High expectations for NSSF 2023 Interest announcement as revenue increases by 15% to Ugx 2.2 trillion in FY 2022/23

As members of the National Social Security Fund (NSSF) await the imminent annual interest announcement, experts have suggested that savers are likely to receive a rate that is above 10%.
This comes after Patrick Ayota, the NSSF Managing Director revealed that the funds revenue increased by 15% from Ugx1.9 trillion to Ugx 2.2 trillion for the Financial Year ended June 30, 2023.

Addressing the media at the NSSF Annual Media Roundtable, Ayota attributed the growth to increased earnings from interest income from Ugx 1.79 trillion to Ugx 2 trillion and dividend income which grew from Ugx 84 billion to Ugx 139 billion. Income from the Fund’s real estate projects also slightly increased from Ugx 13.4 billion to Ugx 14 billion and Ugx 16 billion was earned from other income.

“Overall, the investment environment in Uganda and the region was challenging over the last Financial Year. However, the Fund was able to increase its revenue owing to strategic asset allocation that enabled us to remain profitable, despite a generally depressed market,” he said.

“Although inflation remained under control at 4.8%, the reduction in the value of the stock markets in Uganda and Kenya, the appreciation of the Uganda Shilling against the regional currencies, and the reduction in long-term bond yields increased pressure on the Fund’s performance. For us to post a 15% increase in revenue shows our resilience and an astute investment risk balance,” Ayota added.

Overall, the long-term bond yields dropped compared to the last Financial Year. For instance, on a year-on-year comparison as of 30th June 2023, the 10-year bond yield dropped from 15.600% to 14.788%, the 15-year bond yield dropped from 16.194% to 15.291% and the 20-year bond yield dropped from 17.6345% to 15.313%.

In addition, the stock markets in Uganda, Kenya, Tanzania, and Rwanda suffered a reduction in value. The Uganda Securities Exchange Local Index reduced by 11.47% the Nairobi Stock Exchange All Share Index reduced by 14.04%,  the Tanzania Stock Exchange Share Index reduced by 4.02%, and the Rwanda Stock Exchange reduced by 2.27%.

There was a significant appreciation of the UGX against major currencies, mainly the Kenya Shilling which depreciated by 22.2% against the Uganda Shilling.

Ayota however said that the Fund’s financial position is stable and the Assets Under Management continue to grow.

“Our Assets Under Management (AUM) increased from Ugx 17.26 trillion in Financial Year 2021/22 to Ugx 18.56 trillion in Financial Year 2022/23. This growth was driven by an increase in member contributions, increased realized income, and a cost management strategy that enables us to create more value for the member at a lower cost compared to the previous Financial Year.”

“In fact, with the current asset base, we project that the strategic goal of growing the Assets Under Management to Ugx 20 trillion by 2025 will be achieved by June 30, 2024, one year ahead of schedule,” Ayota added.

Information from the Fund shows that member contributions increased by 15% from Ugx1.49 trillion in Financial Year 2021/22 to Ugx 1.72 trillion in Financial Year 2022/23, while the cost of administration reduced from 1.18% to 1.02%.

Ayota assured NSSF members that the Fund is in a better financial position going forward and the focus has now shifted to ensuring its long-term sustainability.

“Our new “Vision 2035” is the bedrock of our long-term strategic focus– where we want to grow the Fund to Ugx 50 trillion, cover at least 50% of the working population, and achieve 95% and both customer satisfaction and staff engagement,” he said.

Gerald Paul Kasaato, the NSSF Chief Investments Officer and acting deputy Managing Director noted that the Russia-Ukraine conflict had impacted the funds performance.

He also pointed out that Assets Under Management (AUM) increased by 7.5% from Ugx 17.26 trillion in Financial Year 2021/22 to Ugx 18.56 trillion in Financial Year 2023/24.

Member contributions increased by 15.4% from Ugx 1.49 trillion in Financial Year 2021/22 to Ugx 1.72 trillion in Financial Year 2022/23

Total Realised Income earned increased by 15% from Ugx 1.9 trillion in the Financial Year 2022/22 to Ugx 2.2 trillion in the Financial Year 2022/23

Benefits paid to qualifying members increased by 1% from Ugx 1.189 trillion in the Financial Year 2021/22 to Ugx 1.199 trillion in the Financial Year 2022/23.

The cost-to-income ratio improved from 11.7% in the Financial Year 2021/22 to 9.4% in the Financial Year 2022/23

Cost Management – the funds administration costs reduced from 1.18% of total assets to 1.02%.

The Rate of Compliance slightly improved from 55% in Financial Year 2021/22 to 57% in Financial Year 2022/23

Customer Satisfaction increased from 83% in the Financial Year 2021/22 to 86% in the Financial Year 2022/23

Staff Satisfaction slightly reduced from 85% in the Financial Year 2021/22 to 82% in the Financial Year 2022/23.

Stevens Mwanje, the NSSFs Chief Financial Officer noted that the fund had gone up and beyond to ensure that unaccounted funds that came into the funds coffers without proper identification of beneficiaries is paid out after careful scrutiny of claimants. He said that the funds had reduced from over Ugx100 billion to Ugx58 billion. 

The National Social Security Fund Uganda is a multi-trillion Fund mandated by Government through the NSSF Act, as amended, to provide social security services to all eligible employees in Uganda. The Fund is a secure, innovative, and dynamic social security provider that guarantees safety, security, and a return on members’ savings of at least 2% above the 10-year inflation average.  

The Fund manages assets worth over Ugx18.5 trillion, invested in Fixed Income, Equities and Real Estate assets within the East Africa region. As the largest Fund in East Africa by value, with the ambitious goal of growing its Assets Under Management to Ugx20 trillion by 2025.  

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