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Uganda’s National Social Security Fund (NSSF) is not only the largest pensions Fund in East Africa, but it is also one of the best-run government parastatals in Uganda and probably one of the best-run companies in the region too!
Barring any occurrences beyond control, if NSSF sustains its current compounded annual growth rate (CAGR), the Fund is expected to hit its UGX20 trillion target by 2023/24, at least a year ahead of the targeted 2024/25!
The numbers do not lie.
NSSF assets over the last twelve years, eleven of which have been under Richard Byarugaba, grew 9 times (814%)at a CAGR of 20%, from UGX1.7 trillion in 2009/10 to UGX15.6 trillion at the end of 2020/21 (and UGX17.3 trillion as of October 2022); the Fund is expected to hit its UGX20 trillion target by 2023/24, at least a year ahead of the targeted 2024/25!
Thanks to this steady growth- the Fund was able to withstand a tough operating environment and the lag effects of Covid-19 to still be able pay members an interest of 9.65% on their savings for the financial year 2021/22.
Although this rate is lower, compared to the interest rate of 12.15% for the FY 2020/2021 it is still way above the 10-year average rate of inflation which stood at 5.5% as at end of June 2022.
The decline in the 12.5% interest rate paid the previous year was mainly attributed to the reallocation of investment in long-term to short-term fixed-income instruments to provide liquidity for mid-term payouts, inflation pressures and spillovers from turbulence in the global economy.
The Fund, according to, Byarugaba, the Managing Director, is not only hitting its financial targets, but also meeting other non-financial targets, such as customer and staff satisfaction.
“When we assumed leadership of the Fund, customer satisfaction was 41% and staff satisfaction a trifle 48%. Benefits contribution compliance was 47% and it took on average, 105 days for our members to lodge in their claims and get paid,” recounts Byarugaba.
“But the Fund has now transformed and all that is history. Today, customer satisfaction is at 86%- about 9 percentage points away from the targeted 95% and staff satisfaction at 94%- just 1% short of the targeted 95%. Benefits payment is 8 days- about 7 days to the targeted 24 hours- although age benefits which form the bulk of payments are already down to just 4 days,” he says adding: “benefits payment compliance is at 76% while our data quality index has improved from 76% (in 2018/19) to 85%.”
Great things happen when technology mixes with vision and good governance
While the role of good governance, both at the board and management level as well as the subsequent great vision and strategic execution that was ushered in after 2009/10 has been extensively discussed, there hasn’t been as much attention put on the role of technology and digitalisation in transforming NSSF from a pariah government parental to now one of the most trusted and respected government institutions and certainly the best-run organisations in the region.
It all started with the creation of the Fund’s 10-year strategic plan in 2015, which sought to transform NSSF into a “social security provider of choice” and a “relevant partner to our customers through continuous innovation in social security.”
One of the key strands of the strategy was leveraging technology to enable faster and more efficient service delivery.
“From the onset, we wanted to be a model of operational excellence in Africa, but this couldn’t happen when people were spending time in long queues for services, taking more than 105 days to have their claims settled,” Byarugaba recalls.
“We did a customer survey around 2014 and as expected, our stakeholders told us that while reasonable and consistent returns were a must, they also wanted quick accessibility and timely good customer service. Therefore, excellence in our service delivery channels and customer relationship was going to be very key to our success,” he says.
At the time, only 55% of the Fund’s core business processes were automated, with a lot of bureaucratic delays, made worse by the manual movement of files and cheques. He says that an internal review also showed that as a result, inefficient and manual processes, as well as procurement delays, lead to lost time and cost members a lot of value in missed investment and commercial opportunities.
“Re-engineering our business processes was key to delivering a new and exciting customer experience. The target was to get have at least 75% of all the Fund’s business processes automated by 2019/20 and 80% by 2024/25,” he says.
“Technology and digitisation not only improves the customer experience but it also improves data quality which enables timely and accurate decision-making across the business,” Byarugaba adds.
#NSSFGO: An Automated Customer Experience
The very first technology initiative was the NSSFGO service platform. The thinking behind NSSFGO was that customers should be able to self-serve on the go, 24/7 as much as possible.
“Originally, members would physically visit NSSF branches to access all services including mere account balance inquiries. But with a growing membership, this was unsustainable and unnecessary. With NSSFGo, our members could, using an App, our revamped website and by dealing *254# on their mobile phones, including for non-smartphones, self-serve on a variety of services. Over time the NSSFGo platform has been revamped and now handles voluntary contributions payments via Airtel and MTN Mobile Money, benefits claim applications, balance inquiries and e-statements, member self-registration and contacts updates as well get direct access to their relationship manager. Currently, there are 91,165 active users of the App alone,” Byarugaba proudly says.
