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Mr Patrick Ayota’s inaugural year as Managing Director at the National Social Security Fund (NSSF) coincided with the announcement of the Fund’s annual financial performance last week.
Mr Ayota took over last year in August after NSSF weathered the storm of Parliament hearings into the management of the Fund.
In his reflection on the NSSF performance, he says, the past year stood out as one of resilience, determination, and remarkable performance.
“Despite the intrusive months of rigorous public investigation inquiry, we emerged from a challenging year even stronger. Our strong governance prevailed and sustained us. Member trust in NSSF remained steadfast,” he explains.
He says this is a demonstration of the members’ unwavering faith in the Fund which saw contributions and enrolments increase with the Fund growing by almost UGX 4 trillion, underscoring the strength of the Fund’s strategy.
“This resilience gives us the foundation to lay out our strategy for Vision 2035. We are thinking bigger and bolder not only to solve today’s problems; but to invest in solutions for a better tomorrow, for our members and for Uganda.”
During FY2023/24, amidst the challenging environment, NSSF registered good performance with its assets growing by 19% from UGX 18.6 trillion in the previous year to UGX 22.13 trillion, exceeding our 2025 target of UGX 20 trillion.
NSSF total realised income grew by 15% from UGX 2.2 trillion to UGX 2.5 trillion, mainly driven by interest income, while dividend income earned in the year grew by 21% from UGX 145 billion in the previous year to UGX 175 billion. Member contributions collected in the year grew by 13% from UGX 1.72 trillion in the previous year to UGX 1.93 trillion.
My Ayota says the investments and the growth in realised revenue was based on the management’s strategic decisions informed by strategic asset allocation
“What informed our plan is how much equity and real estate do we need to have, and how much more do we need to buy? The other investments became more tactical, we needed to put more money in equities but we agreed which companies are being driven by this tactical allocation. It allows that we’re not making decisions in a vacuum but within a framework and it works out,” Ayota explains.
Investments in MTN and Airtel made a key contribution to NSSF final dividend income registered at UGX 175 billion with MTN contributing UGX 40.5 billion and Airtel raking UGX 22 billion.
“Those are good companies. You run the numbers, the underlying assumptions and the fundamentals are good. The dividends we got from MTN were not by accident but the company was performing,” Ayota notes.
Ayota says telecoms such as MTN and Airtel are riding on a digital wave as smartphone penetration increases in the country with a growing sophisticated population. As such, investing in the telecoms is a good bet for the Fund.
“The usage of services that MTN and Airtel provides will grow. We’re looking at demographics, growth, and usage,” he notes.
Other initiatives
The Financial Year ended June 2024 will also be remembered for the Fund’s strong focus on creating value for its members.
This follows the launch of the Yo Benefits Campaign, targeting members eligible for age-related benefits, to support them in making prudent financial decisions pushing beyond traditional retirement benefits to address the adequacy, sustainability, and predictability of social security benefits.
The Yo Benefits Campaign provided financial advisory services to over 12,000 members, leading to a notable shift toward drawdown plans and partial benefits.
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As a result, over 1,069 members chose these options, retaining UGX 94 billion, a 56% retention rate. This effort also saw an increase in deferred benefits, with over 76,673 members deferring applications totalling UGX 1.01 trillion, reflecting growing member confidence in the Fund.
NSSF also introduced a new Whistleblower platform to empower members to report cases of noncompliance, thereby enhancing overall compliance and contributions, key to ensuring long-term security for its members.
Additionally, the Fund scaled up its Artificial Intelligence-supported integration with partners such as the Uganda Revenue Authority, automating the generation of social security bills for employers. This initiative tackled under-declaration in employer remittances, creating additional value for the Fund and members.
Addressing operational challenges, the Fund’s benefits payout time averaged 10.1 days, slightly above the 9-day target but an improvement from the previous year’s 12 days.
The future
Beyond the traditional investments- bonds, equities and real estate. NSSF is opening up new investment areas.
Building upon its 2025 strategy, the Fund has set ambitious targets for the next decade. Central to the Fund’s strategy is an active role in the daily lives of young Ugandans, especially in the areas of agriculture and job creation.
So far, the NSSF Hi-Innovator programme has successfully created over 12000 jobs and led to new contributions of UGX 530 million savings and this has been mainly among the youths.
“When you see us say, we want to get into agriculture and help the farmer sell his products at a fair price. That’s an investment and those are game changers because you can exponentially grow your membership now from 2 million to 10 million,” Ayota explains.
As the Fund matures, more and more members are expected to qualify to take their benefits, which will eventually exceed contributions.
The Fund, therefore, is on the move to widen coverage and attract new members. Currently, NSSF coverage is at 11% of Uganda’s working population, with the aim to expand this to 50%, reaching 15 million members.
The target is also to reach a significant portion of the eligible workforce, particularly within the informal sector.
The Fund has also set an ambitious UGX 50 trillion target with its innovative growth strategies aligning with national priorities in infrastructure development and industrialisation.
Tol pave the way for a more successful and resilient future, NSSF has set its eyes on agriculture and plans to set up the National Marketing Company (NAMCO):
Here, the aim is to improve farmers’ livelihoods by granting them access to markets with advantageous pricing, thereby empowering them and facilitating savings for 8 million households with the Fund.
Another plan is to launch the first official cohort aimed at expanding our membership base by reaching grassroots communities within the informal sector. This initiative will focus on providing tailored financial education and support, enabling these communities to benefit from the Fund’s services and contribute to their financial stability and growth.
The Fund also continues to review its strategic asset allocation by incorporating more “alternative assets” into its portfolio to mitigate risks and enhance returns for our members.