Uganda’s National Social Security Fund (NSSF) has rewarded members with a record 22.53 per cent interest rate for the 2025/26 financial year, crediting Shs 5.44 trillion to their savings.
Behind the headline return lie questions about the sustainability of its investment performance, its heavy exposure to government debt, the returns from its property portfolio, and rising administrative costs.
An examination of the Fund’s financial statements and audit findings raises questions about how effectively members’ savings are being invested, how exposed the portfolio is to market and sovereign risks, and whether weaknesses in property management could create additional financial and legal liabilities.
The Fund’s treatment of certain loans, investment valuations and recent acquisitions warrants closer scrutiny of risk management, investment performance and the transparency of decisions affecting members’ savings.
GOVERNMENT BONDS
NSSF’s 22.53 per cent gain is heavily driven by unrealized fair value gains, which are essentially on-paper valuation adjustments. Because these profits are dictated by shifting market conditions, they could be completely erased if asset values drop in future cycles.
Some of these gains stem from Kenyan-listed equities, including Safaricom, Equity Group Holdings, and KCB. While these investments offer NSSF opportunities for regional diversification and growth, they do not directly channel investment into Uganda’s relatively illiquid stock market.
Looking ahead, NSSF’s baseline performance benchmark for FY 26/27 is 13.5 percent. While members might expect a repeat of the current record payout, such market-driven spikes are historically volatile and unlikely to recur immediately.
Furthermore, 76.5 percent of the Fund’s portfolio remains locked in government bonds, exposing NSSF to intense concentration risk. Persistent inflation threatens to erode the real value of these fixed-income returns if bond yields fail to outpace rising prices.
This heavy reliance also leaves the Fund deeply vulnerable to shifts in state borrowing policies and interest rate environments. A slight reduction in the coupon rates on these government securities could significantly reduce NSSF’s interest income over time, potentially lowering its overall revenue.
While a sovereign debt restructuring remains highly unlikely at present, the underlying credit risk is real: the 2021 Joint World Bank–IMF Debt Sustainability Analysis already downgraded Uganda from a low-risk rating to a moderate risk of public debt distress.
REAL ESTATE
NSSF’s real estate portfolio raises questions about income generation relative to its asset value. As of June 2026, the portfolio was valued at Shs 1.655 trillion but generated real estate income of Shs 16 billion, down 3.9% from Shs 16.64 billion in the previous financial year.
The portfolio delivered a return of approximately 3.2%, largely supported by revaluation gains. The return on investment for this asset class is low. The Auditor General’s 2025/2026 report notes mismatches in the acreage of the Fund’s land holdings.
In his report, the Auditor General noted, “During the audit, I noted that some land titles had caveats, ownership claims, special certificates, boundary overlaps, public access road reservations, encroachments, and occupation by squatters or neighbouring users.”
The Auditor General further pointed out a physical-to-book mismatch in selected real estate assets. While land titles accounted for a total of 820.96 acres, actual on-the-ground surveys measured just 814.83 acres, exposing a net variance of 6.12 missing acres.
The audit findings raise fresh questions about the management of NSSF’s land portfolio, particularly in light of the Fund’s previously reported land disputes, including those associated with Temangalo and Lubowa.
The extent to which the identified discrepancies could lead to litigation, financial losses or restrictions on the use of affected properties remain to be fully quantified.
KAMPALA MARRIOTT HOTEL & EXECUTIVE APARTMENTS
During the financial year ended 30 June 2026, the Fund acquired a 30 per cent equity stake in CS Hospitality Limited, which operates the Kampala Marriott Hotel and Apartments.
The investment cost NSSF $50 million following a year of extensive board review according to public updates. In 2007, the Fund acquired a 20 per cent shareholding in Kampala Serena Hotel for $1.95 million (Shs 3.5 billion).
By the year ended June 2026, the market value of this stake had risen to Shs 8 billion. This represents a compound annual growth rate (CAGR) of 4.45 per cent over 19 years, which is below the average inflation rate and implies a low or negative real return.
