File NATION
Investors in the Nairobi bourse. Confidence that the economy will
outperform 2011 and better the pace in 2013 also contributed to the good
performance
Kampala: Uganda's
sole state pension fund said on Wednesday it would start investing in
Kenyan debt and equities and establish a private equity fund to expand
its Ugandan investments into unlisted companies.
The National Social Security Fund (NSSF) is one of the biggest
investors in the country with assets of 2.74 trillion shillings ($1.04
billion) last year, and has about 130 billion shillings to invest every
month from contributions.
Kenya offers a more varied array of established companies to invest in compared to Uganda, said the NSSF's managing director, Richard Byarugaba.
The NSSF already has large holdings of stocks on the Uganda Securities Exchange.
"The main problem NSSF faces is that Uganda
doesn't have a deep equity market so our investment options are
limited, yet we have a lot of cash - about 130 billion shillings in
fresh cash to invest every month," he told reporters.
"So we're working on an idea of setting up a private equity fund that
will be looking at investing in small and medium enterprises and we're
also planning to increase our investments on the Nairobi Stock
Exchange."
The pension fund expanded its assets by 29 percent last year after improving contributions from its members.
All Ugandan
employers with more than five workers are required to remit 15 percent
of each employee's monthly salary to the Fund as social security savings
to be redeemed upon retirement, set at 55 years.
Some struggling employers, however, often fail to remit the worker
contributions and the fund has traditionally struggled to enforce
compliance.
Byarugaba said he had changed the pension fund's investment model,
putting more money into high yielding, longer-term government paper
instead of short-term. The NSSF cut back its deposits in commercial
banks, he said.
"Also, we're planning to start buying Kenyan treasury paper," he said.
Last year, President Yoweri Museveni revealed his government was
looking to borrow about $400 million to finance construction of roads
and Byarugaba said the loan was likely to be budgeted for in the
financial year to June 2014.
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