Annet Nakamya, a businesswoman with Psalms 1 Enterprises, a company dealing in printing works, was in May 2021 diagnosed with deadly levels of Covid-19. Her oxygen levels had sunk to 65% and she had to spend three weeks in ICU and on oxygen.
Having not been able to work, her medical bills were going high. She was stressed. As she was beginning to regain consciousness, one day, by a stroke of luck she overheard an announcement on a radio set belonging to one of the patients, with her in hospital…. that NSSF had started allowing members in intensive care due to Covid-19 to access their savings. Although still in disbelief, unable to talk well, she texted a one, John Bosco, her regular contact person at the Fund. Two days later she got an SMS that her funds had been processed and sent to her bank. On the third day, she got a notice from her bank that indeed her account had been credited with her savings.
“I could not believe that after one day, I received a message that my money had been processed and on the third day, it was on my account,” she recalls.
“I thank NSSF because I could not believe that I could have that money. It came in time,” she unbelievably adds.
But Nakamya’s case is not isolated, these days, thanks to investment in the right people, technology, customer care and enhanced quality of data for members, it takes an average of 7-9 days to claim and receive one’s benefits, depending on the nature of claims being made.
In fact, after the recent passing of the National Social Security Fund Act, 2022 that among others allowed for mid-term access, to qualifying members, the Fund was in a few days able to pay UGX78.8 billion to 4,417 eligible members to date, UGX 28.8 billion above its weekly target of UGX 50 billion.
“We committed to payment of UGX50 billion per week starting on March 17, 2022. So far, we have paid above our weekly target by over Ushs28.8 billion. This implies we have paid 30% of the total members who have applied for midterm within the first one week since we commenced payments,” Richard Byarugaba, the Fund’s Managing Director told media at a press briefing.
“Whereas Regulations prescribe the payment of Midterm Benefit within 45 working days, we committed to pay qualifying members promptly every week, before the prescribed timelines. We have demonstrated this commitment in these first 2 weeks,” Byarugaba added.
Byarugaba, said that NSSF has earmarked UGX1 trillion for payment of the Midterm benefit under Section 20A of the NSSF Amendment Act 2022, following the President’s assent to it and subsequent gazetting in January 2022.
For members making claims today, or in the past few years, it is easier to assume that life has always been this easy. But not at all.
Just about 12 years ago, in 2009/10, it took on average, 105 days to claim and receive claims. Yes, 105 days!
It therefore no wonder that customer satisfaction at the time, was 41% and staff satisfaction a trifle 48%. Not only was the service bad, but the Fund’s reputation was also in tatters. So bad was the Fund’s image, that for every 10 stories written by the media about NSSF in 2010, nearly 5 stories (45%) were negative- according to media research by media research firm, Ipsos.
Compliance- the percentage of actively saving registered members was 49%. People didn’t see a good reason to save with NSSF, even though there was a law compelling them to do so.
As such, the Fund was performing below its potential, with only UGX294.7 billion collected annually in 2009/10 as members as savings. With limited savings, investments too were on the low side and so was total income earned by the Fund- just UGX134.7 billion.
I remember, in September 2010, soon after it had been announced that Richard Byarugaba, an amiable but no-nonsense banker, then Managing Director of the now-defunct Global Trust Bank, had been appointed the new Managing Director of the National Social Security Fund (NSSF), I gave him a call to congratulate him.
As a business journalist, I had worked closely with Richard, right from his time at the former Nile Bank where he was Managing Director, then at the then Barclays Bank where he was the Chief Commercial Officer after Barclays had acquired Nile Bank. At Global Trust Bank, where he later became Managing Director, Richard, always kept an open-door, open-ear policy and was always handy with a quick comment- whether about the industry or his own bank.
On this particular afternoon, after I had congratulated him- I quickly quipped about whether given the trend, the previous NSSF CEOs had ended their careers at the Fund, whether he was making the right decision and if he thought he would be the much-awaited “Messiah” who would transform NSSF.
