New NSSF MD

By John Njoroge

State House involved in search

Kagina, Rutega, Muhairwe named

On December 30, 2009 the National Social Security Fund (NSSF) appointed Grace Isabirye as Acting Managing Director (MD) pending a formal appointment of a new MD by the NSSF board of directors.

Isabirye had been NSSF’s Chief Investments Officer and was taking over from Martin Bandebiire who resigned in the same month. Bandebiire on the other hand had held this position severally.

He was acting MD from September 2004 until February 2007 when David Chandi Jamwa was appointed MD.

When Jamwa was suspended over his involvement in the Shs11.2 billion Temangalo land scandal, Bandebiire took over once again as Acting MD until he tendered his resignation to the Minister of Finance. Jamwa, even though suspended, had an active and running contract with NSSF. Jamwa’s contract together with that of his Deputy ‘ Prof. Mondo Kagonyera expired in February and has not been renewed as was largely expected.

Recently, NSSF has run adverts in the local media and has appointed Earnest & Young to handle the short-listing of process of filling the position of MD. Experts are divided on whether executive searches by professional firms and newspaper adverts do not always produce the best choices. In fact, according to sources close to State House who spoke to The Independent on condition of anonymity, there is a quiet head-hunt for a new MD that has been going on since the beginning of the year.

According to the source, the head-hunt has since generated a shortlist of Ugandan executives to take over the leadership of the country’s pension fund. The Independent has been able to speak to at least four of the persons named and while one admitted having been contacted informally, they all variously said they were not interested in the job.

Head-hunts of this nature are common since for such jobs as it would be a mistake to hire an ‘experienced yet generally unknown person’.

‘This is not an attempt to interfere with or short-circuit the recruitment process,’ said a source close to the process, ‘But NSSF is an institution in which the state has a strategic interest, it is in charge of the savings of the workers of this nation and after all that has gone on there, it would be wrong for those in charge to sit by and look, only to take the blame when things go wrong. The head-hunt is in good faith and for the good of NSSF and the workers’.

While the NSSF advert lists requirement for candidates like a bachelor’s and post graduate/masters degree in either commerce, finance, business management or any other relevant degree, 10 years experience managing a top financial entity, and familiarity with current global and local regulatory environment for investing funds, it does not list the most important requirement; being acceptable to President Yoweri Museveni.

NSSF is the sole pension fund for workers in Uganda’s private sector. It has a net worth of Shs 1.4 trillion, equivalent to 25 percent of the national budget for the financial year 2009/10. Management of the fund is so critical that President Museveni moved its oversight from the Ministry of Labour, where it rightfully belongs, to the Ministry of Finance and Planning.

Unfortunately, all previous management teams of the fund have either been fired in disgrace or been charged in court and parliament and suspended over corruption. NSSF is at the centre of the most high profile financial malpractice cases in Uganda today, and a former minister responsible for it fled into exile to avoid jail.

Insiders say Allen Kagina, the Commissioner General of Uganda Revenue Authority and Simon Rutega, the Chief Executive Officer of the Uganda Securities Exchange are the front-runners for the job. Both are going to be out of their current jobs this year, are highly qualified for the job, and have generally clean records.

Simon Rutega  

Simon Rutega is currently the Chief Executive of Uganda Stock Exchange, a job he will continue to hold until June this year when he retires.

His job at the Stock Exchange has already been advertised in the press as vacant, giving credence to his likely departure for another employment. Previously, Rutega worked for the American Express Advisory Service Group as a Business Planner/Financial Analyst where he was charged with providing comprehensive financial planning for business and individual clients, investment portfolio management, insurance coverage, tax planning and general financial management.

Rutega sits on several boards and is Chairman of the East African Stock Exchange Association, the Vice President of the Institute of Corporate Governance of Uganda, a director on the DFID East African Financial Deepening Board, East African Regional Central Depository Board, African Agricultural Capital Limited, Good African Coffee Ltd and also sits on the Uganda Private Sector Foundation Audit committee and SME committee.

Rutega holds a BSc degree in Business Administration with specialty in Accounting, and an MBA degree in Finance from Brigham Young University in the United States. He also holds various diplomas in capital markets, finance and is a certified corporate governance trainer.

