Pension funds net $125m in investment returns

Monday July 19 2021
Real estate.

Real estate has attracted the interest of pension funds. PHOTO | FILE | NMG


Uganda’s pension industry registered an increase in assets that has been credited to a growth in new clients, a decline in withdrawal and positive stockmarket performance in the region.

Currently, the industry is holding assets worth Ush16.9 trillion ($4.7 billion) as of end of March 2021, up from Ush16.3 trillion ($4.5 billion) in December 2020. Overall investment incomes also rose to Ush446 billion ($125 million) in March 2021 from Ush419 billion ($117.7 million) in December 2020 inspired by sharp stock market recovery across the region in the first three months of 2021, bargain share prices offered by investors and reasonable capital gains made by active portfolio managers, according to industry players.

The enrolment of Baylor College of Medicine and Exim Bank Uganda Ltd Staff Provident Fund by local fund managers during the first three months of 2021 also boosted industry assets but initial pension contributions related to those clients could not be confirmed by press time. Fixed income portfolio maintained by industry players recorded steady growth inspite of the intense election fever experienced in the first quarter of 2021.

“The regulator also offered a ceiling of 50 percent against members’ withdrawal applications made against one’s pension savings for purposes of clearing Covid-19 Intensive Care Unit treatment bills,” explained Martin Nsubuga, chief executive of Uganda Retirement Benefit Regulatory Authority (URBRA).

By end of March 2021, cash and demand deposits held by local schemes amounted to Ush74.8 billion ($21 million), equivalent to 0.4 percent of total industry assets. The value of government securities stood at Ush12.8 trillion ($3.6 billion), equivalent to 75.9 percent of overall industry assets while listed shares were valued at Ush2.2 trillion ($617.9 million), equivalent to 12.7 percent of pension industry assets.

Immovable property which includes land and houses was valued at Ush1.07 trillion ($300.5 million), equivalent to 6.3 percent of industry assets, URBRA data shows. Regulatory statistics also indicate the weighted annual return posted by equities stood at 8.45 percent at the end of March 2021 compared with 16.3 percent and 10.6 percent registered by fixed income and money market assets during the same period.


“The closure of the election season in January this year encouraged some traders to unwrap part of their cash that had been stored away out of fear of political violence expected after the announcement of presidential election results. But they also realised that many borders were still partly closed at the time because of the Covid-19 pandemic, their businesses were operating below full capacity,” said Owen Kato, general manager at ICEA Investments Uganda Ltd.