According to Richard Byarugaba, the Ugandan economy provides fewer investment opportunities that the Fund can partake in order to grow members contributions. He says investment options like infrastructure bonds, corporate notes, increase in public companies on the stock market and long-term government bonds could enable the Fund invest members savings securely.
According to Richard Byarugaba, the Ugandan economy provides fewer investment opportunities that the Fund can partake in order to grow members' contributions.
Over time, NSSF has grown into a formidable Fund with interests in banking, real estate, stocks and bonds, among others.
The Fund is also involved in cross-border investments particularly in Kenya and Tanzania.
As the Fund continues to grow, the managers are increasingly finding it difficult to invest members' contributions which have to attract interests above inflation annually.
Responding to a query from Uganda Radio Network, Byarugaba said NSSF needs to invest in long-term bonds which match the saving profile of its members.
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Byarugaba says investment options like infrastructure bonds, corporate notes, increase in public companies on the stock market and long-term government bonds could enable the Fund invest members' savings securely.
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A corporate bond is a debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations.
Infrastructure bonds, on the other hand, are issued by infrastructure companies approved by the government and they offer a decent rate of interest plus tax benefits.
The implication is that a huge fund like NSSF can fund huge infrastructure projects like dams and roads but would need guarantees in order not to lose workers' hard saved money.
While announcing the NSSF interest rates for 2015/16, the Board Chair, Patrick Byabakama Kaberenge assured workers that they will safeguard their savings by prudently investing in lucrative and less risky ventures.
NSSF has 1.4 million members but only about half are active. The Fund in the last financial year grew by one trillion Shillings, clocking nearly eight trillion Shillings or a third of Uganda's national budget.