National Social Security Fund(NSSF) has defended the shs11 billion loan extended to Uganda Clays Limited in 2011, saying parliament was wrong to accuse them of irregularly extending the unsecured loan to the company.
Addressing journalists on Monday, NSSF acting Managing Director, Patrick Ayota said being a major shareholder in Uganda Clays, the Fund extended the loan to enable the company expand its operations in eastern Uganda but to also shore it up to become profitable again.
“The Fund considered the risk of letting the company collapse with the Fund’s initial investment against injecting capital to help it survive and return to profitability. The Fund chose the latter,”Ayota said.
“Uganda Clays has since returned to profitability and has already planned to pay back the loan with interest. The company today contributes more than shs1.5 billion a year to NSSF. In fact the action by NSSF helped Uganda Clays to survive, saved more than 1000 jobs and saved the 33% equity that NSSF had made into the company.”
In its report, the parliamentary committee investigating the alleged abuse of office, corruption and mismanagement of the Fund accused NSSF of erroneously guaranteeing an unsecured loan to Uganda Clays Limited without conducting due diligence on its credit worthiness.
The committee said this state of affairs positioned savers’ money at risk.
However, speaking on Monday, the acting NSSF Managing Director accused the parliamentary committee of ignoring useful information regarding this loan that was provided.
Ayota insisted that the loan was extended to Uganda Clays legally , approved by the NSSF board and then the Minister of Finance, adding that by then, the URBRA Act which bars direct loans had not been passed.
“The action at the time was regular and legal. Clearly, doing nothing was more detrimental to workers’ funds than what the Fund did. Somehow, the committee ignored all this information and condemned the Fund for this action.”
Ayota said during the investigation and subsequent report, the parliamentary probe failed to consider information given to it.
He noted that the probe committee ignored the context within which NSSF operates and assumed that it operates like a government ministry.
“We have grown the Fund from shs1.7 trillion to shs18 trillion in just 12 years. We are the only noteworthy mobiliser of a large pool of long-term domestic capital for development funding that has enabled the government to become less reliant on foreign capital. We have consistently grown the value of members’ savings by paying a real return better than our peers in the region.”
“We also have the lowest cost of administration among our peers in the region and global social security funds of our size.”
