Players in the pensions sector in the country say they’re willing have to in invest in infrastructure development but say the environment in which they operate needs to change.
This comes few days after the Minister for Gender, Labour and Social development, Henry Tumukunde expressed dissatisfaction at the investment practices of the retirement benefits schemes including the National Social Security Fund (NSSF).
“For the kind of volumes we are dealing with, is the best being done to turn it around? This is nine billion dollars, what effect do you have on the economy? Are you helping the economy to” General Henry Tumukunde asked during NSSF’s annual members meeting last week.
“The Money is from contributors. It is supposed to be turned around to its level maximum. But you automatically get the money, you invest it in the most risk-averse ventures, are you helping the economy?”
These sentiments were re-echoed by the state minister for Labour, Employment and Industrial Relations, Simon Mulongo at the inaugural Stanbic Uganda Pensions Conference, organised by SBG Securities, an investment and stock brokerage firm, Thursday.
Uganda’s pension sector now has assets totaling more than 40 trillion shillings or more than 10 billion shillings, which, government and analysts say, would be enough to cater for most of government’s deficit.
Our Tenfold Growth Strategy will not be delivered by Government acting alone.
It requires financial institutions that can provide capital, investment expertise and market infrastructure,” Mulongo said, and urged pension schemes and the financial sector generally to tailor their products for sections of the public which are currently not covered.
Paul Mugerwa, Corporate and Investment Banking Head at Stanbic Bank Uganda says the capital is available and so are the opportunities to invest, but that the terrain may currently not favour pension funds.
He says that one of the characteristics of pension funds is that they prefer to enter into a venture where there is a possibility of easily opting out, when necessary, the reason they prefer short term investments.
Mugerwa adds that with the high returns given on government securities, it is hard for them not to go for that and instead invest in development ventures.
The Uganda Retirement Benefits Authority (URBRA) alongside the Capital Markets Authority are the responsible regulatory bodies of the pension sector and collective investment schemes, with the man aim of ensuring that the savers’ money is safe.
Daisy Nabakooza, the Director Supervision and Market Behaviour at URBRA says the sector has invested most of the money with the government, but that it is invisible because it is not in physical ventures like infrastructure, agriculture or the even the government’s priority growth areas, also known as the ATMS.
She says that the treasury bills and bonds market is already concentrated with investors as other areas outside remain underfunded.
However, she adds, there is need to first streamline the policies to ensure that pension funds will venture in when sure of sustainability, a task that the regulators have started undertaking.
She advises the fund managers are trusts to continue being cautious about investing the savers’ monies even after the guidelines have been put in place, assess the markets before investing in development projects and even know how the risks are spread.
The bulk of the Assets Under Management by the pension sector are dominated by NSSF, with about 34 trillion shillings worth currently.
The Fund also holds about 23 percent of the Uganda’s total public debt, basically through bonds and bills.
Kenneth Owera, the Chief Investment Officer at the Fund, says this shows that the assets are not lying idle but helping government fund its budgetary needs. He also cites the foreign exchange that pension schemes bring in through the investments outside the country.
Owera says that the Fund is ready to invest in development projects if the government can avail the opportunities and make it easy for funds to be attracted to those areas like they are to the financial markets.
The conference also featured the launch of the SBG Securities, expanding its investment management services into the pensions sector.
This service focuses on managing pension assets efficiently and deploying long-term capital into investments that contribute to Uganda’s economic growth, mainly targeting women, youth and farmers.
“Today, we are expanding into pension fund management to mobilise and responsibly steward long-term domestic capital, supporting retirement security and Uganda’s economic growth,” said Mark Ocitti, Executive Director, Stanbic Uganda Holdings Ltd.
Grace Semakula, SBG Securities Uganda Chief Executive assured the Ugandans that the company has over the time-built capacity to do what it takes to grow their investments safely and responsibly.
“We have taken time to build the expertise required to serve Uganda’s investment market…we are ready to take the next step into pension fund management. Pension savings are a vital source of patient capital, and we recognise the responsibility that comes with managing these assets,” he said-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
