Uganda's state controlled social security fund has come under pressure from falling interest rates earned on treasury bonds and toxic stockmarket conditions.

Declining yields earned on treasury bonds slowed down overall growth in total revenues earned by the National Social Security Fund (NSSF) between July 2018 and June 2019.

Weighted interest rates earned on Ugandan treasury bonds fell from 15.6 per cent in 2017/18 to 14 per cent in 2018/19 financial year while indicative rates for treasury bills dropped to around 8.8 per cent during the same period, according to data provided by the Ministry of Finance, Planning and Economic Development.

Steady declines in interest rates earned on treasury bills and bonds are attributed to loose monetary policy adopted by Bank of Uganda since 2018 in a desperate effort to boost economic growth and consumer demand.

Fixed income assets such as treasury bonds, corporate bonds and fixed deposits placed in commercial banks account for the largest share of the Fund’s assets while NSSF Uganda holds a 40 per cent share of outstanding treasury bonds issued by government. Total income generated by the fund’s assets grew modestly from Ush1.05 trillion ($283.7 million) in 2017/18 to Ush1.26 trillion ($340.5 million) according to latest financial results released by NSSF Uganda.

The Fund’s total assets grew to Ush11.3 trillion ($3.05 billion) at the end of June 2019 while annual collections rose to Ush1.208 trillion ($227.8 million) during the period under review.