Ms Allen Kagina

The Commissioner General, Uganda Revenue Authority (URA) since 2004, her contract expires this year. Kagina is considered a hands-on manager who transformed URA into a more effective tax body through zero tolerance to corruption.

Prior to that, she had no real experience at the top but worked at several mid-levels in URA from 1992 and 2001.

In a massive restructuring exercise that trimmed the number of departments from ten to five, Kagina scrapped the posts of Deputy Commissioner-General and Deputy Commissioner. Kagina then embarked on a campaign to clean up URA’s image, which was in tatters after the Sebutinde commission of inquiry into alleged corruption in URA. Amiable, eloquent and cerebral, she is highly regarded internationally. PeaceWomen, a New York based UN project said of her: ‘Allen Kagina is definitely up there on the list of most visible women in the corporate world’¦’

After a Bachelors Degree in Psychology, she pursued a Masters Degree in Administration and Management at Makerere University in 1988. She also holds a Masters Degree in Public Administration from the University of Liverpool, UK.

Talk of Kagina’s move to NSSF has been rife in the power corridors for a while now. Her URA contract expires soon and cannot be renewed or extended unless the law is amended which is highly unlikely and any attempt to do that would amount to legislating for an individual.

Kagina has built herself a reputation of fearlessness and honesty, she is said to have direct access to President. She is also said to be one of the few public officials who can speak her mind to the President regardless of his opinion, and in the process she has earned his respect. With her positive attributes, and soon out of a job, the circumstances suit her candidature for NSSF MD. But for all her positives, her closeness to the First Family has always been an issue not lost on many observers and her competence sometimes gets lost in that malaise eating up the country.

David Chandi Jamwa

Sources say that although David Jamwa left the Fund amidst acrimony, he is still regarded positively by Museveni who considered him bad mannered and misled but ‘smart and not corrupt’ during the Temangalo land saga. The Auditor General in his report to Parliament has faulted Jamwa and his deputy, Mondo Kagonyera, for some of the financial losses suffered by the Fund and has recommended their prosecution. Several voices from the public and workers organisations continue to call for their prosecution, making the inclusion of Jamwa’s name on the list surprising. Jamwa is undoubtedly brilliant but carries with him  a lot of reputational risk and potential prosecution.

Jamwa’s tenure at NSSF has been the most stellar because of his aggressive management of the Fund’s investment portfolio into more profitable ventures. The fund hit the Shs 1 trillion mark under him and for the first time paid savers a return above the rate of inflation of 14% from 7%.

He oversaw a US$1.95 million investment for 20% of the Kampala Serena Hotel, US$12 million in a National Farmers Association project, Shs 16 billion lent to the Uganda Revenue Authority (URA), and Shs 128 billion in the redevelopment of the National Theatre. Some like the Temangalo land and the Lumumba Avenue NSSF tower have attracted negative publicity but most experts agree that they are sound investment decisions.

Before he joined NSSF, Jamwa was the youngest ever Senior Partner at PriceWaterHouseCoopers. A highly acclaimed brain, he was the best student worldwide in his professional accounting exams.

He competed for the top job of NSSF with Charles Ocici, the current Executive Director of Enterprise Uganda and Dr William Muhairwe, the current Managing Director National Water and Sewerage Corporation (NWSC).

His stint at the Fund brought out the dangers of external interference in the internal management of any company.

Dr William Muhairwe

Dr Muhairwe, who has been Managing Director of National Water and Sewerage Corporation (NWSC) since 1998, is also in the running. He has also been the vice chairman to the Federation of Uganda Employers since 2008. He is a German trained management specialist with a PhD in Economics and Business Management. His key competences are in strategic planning, performance turnaround, policy formulation, private sector development and stakeholder management.

As NWSC MD, Muhairwe is said to have instituted high performance turnaround initiatives that have transformed the corporation from a loss making organistion into a world acclaimed and admired profit-making government parastatal.

