The Independent Uganda: You get the Truth we Pay the Price
✳ Year – Interest
2012 ✅10.00%
2013 ✅11.23%
2014 ✅11.50%
2015 ✅13.00%
2016 ✅12.30%
2017 ✅11.23%
2018 ✅ 15%
2019 -………..
Kampala, Uganda | THE INDEPENDENT | Ten days after cautioning that National Social Security Fund (NSSF) will pay a lower interest rate on account of a drop in its total income compared to the previous year, Managing Director Richard Byarugaba gets an opportunity today to engage savers at the Annual Members Meeting.
Byarugaba is expected to explain that despite another decent financial year for NSSF, they will not match the record 15% interest rate paid the previous Financial Year 2017/2018 when Minister of Finance, Planning & Economic Development Matia Kasaija declares the new interest rate at the AMM meeting at Serena that starts at 9am.
Last year was the very first time in the fund’s history that NSSF had declared 15% interest rate to its members. The announcement came on the heels of the Fund’s declaration of an impressive performance on key financial indicators for the Financial Year 2017/2018, with total income hitting a record sh1.6 trillion before interest to members and taxes with the fund’s total Assets Under Management (AUM) hitting a record sh9.98 Trillion as at June 30, 2018, a 26% increase from UGX 7.92 Trillion the previous Financial Year.
In a NSSF media briefing on September 17, Byarugaba said that while the Fund’s revenue which includes interest, dividend and rental income increased by over 20% to sh1.3 trillion, overall income reduced by over sh402.8 billion due to a decline in regional equity prices and currencies.
Overall income dips
“The Nairobi Stock Exchange lost 14%, the Uganda local share index shade 10% while Tanzania plummeted by over 21%. Consequently, the share prices closed below the prices registered at end of the previous FY, which impacted the performance of our equity portfolio,” he said, adding that “Further there was general depreciation of the regional currencies against the Uganda Shilling. Both the Kenya and Tanzania currencies depreciated by 6.1% against the Uganda Shilling.”
Byarugaba said that although the fund will most likely declare lower interest rate to its members, it will still pay a competitive return, at least 2 percentage points above the 10 year average rate of inflation.
“Since fiscal year 2012/2013, we have consistently delivered on that commitment. I am therefore extremely confident that the Minister will declare a rate that will achieve and even surpass this target.This promise which we started fulfilling in the FY 2012-13 will be maintained this year.
Byarugaba also assured members that the Fund is stable and financially sound, and continues to grow both in value and membership. The Fund”s assets under management increased by 13.1% from sh9.9 trillion to sh11.3 trillion at end of June 2019, mainly driven by increased contributions and interest income. Contributions increased by 15%, from sh1.0 trillion to sh1.2 trillion.
“Our members should be confident about the health of the Fund in the short, medium and long term as the Fund remains financially stable and growing. We have the ability and means to withstand any shock in the economy, given our aggressive but prudent investment approach and our investment diversification strategy. Safety and Security of members’ funds will remain the guiding principle in our decision making,” he said.
The National Social Security Fund (NSSF) is National Saving Scheme mandated by Government through the National Social Security Fund Act, Cap 222 (Laws of Uganda) to provide social security services to employees in Uganda. Government is pushing for an amendment in parliament to enable NSSF enter new areas and adjust to the changing times.
Financial Performance Summary as end of June 2019
- Assets under Management increased by 13.1% from UGX 9.9 trillion to UGX 11.3 trillion.
- Annual contributions collections increased from UGX 1.0 trillion to UGX 1.2 trillion – a 15% growth
- The amount of money paid in benefits increased by 25% from UGX 360 billion in to UGX 450 billion.
- Cost of administration marginally improved from 1.30% to 1.28%.
