The National Social Security Fund (NSSF) has said they are unlikely to pay members a double-digit interest rate due to the impact on the COVID-19 pandemic on its operations.
In a virtual conference with journalists today, NSSF Managing Director Richard Byarugaba said that the economic downturn in Uganda and East Africa resulting from the impact of the pandemic affected the Fund’s operations in the last 2 quarters of Financial Year 2019/2020.
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“The economy contracted by 3.2% in the second quarter of 2020 and economic growth
projections dropped to 3% to 4.0% compared to 5.2% in the previous Financial Year. The
Fund’s operations were also affected. The stock market gains in the first 2 quarters of the
year were wiped out by the end of the year,” Byarugaba said.
“In addition, we were also affected by the Uganda currency movement in relation to other
major currencies; and the directive by the Central Bank to hold back dividend payments by
commercial banks. All combined to affect the fund’s performance last financial year.”
“Given the operating environment we faced, we may not be in position to pay a double-digit
interest rate on members’ savings for the Financial Year 2019/2020.”
The Minister of Finance, Planning and Economic Development Matia Kasaija will declare the annual interest rate on Monday, September 28, 2020 at the fund’s annual members’ meeting in line with the NSSF Act.
Last year, NSSF paid 11% interest rate, and 15% the previous year but last paid a single-digit interest rate nine years ago in the financial year 2010/2011.
Due to COVID-19 Standard Operating Procedures (SOPs), the fund will hold a virtual
meeting.
In spite of the anticipated low interest rate, Byarugaba reassured contributors that the
whatever rate the minister declares, it will still be very competitive, above the 10 -year average rate of inflation.
“We will also keep the promise made to our members when we launched our 10-year
Strategic Plan; which is to pay at least the 10-year average rate of inflation plus 2
percentage points.”
He also said that the fund is resilient and will in the medium to long term shake off the
effects of COVID-19.
“Our resilience is evidenced by the fact that in spite of the economic downturn and the effect
on our operations, the fund’s assets under management registered a 17% growth from shs 11.3 trillion to UGX 13.38 trillion. Our upward trajectory towards achieving at asset base of shs 20 trillion by 2025 is not in doubt,” he said.
Byarugaba also said that at a time when businesses have barely grown, when many businesses across the globe are focused on survival rather than growth; consolidation rather than expansion, the Fund has withstood the shocks.
“We have delicately balanced the risk-return equation to ensure that we add value to our
members’ savings.”
