The minister of Finance Maria Kiwanuka on Wednesday announced the reappointment of Richard Byarugaba as the managing director of National Social Security Fund (NSSF), after more than a year of scouting for the right person to take over Uganda’s biggest financial institution.
The announcement came as a surprise to the market, considering Byarugaba’s contract was not renewed after his three-year tenure at the fund. Geraldine Ssali, who was then Byarugaba’s deputy, and managed the fund during this interim period, has been reappointed as deputy managing director. Richard Wabwire Wejuli, who formerly worked in the legal departments at British American Tobacco and Uganda Breweries Limited, is the new corporation secretary for the fund.
Some analysts say Byarugaba proved his potential and deserves the job. Dr Fred Muhumuza, an economist and senior manager at audit firm KPMG, told The Observer that given the fact that Byarugaba made it to the shortlist of the top three, and his track record while at the fund, he was deserved the job. “Definitely his contribution was completely visible,” Muhumuza said.
One of Byarugaba’s contributions was his investment in Umeme, which remains controversial, but one that has generated billions of shillings for the fund. Unlike the past two MDs before him, who were thrown out of the fund after a spate of scandals, Byarugaba managed to run down his three-year contract even though he, too, had been accused of financial irregularities by a whistle-blower.
Red Pepper, a local tabloid, however reported that President Yoweri Museveni intervened after the fund had gone more than a year without a permanent managing director and directed Kiwanuka to announce an appointment soon. When Byarugaba took over NSSF in 2010, he found the interest rate paid on workers’ savings at a paltry three per cent.
Two years later, he announced a ten per cent rate. This year, the rate has shot up to 11.5 per cent, although it remains below David Chandi Jamwa’s 14 per cent in 2008. As he prepares to join the fund, Byarugaba will be expected to raise the interest rate to a new high, although he will meet a stringent procurement process that has held back investments.
He also comes at a time when the country is about to liberalise the pension industry, which could eat into NSSF’s revenues. While presenting a paper at an investment forum in London recently, Minister Kiwanuka said 67 per cent of the eligible savings, to be collected under NSSF Act, were not being collected.
“Only 10,000 companies out of about 30,000 eligible firms [are contributing to NSSF],” Kiwanuka said. “If about 90 per cent of what is eligible for collection, under the current NSSF Act, was collected, the new savings would be Shs 11.28tn in ten years.” This shortage in collection is what the private pension schemes will be targeting when the market is fully liberalized.
The law to liberalise the pension sector is in the final stages with a parliamentary committee on social security making a final scrutiny to the bill. It is expected to pass into law by the early next year, and could break NSSF’s monopoly in the sector. NSSF will need a better strategy to stave off any competition from the new pension schemes.
KPMG’s Muhumuza said: “Customer satisfaction is expected. People must know what is happening to their money. Also, a new dimension, which is the marketing aspect, must be introduced in the liberalised market.”
As of June 2014, the fund’s asset value hit the Shs4.4tn mark, becoming the largest source of non-bank finance in East Africa, according to the NSSF statement. Ivan Kyayonka, the board chairman, told the members meeting on Tuesday at Sheraton hotel that they targeted to grow the assets to Shs 6tn by 2017.
Byarugaba has worked at most top banks in the country, including Standard Chartered bank, where he served as executive director for Finance in 1992. Later, he worked at Nile bank, serving as its managing director, before Barclays bank bought it in 2007.
Under his watch, Nile bank became one of the biggest local banks in the country, with a wider outreach that went deep into the retail market. After the takeover by Barclays bank, Byarugaba served as the chief operations officer for the new shareholders.
In 2008, Byarugaba became the managing director for the now defunct Global Trust bank. And in April 2010, he was appointed the managing director of NSSF. Recently, he had been appointed the CEO of a technology firm called Afrimax.