Tuesday, July 23, 2013


Let me start by declaring my interest in the subject.

I am a contributing member of the National Social Security Fund (NSSF) and have been most of my working life. I don’t care what the fund does as long as it can grow my money year after year.

The management team led by Richard Byarugaba, paid me 10% on my savings and pledged to hold my returns above the average inflation rate of the previous ten years. They managed to do this thanks to improved returns in their investing and a restructuring of their operations that has made them leaner and more cost effective.

Having been in office for the last three years (why do they have three year contracts and not five like everybody else?) – the first two of course spent cleaning up the mess they found there, and having performed well during the period, my jaw hit the floor when I learnt that the finance ministry was not going to renew their contracts. In fact finance minister Maria Kiwanuka was going to advertise the top management jobs and the current crop are free to reapply!

“After due consultations within the ministry, I strongly recommend [that] all senior positions up to and including the managing director should be advertised internationally,” Kiwanuka wrote to the NSSF board.

I am sure it’s within the minister’s right to do what she has done but knowing what disruption happens when there is a change of management, particularly at NSSF, I wonder whether she is acting in my best interests.

According to media reports the minister was taking this action in light of recent allegations of mismanagement leveled against the current management and lodged with the IGG.

I have seen the allegations by the anonymous whistleblower, which range from alleged fraudulent land acquisitions to charges that management set its own salary to questioning the mobile phone bills.

Interestingly certain actions that are being investigated are not the fault of the current management.

The disposal of a piece of land in Namirembe is a case in point. The half-acre piece of land, which was bought at sh650m, a price significantly above the valuation price when it was bought in 2008, has no access road and is surrounded by the land of a prospective buyer. Management with the approval of the board approved the disposal but unfortunately current valuations have only just caught up with the price at which the fund bought it five years ago.

On the surface of it the decision is between selling it now and make a real loss but unlock the cash for use on alternative investment or retain the plot until it appreciates so you can record a profit. If you are a prudent businessman you would opt for the former but if you are a politician the latter would be more favourable.

The IGG should and must investigate the allegations and get to the bottom of the matter. But to use the IGG’s investigation as a reason to not extend the NSSF’s management’s contract seems to me like overkill. What happened to being innocent until being proven guilty? For a bystander the automatic assumption is that while the IGG might still be investigating or compiling the final report, the minister knows something the rest of us don’t.

Maybe the prudent thing would be for the IGG to investigate and report on the matter and if the management is found lacking then action can be taken against them even if it’s on the second day of their new contract.

Given too that the management have explained themselves to the board who have recommended and extension of their contract … Frankly it all doesn’t add up.

NSSF is the biggest financial institution in this country with more than three trillion shillings under management, the interest in controlling it should come as no surprise. But this musical chairs of management teams, whichever way you look at it just doesn’t augur well for the continuity that is badly needed in the management of long term funds.

NSSF’s it seems will retain its reputation as the graveyard of careers. Unnecessarily so this time, I think.

But what do I know, I am just a lowly saver trying to get the best deal for my hard earned savings.

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