I had inherited problems with Lubowa. These are some of the historical problems we had. There was a joint venture signed up with Sole Bonier International (SBI), the company repairing all the main highways. Legally, NSSF had to find a way to move forward with them otherwise we would have gone back to an Alcon situation where we are supposed to pay over US$ 10 million in compensation for breach of contract. I told people, isn’t NSSF tired of paying people money for not doing any work?

So, I provided the solution; a structure in which the developer becomes the lead consultant. There is a joint venture between NSSF and that developer. The person building will be publicly procured to avoid conflict of interest. In terms of financial participation, the developer gets their percentage and has no rights on the profits from the houses since they don’t own the land. I cancelled the original Lubowa arrangement since it was a raw deal. Originally, Lubowa was very much like Nsimbe because SBI was the joint venture partner, there was some capital they were going to inject, and they were also the contactor for construction. They would also enjoy some profits on the houses yet the houses and the land were completely NSSF property.

The main thing here was to rebalance the investment mix of NSSF to 30% in fixed income assets, 40% in real estate and 30% in equities. In fixed income, the first rebalance we did was to move money away from the treasury bills and bonds for Bank of Uganda. Secondly, we were able to convert that low earning money to high earnings with no increase in risk. So we began to ask banks to bid for our fixed deposits. They did and this increased our annual earnings from about 11.5% to about 15%.

We also shifted money into equities, changing their contribution in NSSF’s portfolio from 5% to 25%. Some of this money bought shares in Stanbic, DFCU, Safaricom, Serena. These equity investments increased the return on NSSF money to 38% per annum as opposed to 10 or 11% we were making on fixed income assets. The only area that did not move as per plan is the movement of money from treasury bills to real estate because of the political controversies involved in real estate investments. I increased returns on everything and made a profit of Shs 130 billion, more than twice what the second largest financial institution in this country, Stanbic did.

I stopped member cheque scam. There was a syndicate within and without the Fund that used to identify juicy cheques to steal. The people inside would give all the data on the client but they would change the photograph. They would open an account, pay the money into it and eat it. There was also another scam of fraudulent employment. NSSF employed people with fraudulent papers, low qualifications. I sacked 150 people. I established a system whereby no one can pass through the system and get employed without having their papers validated. There were ‘air’ supplies. Then I busted NSSF defaulters; I made Bank of Uganda pay us out Shs 18 billion.

I found NSSF paying only 6% return on members’ savings and I increased this, within one year, to 14%. Finally, I had initiated a health insurance plan for all NSSF members so that without them having to pay anything, they would be medically insured. The insurance premium would be paid from the profits on their savings without reducing on the return on their savings. I have been unfairly judged by many people. But I know that history will give me a fair judgment and it will be a glorious judgment.

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