To complement the App, the NSSF website www.nssfug.org was revamped and enriched with self-services for both employees and employers. On the employer side, these services include company registrations, clearance certificates, and contributions payments. On the employee side, self-services include contributions remittances, benefits claim, member registration, balance and statement inquiry as well as a whistleblower platform to report defaulting employers.
“The increased adoption of self-service channels for social security contributions payment, registration (both employers and employees), savings tracking, benefits application & tracking, biodata update, – for convenience, efficiency, and greater access. Today, online employer registrations have increased from almost none in 2011 to 2,744 employers while online employee Registrations increased from almost none in 2011 to 128,239 members. The e-channels/walk-in ratio has improved from 38:62 in 2011 to 93:7 in 2021/22,” explains Byarugaba.
To further make it easy for employers to make payments to the Fund, NSSF invested in Straight Through Process- an e-Collections platform that allowed employers to directly pay to NSSF’s bank accounts.
Previously, NSSF’s contributions collections process was manual, involving writing cheques and manually taking them to the bank, causing delays and in some cases errors on member accounts. This affected compliance levels as well.
This was unveiled in February 2016 to improve customer experience in contributions payment.
“The Straight Through Process innovation is at the core of the Fund’s electronic system that enables the processing of the member contributions and updates of member accounts within a day of depositing their contributions. With the STP application, there’s auto reconciliation and apportionment. The application interfaces directly with the banks and employers. This enables the employers to generate a schedule of contributions for members, pay directly to the bank, and electronically send matched paid contributions and schedule straight to The Fund,” explains, Richard.
Partner Banks on the e -collections portal are Standard Chartered Bank, Centenary Bank, Absa Bank, Diamond Trust Bank, NCBA Bank, PostBank Uganda, Stanbic Bank, Tropical Bank, Finance Trust Bank, Bank of Africa, Orient Bank, United Bank for Africa and DFCU Bank.
STP has minimised errors in the payment schedules e.g. underpayments, wrong employer/employee accounts as well as give employers access to payments reports and additional conveniences as they can now make payments from anywhere at any time as long as they can access their accounts online.
Other Benefits of STP, include improving the Fund’s data quality and a faster update of member accounts, consequently leading to faster processing of member benefits.
“Since implementation, the number of employers using the online e-collections platform improved from 16,150 in 2011 to 34,574 in 2021/22 and the amount of money remitted through e-collections increased from Ugx 473 billion to Ugx 1.48 trillion in 2021/22 – an equivalent of 99% of all collections,” Byarugaba testifies.
Such has been the impact of the STP innovation that in 2017, the Straight Through Processing platform won NSSF the prestigious Good Practice award from the International Social Security Association (ISSA).
According to the international jury that awarded the Fund, the STP was described as “a contemporary response to managing risks associated with data security and integrity.”
Since the international nod, NSSF has had other pension funds such as from Kenya and Zambia benchmark it as a means to improve their contributions remittance processes.
That is not all, the Fund also partnered with major mobile telecommunications companies namely, MTN and Airtel to enable payment of social security contributions using Mobile Money. The partnership enables NSSF members on the NSSF Voluntary Membership Plan as well as small and medium-sized entities that pay less than UGX4 million in contributions monthly, to conveniently make payments using MTN Mobile Money. Just like STP, NSSF can receive member contributions promptly, thus enhancing its contributions process efficiency. The service also guarantees convenience in contributions payments and eases the reconciliation of payments to member accounts. Members get instant confirmation of received contributions through SMS.
Digitally future-proofing the Fund with the NSSF Smart Card, a new digital mid-term payment tool and a robust pensions system
The Fund is certainly on course to meet all its 2024/25 targets, but this is no reason for the management to lie back and bask in the glory of the achievements of yesterday.
According to Byarugaba, the Fund must be continuously reinventing itself to meet the ever-growing needs of customers as well as the changing operating and regulatory environment.
For example, upon passing The NSSF Act 2022 by parliament in November 2021, the Fund didn’t have to wait for the law to be gazetted so it could start reviewing its processes.
Some of the key provisions in the new law were mid-term access to savings for eligible members. For example, in Section 20A (1) of the new law, a member who is forty-five years of age and above and who has made contributions to the fund for at least ten years will be eligible for midterm access to his or her benefits, of a sum, not exceeding 20 per cent of his or her accrued benefits; and a member who is a person with a disability is forty years of age and above and has made contributions to the fund for at least ten years will be eligible for midterm access, of a sum of 50 per cent of his or her accrued benefits.
