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NSSF Interest Rate Shrinks to 10.75% as Member Contributions Drop

The National Social Security Fund (NSSF) has announced it will be paying out a 10.75% interest to its savers for the year 2019/20.

The Minister of Finance Hon Matia Kasaija made the announcement this morning at the NSSF Annual Members Meeting in Kampala.

The new rate, according to the minister translates to Shs 1.14 trillion which will be paid out to savers this year.

It is also a slight drop from 11% which was announced last year, and 15% which was paid out in 2018.

However, the 10.75% interest does beats expectations of several analysts, given the economic situation that has been precipitated by the Covid19 pandemic that ravaged the Ugandan and global economy.

Just last week, the NSSF Managing Director Mr Richard Byarugaba had projected that this year’s rate was likely to be single digit.

Speaking at the AMM today, Mr Byarugaba said the Covid19 situation had significantly hurt the Fund’s collections.

“We were among others affected by that decision by the Central Bank to ask commercial banks to suspend payment of dividends indefinitely,” he said.

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“Last year we made about Shs 77bn from dividends and that has drastically dropped to 66 bn because of that Central Bank decision.”

Over the years, Byarugaba said the NSSF collections had been growing at an average of 14%, which has now dropped to 5% this year as a result of the pandemic.

Overall, since March, Uganda’s economy which was projected to grow at 6 percent, is now at around 3%.

However, Mr Byarugaba expressed optimism that the Fund whose assets now stand at 13.3trillion will continue to grow despite the environment.

“We remain on course to deliver our strategic goals and we expect to hit our target of 20trillion by 2025,” he said.

On his part, Minister Kasaija appealed to Ugandans to cut on their habit of extravagant expenditure and embrace the culture of saving.

“You find that someone has 50 dresses in wardrobe and she hasn’t worn some in 3 years. What for? Why not save that money and rest assured that it will reproduce?”  he said.

Uganda’s saving to GDP ratio currently stands at 21.2% .

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