Uganda’s NSSF suffers Shs598b loss in targeted growth 

Foreign exchange losses and unrealised income due to equity investments saw Uganda’s National Social Security Fund (NSSF) post a lower than targeted growth in the size of the Fund for the period ended March, financial results released yesterday indicate. 

The Fund, which reported a 7.6 percent expansion in total assets to Shs18.14 trillion from Shs16.86 trillion during the period, indicated that the growth was, however, 2 percent lower than projected, mainly because of unrealised foreign exchange losses, which stood at Shs598b. 

This, NSSF noted, was due to a combination of a losses of Shs562.6b resulting from the depreciation of Kenya shilling against the Uganda shilling, while capital losses stood at Shs35.8b, mainly due to low returns from equity investments. 

“We have posted unrealised losses of [Shs598b for the period ended March. This is a combination of FX [foreign exchange] loss[es] of Shs562.6b mainly driven by the depreciation of the KES [Kenya shilling] and capital losses of Shs35.8b from our equity investments,” notes published along the financial results indicated. 

The Kenya shilling has been volatile against major currencies, experiencing a 25 percent decline against the dollar between 2020 and January 2023, according to Business Daily. 

The unit has also exhibited a weak stance against the Uganda shilling, closing yesterday at Ksh27.45 against a high of Ksh29 in January last year.   

However, NSSF noted that high yields in government securities across East Africa returned an impressive growth in interest income. 

NSSF generates 78 percent of its earnings from fixed income, 15 percent from equities and 7 percent in real estate.

During the period, interest income, which makes up 98 percent of total Fund income, grew by 14 percent from Shs1.336 trillion to Shs1.522 trillion, due to increased investment in government bonds in the region.

Member contributions grew by 20 percent to Shs1.22 from Shs1.02 trillion, which was slightly above target by 0.5 percent.  Member payments grew above target by 19 percent to Shs846b and 31 percent above Shs773b, which was paid in the same period in 2021. 

The growth was largely due to mid-term benefits payout, which NSSF commenced in March 2022. During the period, to March 2023, the Fund noted, Shs161b had been paid out so far. 

The Fund also reported improvements in compliance levels from 47 percent in the previous period to 53 percent, which helped the Fund to on-board 114,858 members compared to 87,619 members in the same period in 2021, while employer registration almost doubled from 2,026 to 4,003. 

However, NSSF reported a decline in dividend income, which as of December 2023 fell to Shs56.8b compared to Shs67.7b in the same period in 2021. 

Cost of administration slightly increased by 0.98 percent from 0.94 percent while total costs rose to Shs132.7b from Shs118.9b.

Investment in properties rose to Shs741.1b from Shs719.8b while capital work in progress stood at Shs347.3b from Shs500.7b.

Deposit with banks declined to Shs100.1b from Shs326.3b in the same period in 2021.