Income from telecom investments, bonds shore up NSSF assets to Shs22 trillion

Telecom investments have shored up NSSF’s income, strengthening the Fund’s assets.

National Social Security Fund (NSSF)'s earnings in the year ended June increased by 15 percent, from Shs2.2 trillion to Shs2.53 trillion, due to a surge in interest, dividend, and real estate incomes.

Data released by NSSF ahead of the annual members meeting indicates that dividend income increased the most for the second year, demonstrating the Fund's well-targeted high-yielding investments in equity markets.

NSSF remains a key player in the stock market and is Uganda’s largest institutional investor in financial markets. 

The Fund holds substantial interests in telecom giants - Airtel, MTN, and Safaricom. 

During the period, NSSF’s dividend income surged by 21 percent, rising from Shs145b in the year ended June 2023 to Shs175b, driven by investments in Airtel and MTN. 

NSSF bought 4.2 billion shares in Airtel for Shs199b last year and increased its stake in MTN to 11.7 percent.

The Fund saw an increase in its earnings from its MTN stake to Shs40.5b from Shs30b the previous year, while Airtel raked in Shs22b.

Other equity incomes included Shs19b from Equity Bank, Shs19b from Safaricom, and Shs10b from Tanzania Breweries Limited.

"This rise in dividend income can be credited to the recovery of equity markets, which had previously experienced a slump in 2022 mostly those in Kenya,” Mr Patrick Ayota, the NSSF managing director, said.

The recovery, which started last year, also worked in the Fund's favour, resulting in Shs255b in year-on-year exchange gains, which rises to Shs300b when fair value adjustments on equities is factored in.

In the year ended June 2023, NSSF lost Shs1.05 trillion to foreign exchange losses largely due to capital flight from regional financial markets and the devaluation of currencies.

However, Mr Gerald Paul Kasaato, the NSSF deputy managing director, said Uganda’s and other regional currencies had stabilised during the period.

“Stock markets across East Africa saw a strong recovery, with positive net foreign investor inflows from Nairobi, Uganda, Rwanda, and DR Congo, the latter experiencing the highest rebound. This upward trend meant the value of stocks the Fund held from the previous year increased,” he said.

Collectively, during the period, NSSF achieved a 20 percent year-on-year return when factoring in both the price movements of equities and dividends received.

NSSF also benefited from bond markets and a slow increase in returns from real estate holdings.

During the period, income from government debt and other fixed-income securities rose from Shs2 trillion to Shs2.34 trillion, while income from investments in real estate projects increased from Shs11.9b to Shs13.3b.

The rebound in fixed income, NSSF said, was due to yields from long-term bonds in the three major East African markets, shored up by attractive interest rates of between 14.78 percent and 17.30 percent.

The improvement in income, therefore, saw the Fund’s total assets under management grow to Shs22.12 trillion from 18.56 trillion as of June 2023.

[email protected]