It feels good to be back- NSSF’s Richard Byarugaba

Richard Byarugaba’s previous term as Managing Director at the National Social Security Fund [NSSF] can simply put be said to have been eventful. In October 2014 the Minister of Finance Maria Kiwanuka reappointed him for the position. This was after finishing his first 3 year term since August 2010. In this interview with The CEO Magazine, he spells out his plans for his second tenure.

You are back at the fund a year after you left. How is the whole experience of being back?

It feels good to be back. The Fund is still very strong. Compliance levels continue to be high above 70 percent. The Cost Income Ratio is below 15 percent while Fund cost to total asset under management continues to come down at 1.3 percent. The Fund value has touched Ushs5 trillion and our customers continue to enjoy the experience. The investments we have made continue to perform well despite the turbulence in the international and regional markets. We are on course to give our members a return that is in line with our target of offering inflation plus which is a real rate of return on their savings. For this, I would like to appreciate the work done by my Deputy Geraldine Ssali as well as the management, board of directors and staff for having managed to keep the Fund going for the 11 months I was away despite the challenging environment.

What are the key issues you have identified to address in the next three years of your tenure?

I believe we have two main issues to deal with. The first one is on the Collection side. We have been very successful with the Relationship Management model which involved offering amnesty to employers who have not complied and also allowing the employees to whistle blow on the employers. That combined with our ability to offer our members a point of contact within the Fund to manage their affairs has enabled us to drive compliance levels from below 50 percent when I first joined the Fund. We however think that figure has peaked around the 70 plus percentage point and we believe there is slightly more scope to drive the number on compliance higher. We are looking at targets of 90 percent plus. We plan on doing this by increasing audits to non-complying companies especially in the informal sector and in the SME space where they fall near the threshold of 5 employees.

The second area of focus is on the investment side and this involves two specific things. One is to continue to diversify our portfolio and reduce concentration in the fixed income space. We will increase our exposure to the equities asset class specifically within the East African region. There continues to be very good opportunities in the Kenyan market as well as new ones in the Tanzania market where their capital account has been opened. This means that we will be looking for equities quoted on the Dar es Salaam Stock Exchange and also in the private equity space specifically in the energy sector in Kenya, Uganda and Tanzania.

The other area of concentration within the investment is on the Real Estate where we continue to have procurement challenges when bringing contractors on board. We have outsourced the procurement process to third party providers in conjunction with the PPDA. We believe that bringing on board of these third party providers will ensure that we can go to the market to contract providers of construction services to enable us bring to market the three main projects of Pension Towers, Lubowa Housing project and Temangalo Housing project.

What is your projection for the Fund in 2015?

We project to achieve the mark of USD 2 Billion in assets under management and a return on investment that is at least 2 percentage points above the rate of 10 year average inflation. We believe that is achievable within the course of this financial year. Some of the key investments we will implement specifically on the real estate side include starting Lubowa Housing Project, Mbuya phase 2 and getting a contractor to start on phase 2 of Pension Towers.

The fund’s investments evoke varied reactions and some seem to stoke controversy. What explains these reactions and how do you plan to evade such controversies in the future?

Investments like these tend to be complex transactions that might not be well understood by all stakeholders. We believe our role as management of the Fund is to try and explain what the risks are and what mitigating factors we have in place when we make the said complex investments. I believe this role has not been played very well in the past and this is something we want to rectify in the future. We shall be proactive to ensure all stakeholders including the general public, our members, the board, Ministry of Finance, the IGG, PPDA and the Solicitor General are all brought on board. This will ensure we obtain all approvals from all involved parties before making investment decisions. This is the only way to mitigate the so called controversies.

You have said, in the past that the investment environment you can play in is quite limited. How do you plan to overcome this challenge?

The environment is still quite limited especially when considering investing in Uganda. The Fund is now worth about Ushs5 trillion and we invest in 80 percent of the companies listed in the Uganda Stock Exchange (USE). We hold over 40 percent of all government treasury bonds as well as 15 percent of all deposits in commercial banks. If you consider those numbers, we are the “giant in the room