The investment’s performance also falls significantly short of NSSF’s overall performance. Over the period in which the Fund has held this stake, annual dividends have declined from Shs 419.7 million in FY 2018/19 to Shs 248 million in FY 2025/26.
The declining dividends from the Serena investment raise questions about how NSSF assessed the risks and expected returns of its subsequent investment in the Kampala Marriott Hotel and Executive Apartments.
The Fund must clarify why it is doubling down on a historically low-yielding sector by investing in an unproven, newly constructed asset.
UGANDA CLAYS LIMITED
NSSF holds a 32.52 percent stake in Uganda Clays Limited. In 2010, the Fund extended a loan of Shs 11.05 billion to the company.
In 2025, the loan was restructured to Shs 20 billion, leaving the Fund with an unsecured exposure of Shs 9.6 billion in the event of default under the restructured loan. Uganda Clays has mostly been unprofitable, even failing to service its loan to NSSF.
This is not the financial profile of a company that can comfortably support a large, unsecured loan. According to NSSF’s audited statements for FY 2025/26, Uganda Clays Limited owes NSSF Shs 25.214 billion.
The continued investment in Uganda Clays, alongside the company’s reported financial difficulties and outstanding obligations, raises questions about NSSF’s investment strategy, loan-recovery efforts and criteria for retaining underperforming investments.
OPERATION/ADMINISTRATIVE COSTS
Operation costs rose by 20 percent in the financial year ended June 2026 to Shs 275 billion from Shs 228 billion the previous year. Administrative expenses rose by Shs 32.5 billion in one financial year, from Shs 164.9 billion to Shs 197.5 billion.
Employee benefits alone went up by Shs 12 billion. Telephone, fax, telex, and postal bills totalled Shs 1.2 billion, yet NSSF states in its report that 98 percent of member interactions are digital.
Over the ten-year period from FY 2015/16 to FY 2024/25, NSSF’s costs grew at a compound annual growth rate of approximately 13%, compared with approximately 12% for collections.
This means that the Fund’s costs are compounding faster than members’ collections, and take a bigger slice of contributions over time. Patrick Ayota, the Fund’s managing director, and Kenneth Owera, its chief investment officer, were sent questions about the Fund’s investment decisions by email on October 11.
Mr. Ayota was sent a follow-up text message on October 15. Neither had responded by the time of publication. David Chandi Jamwa, a former managing director of NSSF and a former PwC partner who now runs D. Craven Consulting Limited, an investment advisory firm, said the Fund’s heavy reliance on government securities carries significant risks.
JAMWA STATED:
“NSSF Uganda’s heavy reliance on government securities, which account for almost 80% of its Shs 32.8 trillion investment portfolio, exposes members’ savings to significant financial and strategic risks.
Although Treasury bills and bonds offer relatively predictable returns, excessive concentration creates vulnerabilities, including interest rate fluctuations, reinvestment risks, liquidity constraints, limited diversification and sovereign credit risk.
“Falling bond yields could reduce future investment income, making it increasingly difficult for the Fund to sustain attractive returns for savers.
Furthermore, overdependence on government debt limits opportunities to benefit from growth in equities, private enterprises and other productive sectors. Heavy exposure also increases vulnerability to government fiscal pressures, political influence and potential debt restructuring.
“To safeguard members’ savings and strengthen long-term returns, NSSF should progressively diversify its investments across African markets, private equity and carefully selected infrastructure projects. A balanced portfolio would improve resilience, enhance growth opportunities and reduce excessive dependence on domestic government securities, supporting the Fund’s long-term sustainability and its ability to meet members’ retirement obligations.”
Jamwa continued to assert that provided that the members’ fund balance—consisting of their capital and accrued interest—was steadily increasing, members’ overall wealth was expanding alongside it. As it presently is for NSSF.
The Fund’s governance sits between two ministries. Its board is appointed by the Minister of Gender, Labour and Social Development, and investment decisions are taken by the board in consultation with the Minister of Finance, Planning and Economic Development, who also declares the annual interest rate.
The test is whether the Fund can show that its heavy allocation to government securities, and any move into state projects, reflects its own assessment of risk-adjusted returns rather than pressure to act as the State’s financier.