He laughed off the Messiah comment, and simply told me, “What NSSF needs is a simple model, that focuses on delighting the members and delighting staff to consistently deliver.”
“This is what we do in the financial services industry, and NSSF is not any different,” he said.
At the time, it didn’t amount to much. It sounded like one of those smart-ass statements that waxing lyrical CEOs tell journalists.
The Fund collects monthly contributions— 5% of gross monthly wage from employees and 10% from employers. The collections are invested – as at end of FY2020/21; 78% in fixed income, 15% in equities and 7% in real estate, from which revenue is obtained. After the costs of managing the Fund are deducted, (cost to income ratio was 1.06% in 2020/21) the rest is passed on to members as annual interest that is added onto their savings.
A man with a mission for a better life for NSSF Members
As soon as he got on the job, he got down to work- changing almost everything.
The first thing that Richard Byarugaba did, was carry out several cost-cutting but efficiency-enhancing reforms. By end of 2012, he had managed to cut expenditure from UGX58.7bn in 2011 to UGX53.6 billion. The biggest cut was on administrative expenses- from UGX43.9 billion to UGX35.3bn.
He tore down everything, including most of the walls in offices, replacing them with transparent glass walls, more less to signify the new era of transparency. A special data-integrity team was hired to clean up member data, such that the Fund was able to regularly issue members, statements on time.
As a signal of the new era, in December 2012, he led the rebranding of the Fund- with not just a new logo and tagline, but also a new promise.
Under the new brand promise, the Fund sought to become “the social security provider of choice”; with “Quality Products. Great Customer Service. Competitive Returns.” With a new brand promise, also came a new values proposition.
“We are not merely changing our look and feel, but rather, the change of our visual identity symbolizes my commitment, your commitment and our commitment to deliver a better future for our growing membership by providing quality products, great customer service and offering competitive returns in a transparent and efficient environment,” Mr Byarugaba told the media at the time.
“Delivering a better future starts now,” he reiterated.
Going by the upswing in customer and staff satisfaction that followed, it appears, that this was indeed, much more than just a promise.
According to numbers presented by the Fund at the March 2013 Annual Members Meeting (AMM)- another transparency initiative by Richard and team, an equivalent of an Annual General Meeting for shareholders, customer satisfaction, had risen significantly, from, 41% to 72, while staff satisfaction also rose to 65%.
Numbers don’t lie.
More satisfied staff and customers created better results as the 2012/13 financials showed.
By the end of 2012/13, annual member contributions had grown by 88% from UGX294.7 billion in 2009/10 to UGX552.7 billion. Like night follows day, growing member contributions, meant there was more money to invest, so total income grew 190% from UGX134.7 billion to UGX390 billion. Prudent cost management saw net profit climb 160% from UGX132 billion to UGX343 billion.
Better profit meant there was more money for members to share, so interest credited to members’ accounts rose by 216% from UGX89.2 billion in 2009/10 to UGX282 billion at the end of 2012/13, thanks to rising interest rate, in line with the Fund’s promise to pay an interest rate above the 10-year average annual inflation rate. The interest rate grew from 7% in 2009/10 to reach 11.23%, after a slight decline to 6% in 2010/11. As a result of all this, assets under management, more than doubled, climbing 104% from UGX1.7 trillion to UGX3.48 trillion!
In December 2013, Richard’s 3-year contract came to an end and due to a hiring hiatus, he had to leave the Fund for a year, and was back in December 2014, after being reappointed to the same position.
But thanks to an inexorable growth machine left in place, NSSF under Geraldine Ssali, then Richard’s Deputy, kept running well.
