Savers with the National Social Security Fund (NSSF) are eagerly awaiting the announcement of this year’s interest rate, scheduled for next Wednesday. The hope among NSSF members is that the interest rate for the upcoming financial year will exceed last year’s offering.
This development comes in the wake of recent controversies surrounding the NSSF, including allegations of mismanagement involving the former managing director, Mr. Richard Byarugaba, and the Minister of Gender, Labour and Social Development, Ms. Betty Amongi. Additionally, the parliamentary Committee on Trade and the Inspector General of Government conducted a probe into the Fund’s management and operations.
As members of the NSSF anticipate the forthcoming announcement, the interest rate remains contingent on the performance of the Fund, akin to any other business. Mr. Dan Okanya, the head of policy and research at the Federation of Uganda Employers, believes that the interest rate should be higher this year due to improved business conditions.
Mr. Okanya explained that a higher interest rate signifies growth in the Fund’s investments during this period of economic recovery. He stressed the importance of the interest rate exceeding the inflation rate to account for inflation’s impact.
The NSSF released a statement on September 17, inviting members to its Annual Members Meeting, where the audited accounts and performance of the Fund for the past financial year will be reviewed. This meeting will also include the highly anticipated announcement of the interest rate for the fiscal year 2022/23.
In the previous financial year, the NSSF declared an interest rate of 9.5 percent, a decrease from the 12.5 percent declared in the previous year, marking the lowest interest rate in recent years. Mr. Byarugaba attributed this decline to factors such as reallocating investments from long-term to short-term fixed income instruments to ensure mid-term payouts, inflation pressures, and global economic turbulence.
During the last financial year, member contributions increased by 9 percent, rising from Shs1.3 trillion to Shs1.48 trillion. This growth was primarily driven by the payment of arrears, new member registrations, and the reactivation of employer accounts.
Usher Wilson Owere, the Chairman General of the National Organisation of Trade Union (Notu), emphasized the need for careful management of the NSSF, emphasizing that the Fund has grown significantly over the years, from Shs1.7 trillion in 2009 to nearly Shs18 trillion. Mr. Owere underscored the importance of keeping political interference at bay and allowing professionals to manage the Fund effectively.
While acknowledging past controversies involving the Fund, Mr. Owere stated that the Ministry of Finance, a joint supervisor of the Fund, has not interfered with its management.