Savers with the National Social Security Fund will earn a lower interest for the financial year 2019/2020 after the effects of the coronavirus ate into the fund’s revenue streams.
During the fund’s eighth annual members meeting at Kampala Serena hotel on Monday, an interest rate of 10.75 per cent on savings was declared, a slight drop from the 11 per cent a year earlier. The new figure is still above the 10-year average inflation rate of 5.82 per cent, according to figures from Bank of Uganda.
The latest interest rate declaration is not as bad as many had anticipated, pointing to the fund’s efficient allocation of assets that has managed to bring it a handsome return on investment.
“Despite the Covid-19 pandemic that has affected the economy and many businesses, NSSF has remained resilient, meeting its annual business objectives especially in the areas of Assets Under Management that grew by 17 per cent from Shs 11.3 trillion to Shs 13.3 trillion and the total revenue that increased by 17 per cent,” Hon Matia Kasaija, the minister of Finance, Planning and Economic Development, is quoted in a statement after declaring the interest rate.
Richard Byarugaba, the managing director of NSSF, said the fund had shown resilience during these tough times.
“Many businesses both locally and globally are either closing down or seeking solutions for survival rather than expansion. I am happy that the Fund has been able to absorb the shocks as evidenced from our performance,” he said.
The chairman, NSSF Board of Directors, Patrick Kaberenge, reassured members that they have nothing to worry about.
“Despite a tough investment environment characterized by a strong shilling and depressed equity markets, the return earned has remained stable,” he said.
Kasaija used the same event to discuss about the NSSF bill, which has created a lot of public debate.
He said the new bill will expand social security coverage, by making it mandatory for all employers including those who are employing less than five people to remit social security contributions for their workers.
“This bill will also spur economic development by increasing the ratio of savings-to-GDP, which is critical for economic development. Uganda’s ratio of savings-to-GDP stands at 21.2 per cent in 2019; so the bill will enable us increase this ratio,” he said.