In the one year, of his absence, Member contributions grew 13% from UGX552.7 billion to UGX622.4 billion. Total income grew 27% from UGX390.1 billion to UGX494.3 billion, while net profit grew 32% from UGX343 billion to UGX452 billion. Assets under management, as a result, grew 26% from UGX3.48 trillion to UGX4.4 trillion. that year, the fund declared an interest rate of 11.5%, crediting a total of UGX365.8 billion in interest, an increase of 30% from the UGX282 billion paid the previous year.
By this time staff satisfaction had reached 66% and customer satisfaction 84%.
Towards a UGX20 trillion Fund by 2024/25
Following his comeback in the December of 2014, Richard in 2015, engineered and launched a new 10-year Strategic Plan (2015-2025)- that sought to drive NSSF into a UGX20 trillion fund and the largest pension fund in the region.
To achieve this, the Fund would have to increase its customer satisfaction and brand reputation to 95% each. It had to build staff satisfaction to 95%. But this wouldn’t be built in a vacuum, it would focus on creating happy employees as well as happy customers.
To create a happy customer, the 10-year strategy would address business process re-engineering to deliver a new and exciting customer experience, by “creating a proactive, exciting and engaging digital customer experience via smart, transparent and fun technology.”
Customers would also be delighted by a prudent investment agenda that would yield better returns, that preserve the value of savings in an especially dynamic and volatile business environment. Ahead of changes in the regulatory environment especially the in-the-works NSSF Amendment Bill, the strategy also addressed itself to product innovation in pursuit of new benefits to the members as well as bring real meaning to the lifecycle of the member- from birth, through to family, poor health, retirement and death.
At a media breakfast to review progress on the strategy held at the Kampala Serena Hotel on Tuesday, November 21st, 2017, Richard explained that while the Fund had done well in the previous years, the major challenge was that less than 10% of Uganda’s working population benefited from formal social security cover.
“Our mission is to create a better life for Ugandans by getting more of them under formal social security cover. The next 5 years will be focused on creating the internal capabilities to progressively deliver this mission,” he told the media.
A UGX15 trillion fund and on course to surpass UGX20 trillion by 2024/25
They say the proof of the pudding is in the eating and looking at 2020/21 results, the NSSF pudding is quite mouth-watering.
For starters, in line with the 2024/25 agenda of achieving a customer satisfaction rating of 95%, customer satisfaction in 2020/21, was 86%—a 2 percentage point drop from 88% the previous year. Regardless of the drop, overall, customer satisfaction has improved from 49% in 2011/12, reaching a high of 92% in 2016/17 before averaging at 86% thereafter.
Staff are happier too—at the end of 2020/21, staff satisfaction reached 94%. Overall, there has been a year-on-year improvement in staff satisfaction, all the way from 2010/11 when satisfaction was 60%.
As expected, happy staff give you happy customers and happy customers give you good business, and NSSF has not been any different.
Even with an economy reeling from the effects of Covid-19 related lockdowns and depressed economic growth, NSSF still registered an 8% growth in member contributions, from UGX1.27 trillion to UGX1.37 trillion, 3 percentage points better than the 5% growth rate in 2019/20. Overall, in the 12 years, to 2020/21, out of which Richard Byarugaba and his team have been in charge, NSSF annual member contributions have grown nearly 5 times (364%) from UGX294.7 billion in 2009/10 to UGX1.37 trillion (UGX114 billion per monthly), a compounded annual growth rate (CAGR) of 14%.
Buoyed by increasing member contributions and subsequently the investments therefrom, total Fund income grew 15% growth in the Fund’s total income from UGX1.5 trillion to UGX1.7 trillion, continuing the Fund’s 12-year income growth trajectory in which total income has grown nearly 13 times (1159%) from a trifle UGX134.7 billion in 2009/10 to UGX1.7 trillion in 2020/21- a CAGR of 23%.
So phenomenal has been NSSF’s income growth that in 2018/19 for the first time in the history of the Fund, income from investments overtook annual member contributions as the key driver of fund growth— total income hit UGX1.26 trillion while annual member contributions reached UGX1.2 trillion!