Other key provisions include the expansion of social security coverage in Section 7(2) which states that every employer, irrespective of the number of employees contributes to the Fund. The new law also provides for the introduction of new benefits in Section 8(1a) which states that the NSSF Board, in consultation with the Minister, by statutory instrument, prescribe additional benefits. It also provides for contributions top-ups under Section 13 A (1) which states that a member can make voluntary contributions to the Fund over and above his standard contributions.
“OctoPAS has enabled us to ably and seamlessly implement provisions of the NSSF Amendments Bill 2021,” explains Byarugaba adding: “For existing products: The old system -JDE, couldn’t support the development of new products. For future products: like Voluntary top-ups and midterm benefits spelt out in the NSSF Amendments ACT 2021, it would mean creating multiple accounts for members which couldn’t be implemented in the old system, but OctoPAS is now able to handle all this,” he said.
OctoPAS key features include a 360-degree view of the customer, automated computation of interest rate and penalties, Straight Through Processing of transactions, multiple service channels and 24/7 service delivery. It also powers self-service, can handle seamless integration with 3rd party systems as well as handle employer self-registration of an employee and is also scalable through agent networking. It can also handle multi-fund and multi- currency administration and bring about improved processing benefits.
“OctoPAS is robust enough to help us improve our existing offerings like the self-service customer experience and the straight-through processing. It also allows us to further address some of the few remaining data integrity issues as it has been difficult to integrate any new modern systems with the old JDE system and customisation concerns. The new system over and above addressing existing pains is robust enough to support product innovation as well as support the creation of new revenue streams for the Fund.
“With the new OctoPAS, we will be able to have faster member account information updates without no manual intervention as well as improved turnaround time thereby increasing service delivery and faster and real-time member transactions,” explains Byarugaba.
Alongside OctoPAS, to be able to quickly handle and facilitate midterm payments- the Fund anticipated over 41,174 members eligible, NSSF also developed a validation tool to enable and support claims application as well as help the Fund prepare and avail required liquidity for the payments for all eligible applicants.
The tool for example enhanced the Fund’s ability to quickly validate members’ eligibility for midterm benefits as well as enable members to select preferred payment dates and payment channels e.g through the bank or mobile money.
Thanks to these innovations, the Fund has been able to pay over UGX421billion of the midterm benefit to 21,603 eligible members, within three months. Out of the 21,603 applications; 13,493 of the applications were received at the Fund’s branch network while 8,110 were received online via its self-service platforms.
“In the first week of the exercise, there was an influx of eligible members flocking the Fund’s branches to apply for their benefits. This forced the Fund to open up a temporary location at Kololo airstrip and deploy over 80 staff to attend to walk-in customers. But the new digital tools have greatly helped manage traffic to the Fund’s branches. Currently, the Fund receives less than 10 applications for midterm benefits physically. The temporary outlet at Kololo airstrip was closed since most of the applications are now online via the self-service channels,” says Richard.
In furtherance of the Fund’s digitization strategy which is geared at leveraging new technology to improve efficiencies, continuously enhance customer experience and ultimately make savings a way of life for Ugandans, the Fund in June 2022 launched the NSSF Smart Card. The NSSF Smart Card is a three-in-one membership card that embeds NSSF functionality, bank functionality and a loyalty program. The Fund partnered with a well-established global payment technology/card company – VISA and Centenary Bank, Uganda’s second-largest bank.
The NSSF Smart Card program is made up of two distinct but equally capable card products; the NSSF Debit Smart Card and the NSSF Prepaid Smart Card. The Debit Card comes with an NSSF Smart Life Account maintained in Centenary Bank to help members access more banking services whereas the prepaid card can be loaded with money for one to make purchases or transactions.
With the introduction of the smart card, NSSF will no longer issue out any other form of member card apart from this new Smart card. Members with the old card can choose to retain them for identification and record purposes or can apply for this new card. The old card will be disregarded upon acquisition of the new card.
sing the card, members can withdraw their NSSF savings upon qualification, make contributions to a voluntary savings plan, use it for member identification, and view their NSSF balance and statement. They can also be used to deposit and withdraw money from their bank accounts, pay bills, make transactions online, and on ATM and Point Of Sale machines, and receive salary. Cardholders can also access discounts on selected services and products at merchant outlets.
“This card is a more functional upgrade of the earlier membership cards previously issued by the Fund. The NSSF smart card is majorly designed as an affordable person-to-business transaction solution to facilitate cashless payments. It is intended to solve the problem of individual cash transactions for retail payments of which the majority of the existing digital platforms in the market like mobile money haven’t fully solved. In addition, we wanted to create a platform through which our members could use for both their social security needs i.e identification, deposit of monthly contributions and withdrawal of their benefits and other financial transactions,” Byarugaba concludes.