UGANDA, Kampala | Real Muloodi News | The National Organisation of Trade Unions (NOTU) has expressed concern about the real estate investments of the National Social Security Fund (NSSF), which it claims do not suit the needs of contributors.
During an investigation into the alleged mismanagement of NSSF, NOTU’s Acting Chairperson General, Musa Okello, called for a review of the USh1.1tn investment in real estate, arguing that the houses built by NSSF in Lubowa, Entebbe Road, costing USh3bn each, were too expensive for contributors.
Okello requested that the construction of affordable houses be recommended to benefit those who contribute to the fund.
He also urged the committee to investigate the nomination of the NSSF Board representatives from the Central Organisation of Free Trade Unions (COFTU), accusing them of self-nomination.
The NSSF Board, led by Dr Peter Kimbowa, also faced questions about a UGX6bn allocation in the Fund’s budget for the Financial Year 2022/23, which was allegedly requested by the Minister of Gender, Labour and Social Development. Kimbowa stated that the Minister’s letter was irregular.
NOTU’s criticism of NSSF’s real estate investments centres on the perceived lack of affordable options for contributors.
According to Okello, the USh1.1tn investment in real estate for the end of the year 2021 is at risk, and workers cannot afford the houses.
Okello’s comments follow reports of NSSF’s construction of houses in Lubowa, Entebbe Road, costing approximately Shs3bn each.
Okello questioned for whom the houses were being built, stating that they were supposed to be investments for contributors who cannot save Shs100m when accessing their savings.
He criticised what he perceived as insensitivity to the needs of workers and called for the construction of affordable houses to provide returns on investments that benefit contributors.
Hon. Fortunate Nantongo (DP, Kyotera District) wondered how investments were implemented if NOTU had representation on the board, adding that she believed the union was consulted.
Hon. Karim Masaba (Indep., Industrial Division Mbale City) encouraged NOTU Board representatives to show a keen interest in the NSSF investment audited accounts.
Committee Chairperson Hon. Mwine Mpaka questioned the role of NOTU in NSSF governance, stating that such decisions were made by the board.
NSSF’s Defence
NSSF’s defence of its real estate investments came from Ag. Managing Director Patrick Ayota, who noted that the Fund’s asset base, contributions, benefits and membership growth had grown steadily over the past 10 years, from annual collections of UGX556 billion in 2010 to UGX1.3 trillion in 2021.
In 2010, the Fund was worth UGX1.7tn in assets under management. As of the end of FY 2021/22, it was UGX17.3tn in assets, a ten-fold growth. As of December 2022, the Fund’s assets stood at UGX18.8tn.
Ayota appeared before the committee alongside the Fund’s senior management team to discuss performance, governance, and stakeholder involvement in the Fund’s decision-making.
He also noted that the Fund has a total of 2.7 million members, with 1.2 million active savers.
Regarding NSSF real estate investments, Ayota also emphasised that the Fund has a diversified investment portfolio that includes real estate, and the investment strategy has been geared towards maximising returns for the benefit of members.
He added that the Fund is currently constructing 17,000 affordable housing units in Nsimbe, Wakiso District, with each unit costing an average of USh200 million. Ayota noted that the project is expected to create over 10,000 jobs and provide affordable housing to low- and middle-income earners.
Ayota also pointed out that the Fund has invested in other key sectors of the economy, such as agriculture, infrastructure, and manufacturing, which have created jobs and boosted economic growth.
He acknowledged that there have been challenges in the management of the Fund, such as the collection of contributions and the payment of benefits, but noted that the Fund has taken steps to address these challenges.
The NSSF Managing Director also called for a review of the NSSF Act to provide for a clear separation of the roles of the Minister of Finance and the NSSF Board.
He noted that the current arrangement, where the Minister of Finance is the appointing authority for the NSSF Board, creates conflicts of interest and undermines the independence of the Fund.
The NSSF and NOTU are both calling for the same thing: investments that benefit the workers who contribute to the Fund.
The NSSF has defended its investments and performance over the past 10 years, while NOTU has called for a re-evaluation of the real estate investments to make them more affordable for the workers.
The Parliamentary Select Committee will have to carefully consider both positions and come up with recommendations that balance the needs of the workers with the need to maximize returns for the Fund.
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