For the umpteenth time the management of NSSF has been hauled before a parliamentary committee.
Parliament wants to probe the NSSF’s investment in Umeme shares and also alleged irregular recruitments into the fund. For good measure they asked finance officials for the results of the ongoing recruitment of a new managing director. Finance officials had the presence of mind to tell the snoops the process was ongoing and therefore they were unable to speak on the subject. As if the MPs didn’t know, or did they?
Reports of the proceedings show the probe is in danger of degenerating into a farce.
Whenever MPs institute a probe I feel sorry for the people under probe, lament the lost tax payer money that is going to go into it and I am certain that nothing good comes of these probes, oftentimes the committees over stretch their mandate, making recommendations allowing for no useful action to be derived from the whole fanfare.
Of course the drama during the probe makes for good reading, but little else.
As a member of the NSSF, looking forward to benefiting from all the savings I have made during my working life, I do not appreciate the MPs unnecessary interest in the Fund.
It would be ok if they knew what they were probing but when an MP jumps up and criticises the buying into Umeme as risky venture, I really wonder. All investment is risky. The question when getting into the venture is, are the perceived benefits large enough to make the investment worthwhile in spite of the inherent risk.
In fact, I think NSSF and government officials for the benefit of the MPs, are being simplistic in touting the juicy returns NSSF has already seen in terms of appreciation and dividend payout. MPs if they knew anything about investment would be scrutinising NSSF’s investment policy and the process of choosing investments, because after all, a good investment can lose money at first and for long periods of time, before showing its real potential. Ask anyone who bought Safaricom shares in 2008.
This unwarranted scrutiny has the unwanted effect of making the NSSF management second guess their processes. What will end up happening is that the Fund’s management will end up piling their money in lower yielding fixed deposit accounts and government paper just so they fly under parliament’s radar.
This will be disastrous for the returns that I expect on my hard earned savings.
Ideally NSSF should be run by us the savers. We should choose the board, which will choose the management. We own it.
As it is now government oversees the Fund on our behalf. It is understandable why Government wants in on the action, this is a huge pool of resources and the political fallout could be massive were the management to collapse the Fund. They are not necessarily thinking of us.
In an effort to prevent this worst case scenario government wraps the Fund’s management in so many layers of bureaucratic red tape often to the point of paralysis.
In the process, just like the MPs incessant sniping, the eventual returns on my money suffer, if for instance NSSF fails to get in on a time bound investment because it is having to jump through hoops to get government approvals.
Given the current environment whoever heads the Fund will always be operating in less than an ideal environment. It is unfair for us the savers to expect NSSF’s management to show world class returns or for government to expect them to play the transformative role in the economy they are capable. In fact when liberlisation comes around NSSF will be so badly hobbled as to offer little to no real competition to the new private players.
So the unintended consequence of allegedly trying to safeguard our savings and also not have too much money repatriated abroad will be to cause loss of the earning power of our savings and send our money abroad to develop other countries.
The solution is obvious.
Liquidate NSSF, disband the Fund.
Pay the workers what is due to them or if we are so concerned about the workers’ social security (never mind evidence to the contrary), parcel out the savings directly to benefit schemes of their choice and regulate those at arm’s length.
Put us out of our misery, spare us the grandstanding of the MPs -- who are not savers with NSSF.
Incidentally what’s good for goose is not good for the gander. While the MPs private provident fund was pigging out on Umeme shares they think us NSSF savers should not invest in the power distributor. Clearly they are not raising these objections for our benefit.