How NSSF has performed over the last 10 years

In this immersive article, the CEO Magazine tracks NSSF financial performance over the last 10 years using a graphical presentation of the Fund’s data.

Finance Minister Matia Kasaija took to the podium yesterday at Serena Hotel, Kampala to announce the final interest rate of 11.5 percent that NSSF savers will earn for the Financial Year 2023/24. 

Kasaija’s docket as Minister of Finance oversees financial, and investment aspects related to the Fund. 

Kasaija in his remarks noted that the fund was financially stable with the right investment in assets and sectors, while also preserving the growing value of members’ savings. 

NSSF saw a robust growth in contributions from UGX 1.72 trillion in 2022/3 to UGX 1.93 trillion 2023/, and will pay over UGX 2 trillion in interest to over 2.3 million registered members. 

The interest rate announcement ends months of speculation since the financial year closed in June, but also allows for a broader look into the NSSF financial performance which continues to register an upward trajectory. 

“The Fund is indeed growing – from UGX 18.56 trillion in Financial Year 2022/23 to UGX 22.13 trillion in 2023/24, an increase of 19.2%. The Fund is investing in the right assets in Fixed Income, Real Estate, and Equities. The delicate balance between risk and return is demonstrated by the concentration primarily in Fixed Income (79.2%), which is by far the safest investment asset,” Minister Kasaija said.  

He added that the Fund has continuously preserved and grown the value of members’ savings, with a consistent payment of more than 2% above the 10-year average rate of inflation for more than 10 years and counting.

“Furthermore, it is gratifying to note that the Fund is engaging in the real economy through funding startups and directly supporting agriculture. By doing so, it is creating its members and guaranteeing its future,” he noted. 

How NSSF made money 

Patrick Ayota, the NSSF Managing Director while presenting the Fund’s performance noted that the Fund achieved commendable performance across most key indicators. 

For instance, the Fund’s total assets, realised income, cost of administration, and contributions all surpassed their budgeted expectation with the asset size growing to UGX 20 trillion by January 2024, reaching this target nearly 18 months ahead of the expected date of 30 June 2025.

Additionally, the Fund also recognised a significant unrealised foreign exchange gain on the regional investments, especially due to the recovery across all its positions in Kenya. 

NSSF realised interest income, which makes up over 93% of total income, grew by 14% from UGX 2.04 trillion in FY2022/23 to UGX 2.3 trillion in FY2023/24. This was driven by higher yields especially in the Kenyan market and appreciation of the Kenyan currency. 

Kenya which remains a significant market for the Fund, with its economic performance directly influencing investment returns. The Kenya shilling’s appreciation positively impacted the Fund’s portfolio for FY2023/24. However, recent unrest poses risks to future returns. 

To mitigate risks and capitalise on opportunities, NSSF has maintained close monitoring of the Kenyan economic landscape with an investment strategy which emphasises diversification across sectors and industries to enhance portfolio resilience. 

This approach has enabled the Fund to navigate short-term volatilities while maintaining a long-term perspective.

The Fund’s real estate investments attracted an increase of 11% from UGX 11.95 billion in income in FY2022/23 to UGX 13.30 billion in FY2023/24 due to rent escalations and increased unit sales in Mbuya compared to the prior year. 

 However, NSSF indicated that its performance  in real estate was below budget by 17% due to lower than planned occupancy rates and house sales.

The Fund continues to face cost pressures due to global supply chain disruptions. These challenges are particularly pronounced in the Real Estate Portfolio where certain construction inputs are imported. Additionally, elevated energy prices, a lingering consequence of the Russia-Ukraine conflict, have contributed to increased operational and capital expenditures. 

In response, the Fund continually adjusts its budget and operations in response to escalating costs driven by global supply chain disruptions and rising energy prices. 

These measures have mitigated the immediate impact while a more comprehensive approach, including investment diversification, enhanced risk management, cost optimisation, and strategic partnerships with contractors and suppliers, is being implemented to minimise the impact.

NSSF’s dividend income grew by 21% from UGX 145 billion in FY2022/23 to UGX 175 billion  in FY2023/24. This was driven mainly by dividend income from Airtel Uganda and a general increase in dividends earned from MTN Uganda, Safaricom, National Microfinance bank, Cooperative Rural Development Bank (CRDB) Tanzania, Stanbic Bank Uganda Limited, UMEME and Tanzanian breweries.

 As a result, total realised revenue grew by 15% from UGX 2.2 trillion to UGX 2.53 trillion driven by the growth in fixed income, dividend income and real estate income.

The Fund’s annual operating costs increased by 16% from UGX 191 billion in FY2022/23 to UGX 222 billion in FY2023/24, and 3% below the budget of UGX 228 billion.

Myr Ayota explained that the increase from the previous period is attributed to the Fund’s continuous strides towards its strategic direction (Vision 2035), driven by initiatives to improve sustainable return and benefits to members through the Fund’s expanded mandate, increased 

strategic partnerships and engagement, processes to boost internal capacity and innovative solutions to improve efficiencies in the delivery of services to our members.

Hon. Davinia Esther Anyakun, the Minister of  State for  Labour, Employment and Industrial Relations expressed interest in the strategies that the Fund will deploy to increase coverage, given that the legal obstacle limiting the eligibility threshold to 5 employees was repealed. 

The NSSF Act (Cap 230), now enables the Fund to recruit employees from the informal sector, the self-employed, and the public sector voluntarily.

Dr. David Obong, the NSSF Board Chairperson, tasked the NSSF management for the speedy realization of Vision 2035 – to expand coverage to at least 50% of the working population, grow the Fund to UGX 50 trillion, and improve efficiency levels to 95%.

NSSF financial performance over the 10- year period. 

We present to you a graphic presentation of the Fund’s performance over the last 10 years.

NSSF benefits clocked UGX 1.12 trillion in the FY 2023/2024 from UGX 239 billion in FY2015/16

The number of NSSF members who are eligible to withdraw their benefits, but have instead chose to retain them in the Fund rose from 52000 in 2022 to 79000 in 2024.

Customer satisfaction was recorded at 89 percent in 2024 rising from 86 percent in 2015.

NSSF can now process funds for over 44,000 members in a record time of 10 days in 2024. When compared to 2015, only 15000 members would have their funds processed in 9 days.

NSSF member contributions have risen over the years from UGX 785 billion in 2015 to UGX 1.9 trillion in 2024.

NSSF Total revenue rose from UGX 845 billion in 2016 to UGX 2.5 trillion in 2024

NSSF total assets grew from UGX 6.6 billion in 2015 to UGX 22.13 billion in 2024.

The NSSF annual interest rate paid out has hovered from around 12.3 percent in 2015 to 11.5 percent in 2024.