NSSF income hits Shs342 billion despite low stock market activity

NSSF managing director Richard Byarugaba  

In Summary

NSSF has invested in KCB and Equity Bank on the Nairobi Stock Exchange but a decision by Kenyan President Uhuru Kenyatta in August 2016 to assent to a law capping interest rates dampened investor confidence.

By Mark Keith Muhumuza

Kampala.

The National Social Security Fund (NSSF) has recorded a 26.4 per cent rise in income for the first half of 2016/17 as a result of rising income from fixed income assets.

Fixed income assets include fixed deposit accounts in commercial banks, government securities, and corporate bonds.
The Fund’s income rose to Shs341.6b as at December 2016 from Shs270b over the same period in 2015.

“The Fund did well, even beyond our expectations, because the fixed income assets did very well especially on the side of government securities,” Mr Richard Byarugaba, the NSSF managing director, said in a telephone interview with Daily Monitor yesterday.

The fixed income assets, which mostly generate interest income, rose from Shs313b to Shs386.6b at the end of December 2016, which is a rise of about Shs73b.

NSSF has invested in government securities in Kenya, Tanzania and Uganda.

The Fund’s investment in government securities increased from Shs4 trillion as the end of December 2015 to Shs5 trillion as at end of December 2016.

This meant higher interest income for the Fund.
There were other notable rises in income for the other income segment, which includes foreign exchange gains. The income from rent was nearly flat.

Stock market activity
The Fund, however, suffered a decline in the valuation of its stock market assets. Shs77b wiped off stock market valuation
“The valuation of our equity portfolio declined because of three main reasons. The strength of the dollar was forced investors to evaluate their portfolio in markets like East Africa.

“Secondly, the capping of interest rates in Kenya that affected most of our banking sector stocks. And then there is also the fear around the Kenyan elections,” Mr Byarugaba said.

NSSF has invested in KCB and Equity Bank on the Nairobi Stock Exchange but a decision by Kenyan President Uhuru Kenyatta in August 2016 to assent to a law capping interest rates dampened investor confidence.

The value of their shares dropped about 20 per cent at the end of December 2016. That wiped Shs77b off the NSSF equity portfolio.

mmuhumuza@ug.nationmedia.com