NSSF records UGX 2.53 trillion in earnings for 2023/24

September 18, 2024 in Business, Companies, Investment, Markets, Trade & Industry by Editor

NSSF MD Patrick Ayota

Uganda’s provident fund the National Social Security Fund (NSSF) will report robust performance to members at an Annual Members Meeting slated for September 26, buoyed by solid returns across its investment portfolio and growth in member contributions during the financial year to June 2024.

Earnings surged 15pc from the UGX 2.2 trillion registered in fiscal 2022/23, to UGX 2.53 trillion for the financial year ended on June 30, 2024.

Finance Minister Matia Kasaija is expected to announce the annual interest return due to individual members the same day, although Patrick Ayota, the statutory savings scheme’s managing director would not be drawn on the specific number for the year. NSSF has a statutory obligation to deliver a minimum return on members’ savings of at least 2pc above the 10-year inflation average.

Speaking during the fund’s Annual Media Roundtable on September 17, Ayota said growth had been registered across interest income earnings, dividend income as well as real estate income. Fixed Income continued to dominate at 79.2pc of investments followed by Equities at 13.1pc and Real Estate at 7.7pc.

“Income from all three asset classes we invest in increased this last financial year compared to the previous one. Interest income increased from UGX 2 trillion to 2.34 trillion, dividend income from our listed and unlisted equities increased from UGX 145.1 billion to 175 billion and income from our Real Estate investments also increased from UGX 11.9 billion to 13.3 billion,” Ayota said.

Ayota says the Fund’s performance mirrored an improvement in the overall investment climate in Uganda and across East Africa in general which saw positive economic growth and restrained inflation in Uganda, as well as a rebound in regional equity markets.

“Our analysis shows that although it was not without challenges, across East Africa, it was a better year compared to fiscal 2022/23. The Ugandan economy recovered and recorded a 6pc growth in GDP, inflation remained under control, regional stock markets recovered and the interest rates slightly increased,” he said.

The fund also saw a better year across other key performance indicators, including growth in assets under management, contributions collected, benefits paid, and cost management.

“During the year, we recorded a milestone in asset growth, achieving our target of growing the Fund to UGX 20 trillion by 2025 more than a year in advance. Our assets under management as of the end of June 2024 stood at UGX 22.13 trillion, an increase of 19.2pc compared to the previous year. We still hold our top position as the largest Fund by value in East Africa,” Ayota said.

Member contributions increased rose 12.2pc from UGX 1.72 trillion in fiscal 2022/23 to UGX1.93 trillion in 2023/24, while the cost of administration shrank from 1.02 to 1.00pc of total assets,” he added.

Benefits paid out also dropped from UGX 1.199 trillion in fiscal 2022/23 to UGX 1.120 trillion in the Financial Year 2023/24, a trend officials said signaled increased confidence by members in the fund’s ability to grow their savings and make them available on call.

Ayota attributed the reduction to a drop in the number of members who claimed benefits from 48,115 in fiscal 2022/23 to 44,250 in fiscal 2023/24 with claims for the mid-term benefits dropping 35pc from UGX 272.2 billion to UGX 176.6 billion.

“People who qualify to withdraw their savings are opting not to because they trust the fund to not only ensure safety but also growth in value of their money. This is a responsibility we do not take for granted,” Ayota added.

On the downside, the cost-to-income ratio increased marginally from 8.66pc in fiscal 2022/23 to 8.77pc in 2023/24. Equally, the rate of compliance (the number of eligible employers who regularly remit workers contributions), remained unchanged at 57pc during the year.

Customer satisfaction also remained flat at 88pc while staff engagement improved from 86pc to 89pc.

Looking ahead, the fund has embarked on its Vision 2035 whose major planks include growing its value to UGX 50 trillion, extending social security coverage to 50pc of Uganda’s working population, and ensuring service satisfaction levels of 95pc by 2035.