The NSSF parliamentary probe is done and dusted. Parliament upheld the report’s recommendations, which among other things called for the resignation of the minister, scrapping of the board and the suspension of management.
"The report – a 562 page tome, is an amazing (I am trying to be polite) piece of work. If it was supposed to unearth impropriety of the management, it failed dismally and instead started clutching at straws. Parliament conducted a fishing expedition that came up short but decided to make drastic recommendations that made for sensational headlines but little much else....
The net effect is that they so muddied the waters, that it
is inconceivable how gender minster Betty Among can continue to work with the
board or management. Though to be fair, the relationship was already toxic and
the committee only served to bring it into the public glare.
One thing that has become apparent to me is that NSSF has
become too big for us. The magnitudes of money being delt with in NSSF we
clearly do not have the band width to comprehend.
Two incidents come to mind.
In the report the committee was alarmed at sh33.3b bonus
payment to staff and aghast at how 85 staff went to Dubai for a team building
exercise that cost sh200m. In respect of this the committee said, “That the board
should be cognizant of their core responsibility, which is to ensure a secure,
profitable and effective financial management for the benefit of the workers ….
Desist from such unnecessary expenditure, which will occasion loss to savers’ Fund.”
I would like to think that the motivation of NSSF staff in
principle is a good thing. And I would like to think as well this motivation has
to have a monetary value.
The trick with designing worker incentives is to link them
to performance, in this case improved return for the members. Ideally if the
enterprise does better than the previous year your bonus should be better, if
you don’t it will be less. And the bonus should be a proportion of the improvement
in performance. That sounds like a good enough principle.
So if for example you work for the Vision Group, which last
year managed a billion shilling profit and say worker bonuses are set at five
percent of profit, then we would share sh50m according to a predetermined
formula.
Using that logic NSSF made surplus of sh1.26trillion in
2021/22 assuming like the example above worker bonuses were five percent of
profit, then NSSF workers would be sharing sh63b among themselves.
What does sh63b look like?
For one it is more than half the Vision Group’s total
revenue of sh100b in 2021/22. So, the knee jerk reaction at the Vision Group
maybe “Shaaa! How can they get all that money as bonus?” But that would be us
at Vision Group thinking from our small perspective.
In short NSSF has become too big for us. It has become so
big that when we view its numbers against our smaller puny reality we think they
must be up to something fishy.
Just to remind you NSSF has almost sh18trillion in assets
under management. To stay with the Vision Group as an example, which has sh122b
in assets, NSSF is nearly 150-times bigger than Vision Group. Basic logic would
dictate that everything – wage bill, profitability, bonuses would reflect this
reality. This is not the fault of the NSSF workers; Ok maybe to the extent that
they worked to make these numbers happen and should therefore should be renumerated
accordingly. You have a problem with that apply for a job at NSSF.
"Incentivising workers is a normal cost of business. The slave trade ended in the 19th century. The MPs should have put aside their shock at the “huge” bonus, asked how it was derived and maybe suggest a change in the formula to fit their perspective, which would be unfair to NSSF workers....
And then my pet peeve is the cost of houses at Lubowa. To
their credit the committee restricted themselves to recommending a value for
money audit of the project. But minister Amongi on the floor of parliament in
her defence brought it up.
She outlined the cost of a three-, four- and five-bedroom
bungalow and asked the house gleefully how a house can cost sh3.2b. She clearly
couldn’t wrap her head around the concept. The speaker Anita Among asked her whether
she had alternative prices for the same properties and the minster had no clue.
Someone helped her with a note, which showed that comparable properties at the Royal
Palm Estate in Butabika were better priced – though they too are outside the
range of the majority of NSSF members.
There are many things that can be faulted with this comparison
not least of all that the locations are different – have you driven on the Port Bell road lately; that Royal Palm was launched
12 years ago – have you tried buying a bag of cement today, you can tick off
the differences.
Somehow the committee queried the unit price of the houses,
the total scope – 2,417 units and cost -- $400m (Sh1.5trillion) was probably
too much for them to handle.
In hindsight maybe NSSF should have anticipated this need
for cheap houses and built the ugly lifeless high rise apartment blocks, which we
see in western capitals, which would have increased the number of units and
maybe brought unit costs down.
NSSF however decided to build high end properties on the
prime Lubowa land and the more affordable housing, which will complain are
still too expensive in Temangalo and eventually Nsimbe estate.
MPs may want to use the opportunity to lower the cost of
mortgages – now not below 10 percent anywhere, lower the cost of development –
infrastructure takes up at least 30 percent of the price and urge government to
underwrite the infrastructure costs of such massive projects, all within their
power to do.
"The truth is we need to upgrade our reality to manage NSSF. And this is a serious issue we have to address ourselves to. NSSF is a modern institution in a pre-industrial country. Either we cut it down to size, since it has galloped far ahead of our reality or we elevate ourselves to appreciate not only what it has become but the Fund’s strategic vision as well to better oversee it well into the future....
I say this on the assumption that our motives are noble and
their no ulterior agendas at play.