Increasing income coupled with a declining cost to income ratio (1.06% in 2020/21) led to a 31% growth in the Fund’s net profit- from UGX1.16 trillion to UGX1.52 trillion- a growth of UGX357 billion, continuing a 12-year double-digit growth rate trend in which net profit has grown by nearly 12 times (1048%), at a steady CAGR of 23% to reach UGX1.52 trillion in 2020/21, from UGX132 billion in 2009/10.
Improved profit performance has led to better interest rates and total interest credited to member accounts. In 2020/21 NSSF paid members an interest rate of 12.15% which is 6.4 percentage points above the 10-year average inflation rate. In line with its promise of maintaining member fund value- the Fund has in the last 12 years, consistently paid above the 10-year average inflation rate including the period between 2011/12 and 2013/14 when inflation skyrocketed.
Interest credited to member accounts in 2020/21, itself grew 31.4%, from UGX1.15 trillion to UGX1.52 trillion. Over the last 12 years, total interest credited to members’ accounts as earnings has grown 17 times (1600%) from UGX89.2 billion to UGX1.52 trillion- a CAGR of 27%.
Besides interest paid, qualifying members have been able to withdraw their savings hustle-free and timelier, thanks to a more liquid fund, coupled with higher quality member data, and improved turnaround time (from 105 days to 9 days). In 2020/21 the Fund paid UGX642.3 billion to qualified members, a 29% growth from the UGX496.4 billion and a tenfold growth (908%) from the UGX63.7 billion paid out in 2009/10- a CAGR of 21%.
Assets under management grew 17% from UGX13.3 trillion in 2019/20 to UGX15.6 trillion in 2020/21. Overall, in the last 12 years, 11 of which have been under Richard Byarugaba, assets under management have grown 9 times (814%), from UGX1.7 trillion in 2009/10 to UGX15.6 trillion— a CAGR of 20%!
Barring any occurrences, if the Fund’s CAGR can be maintained at 20% and factoring in the UGX1 trillion that NSSF is expected to pay out in mid-term withdrawals, NSSF is expected to hit its UGX20 trillion target by 2023/24, at least a year ahead of time!
Another important factor is that while assets under management at the end of 2020/21 stood at UGX15.6 trillion, the Fund’s Total Member Funds & Reserves, stood at UGX15.4 trillion, which means that the Fund is solvent- has enough assets to cover its liabilities.
Over and above a good investment strategy that has yielded great returns for members, the Fund has also invested in a largely digital-led customer service delivery channels such as self-registration via the mobile phone, interactive voice responses for call-in customers, a Sanyu chatbot to handle customer queries online and automated queue management for walk-in customers.
Thanks to increased investment in e-channels, the number of walk-in customers has reduced significantly from 38% in July 2019 to 5% in June 2021. On the other hand, the percentage of customers being served via e-channels has increased from 62% to 95% in the same period.
According to Richard, over and above meeting its financial targets, the Fund is also on course to achieve other non-financial targets such as turnaround time.
“Turnaround time has been improving- averaging between 8-9 days from FY2015/16, despite the number of claiming beneficiaries nearly doubling, from 15,000 to 28,000. A new Pensions administration System has been deployed and the 1-Day turnaround shall be achieved,” says Richard.
“This will be aided by the adoption of machine learning in our data cleaning and so far, the results are promising— our data quality index has improved from 76% (in 2018/19) to 85%. The optimization of our queue management and call centre, as well as the shortening of the verification process for smaller claims, will help us to focus on achieving our 1-day turnaround time,” Richard optimistically says.
“COVID-19 has affected our employers and some of our members have lost work. As a Fund, we have also seen a reduction in the rate of growth of contributions from 17% to 8% over the past 10 years. However, the Fund is resilient and continues to create value for members. The future is about making your savings count for a better life (investments, insurance, affordable homes, great benefits) while still securing a better life,” he concludes.