Uganda NSSF savers expect higher interest rate

Tuesday September 19 2023

L-R: Former NSSF managing director Richard Byarugaba, Minister of Finance in-charge of General Duties Henry Musasazi and Minister for Gender, Labour and Social Development Betty Amongi during the 10th NSSF Annual Members Meeting in Kampala, Uganda on September 28, 2022. PHOTO | FILE


Savers with the Uganda National Social Security Fund (NSSF) are hoping that this year’s interest rate, which the fund said will be announced next Wednesday, will be higher than what was offered last year.

The announcement follows scandals that rocked the fund between the Minister of Gender, Labour and Social Development Betty Amongi, and Richard Byarugaba, NSSF former managing director, over allegations of mismanagement of the fund.

Read: MPs find ‘rot’ in Uganda’s NSSF

There was also a probe into the Fund’s management and operations by the parliamentary Committee on Trade and the Inspector General of Government (IGG).  

The MPs recommended that Byarugaba and Head of Finance Stevens Mwanje should refund a total of Ush4.4 billion ($1.12 million) in equal instalments for the loss occasioned to the Fund when they authorised irregular payments to staff who exited under the voluntary early retirement programme within six months.

As NSSF members await the announcement next week, it can go either way since the interest rate depends on the performance of the scheme, which is like any other business.


Dan Okanya, the head of policy and research at the Federation of Uganda Employers, told the Daily Monitor on Monday that in his own view, the interest rate should be higher than the one of the last financial year because there has been a business recovery.

"The economy and the businesses are still in recovery, but it is now much better than last financial year, so I expect a higher rate of more than 9.5 percent given the fact that things are now much better but still not higher than 12 percent,” he said.

Read: Uganda policy rate cut gives shocks and optimism

Okanya explained that a higher rate is better because it depicts a sign of the growth of the fund’s investment in time of recovery which is taking place in all the sectors of the economy. 

However, he said the NSSF scheme is like any other business where there are profits and losses, and its interest rate depends on how it has performed.

“What is very important is that the interest rate declared above the inflation rate is reasonably good because when it is higher than the inflation rate it caters for the inflation impact,” he said.

In its September 17 statement, NSSF said, “We are thrilled to invite you to our upcoming Annual Members Meeting where we will come together virtually to review the Fund’s audited accounts and performance for the past financial year, communicate the exciting developments at the Fund, and the eagerly anticipated announcement of the interest rate for FY 2022/23.”

The fund declared an interest rate of 9.5 percent in the financial year 2021/2022 down from 12.5 percent it declared in the previous year and the lowest in recent years.

The then NSSF managing director, Mr Byarugaba said the decline in the 12.5 percent interest rate paid the previous year was mainly attributed to the reallocation of investment in long-term to short-term fixed income instruments to provide liquidity for mid-term payouts, inflation pressures and spillovers from turbulence in the global economy.

In the last financial year, member contributions increased by 9 percent from Ush1.3 trillion ($348.1 million) to Ush1.48 trillion ($396.3 million). The growth in contributions was mainly driven by the payment of arrears, new member registrations and reactivation of employer accounts.

Read: Uganda pension grows its key assets by $400m post-Covid

The National Organisation of Trade Union (Notu) Chairman General Usher Wilson Owere on Monday told the Daily Monitor that the NSSF has gone through a lot of challenges and needs to be handled with a lot of care because money hates noise.

“We cannot speculate on the interest rate that is going to be declared, we are waiting for the interest rate to be declared, the most important thing is the NSSF has been well managed. In 2009, the NSSF had only Ush1.7 trillion ($455.2 million) but now it is close to Ush18 trillion ($4.82 billion), which reflects a good management system in the fund by those who have been managing it,” he said.

“The NSSF should be free of political inference because it is being managed by professionals, who know what they are doing; the minister of Gender, Labour and Social Development and politicians should get their hands off the NSSF,” he added.

He further said while there have been scandals between the fund and the Ministry of Gender, the Ministry of Finance, joint supervisors of the fund, it has not “interfered with the management of the NSSF.