Prior to this job, Muhairwe was the MD of the East African Steel Corporation, a joint venture company between the government of Uganda and a private company (Madhvani Group). Muhairwe competed for the NSSF job of MD in 2007 and was among the top three candidates. Information available to The Independent at the time indicated he was the preferred candidate by security organs as being the ‘most politically acceptable’. Curiously though, Muhairwe at the time reportedly wrote to PriceWaterHouseCoopers, who did the executive search, that he was no longer interested in the job and consequently withdrew his candidature. When contacted by The Independent over the latest search for NSSF MD, Muhairwe maintained he is not interested in the job.

Richard Byarugaba

Sources tell The Independent that this quiet man with over 25 years of banking experience who is the Managing Director of Global Trust Bank is on the list. Before that he worked in very senior positions at Barclays Bank, Nile Bank  and Standard Chartered Bank. He was Chief Operations Officer at Barclays Bank immediately before joining Global Trust Bank.

In addition to the above achievements, he has held several board positions at Standard Chartered Bank, Nile Bank, Hospice Africa, Palliative Care Association of Uganda and the Uganda Institute of Banking and Financial Services. He is also a past president of the Uganda Institute of Bankers. A strict disciplinarian, Byarugaba would bring with him a wealth of financial discipline and experience.

Rutega and Byarugaba did not say whether they are interested in the job but only told The Independent they had not been contacted. ‘Where did you get that information?’ Byarugaba asked. Dr Muhairwe said: ‘I am not interested in the job. I have a running contract.’  The other candidates, Jamwa, Kagina, and Rutega were not available for comment.

It is not uncommon though for persons to deny knowledge of or interest in job but apply or take an offer when made. The denials could simply be a tactical game many a time.

NSSF hurdles

Experts say the manner in which the race to fill the NSSF MD job is being conducted is symptomatic of the malaise in many other government departments and agencies ‘ the obsession with personalities. The person and character of an individual manager can and often turns round the fortunes of many corporations but that is not and should not be the main focus of change in any organisation.

What is lacking at NSSF is autonomous good governance. Good governance is increasingly recognised as one of the most important aspects of an efficient pension system, enhancing investment performance and benefit security. Yet despite regulatory initiatives, weaknesses persist in the management of NSSF because of the absence of well-defined governance principles and excessive external interference especially by powerful politicians.

Policy makers in Uganda have continued to have difficulties deciding the right policy framework within which the NSSF ought to operate. At the height of its many scandals, the oversight role was transferred from the Ministry of Labour to that of Finance, the argument being that the Ministry of Labour did not possess the technical competence to manage a Fund of that magnitude. The decision proved disastrous with the ‘Temangalo scandal’. As a knee-jerk reaction, a proposal to transfer the Fund to be supervised by the Bank of Uganda as a Financial Institution was mooted but never pursued.

The proposed liberalisation of the pension sector remains the most rational policy option whose achievement seems far from today. Because the NSSF continues to be a statutory monopoly, it lacks competition and self introspection and consequently continues to suffer the age old problems of monopolies. Just like the Fund itself, the policy has been shrouded in political in-fighting and jostling for business.

NSSF remains the most financially liquid institution in the country. Today, NSSF’s net worth is Shs1.5 trillion and has 404,000 registered members. The Fund pays out Shs 6 billion on average every month.

The main challenge facing NSSF is a lack of necessary knowledge, experience, skills and training among its managers. This inhibits their ability to appreciate the peculiar issues that relate to management of pension funds and they are unable to challenge any advice they receive from outside ‘experts’.

The other nagging problem at NSSF has been the composition of its various Boards. The responsibilities of board members seem not to be clearly defined. The boards have often seemed to lack a clear mission statement and regularly engage in the operational duties which should be left to internal management staff or external service providers.

The selection of board members, as in the case of the current board, was on the basis of representatives of stakeholders and was done under immense public pressure. As ever, the authorities bowed to public pressure rather than sound reason. Board members were mainly selected on the basis of their status in a trade union or employer, rather than specific knowledge or experience on pension issues.

A former top official with NSSF who did not want to be named told this reporter, ‘Some sobriety needs to be brought to NSSF. The problem at NSSF has majorly been the discipline of its managers. They lack financial discipline. The managers have not been looking at the Fund as an institution they should grow but rather most investment decisions taken have been mainly for the benefit of individuals.’

The former official was not supportive of a headhunt and was strongly in favour of a competitive selection process in finding a suitable MD for the Fund