OUR PERFORMANCE:
CFO's Financial Review
FY2023/24 was a remarkable year for the Fund, achieving the 20Tn Vision 2025 target ahead of schedule. Despite initial regional economic uncertainty and foreign exchange exposure, the recovery of the Kenyan shilling in February 2024 positively impacted the bottom line, resulting in an unrealised foreign exchange gain. The Fund delivered impressive results on its key performance indicators such as income, contributions, and asset size, showcasing our commitment to sustainable value creation for our members and stakeholders. Our dedicated efforts, strategic foresight, and agile response to market conditions allowed us to maintain a solid performance despite the challenges, underscoring our resilience and long-term focus.
Mr. Stevens Mwanje, Chief Financial Officer
About the Finance Department
Operating at the heart of value creation, the Finance Department is driven towards transforming its scope; a deliberate effort towards becoming an advisory function.
To achieve this vision, the function has defined its strategic objectives across key themes including team finance, data, finance processes, stakeholder management and advisory.
We continue to embrace innovative approaches by leveraging technology to improve processes, empower data-driven insights, and develop a multi-disciplinary agile team.
The NSSF Finance Team
FY2023/24 key highlights
To support value creation across the organisation and contribute to achievement of business goals, the Finance Department Strategic Plan (2024 – 2028) provides for a clear strategic vision, efficient processes, accurate data, skilled team, robust technology, and effective communication in this continuously changing business landscape.
We have made commendable progress in the first year towards becoming a fit-for-purpose and future ready Finance Department that is able to appropriately support the Fund in achieving its Vision 2035 strategy and beyond. Despite facing regulatory changes, uncertain operating and economic environment in FY2023/24, we made notable progress towards this vision, accomplishing the following milestones:
Commitment to ESG
The Fund remains committed to driving action on sustainability, recognising its critical role in fulfilling our mission to improve the lives of our members, customers, and communities. This year we conducted a sustainability materiality assessment including a maturity model with support of an independent consultant, to identify, assess, and prioritise key ESG topics. The findings of this assessment provided a clear roadmap for the prioritisation of our sustainability efforts, allowing us to focus our resources on those areas where we can make the greatest positive impact.
Real time reporting and segmentation
We remain focused on achieving fully insights-driven reporting to support value-adding and timely decision-making. A key accomplishment this year was establishing the structure for segment reporting, aimed at enhancing visibility into the performance of each business unit within the Fund.
Process efficiency
With a strategic focus on aligning with evolving business needs and the operating environment, we continue to enhance operational efficiency through automation and process re-engineering. Key achievements this year include the deployment of Bank Auto Reconciliation and the integration of the Smartlife system, which manages our voluntary portfolio.
Business advisory
In the course of our advisory journey, we have continued to support external entities with Business Development services during the year under the Hi-Innovator programme and also conducted Financial Literacy sessions for the 2023 cohort. Specifically, we supported three entities, St Eliza, Ka cyber and Simply Nature. Business needs addressed this year included business process re-engineering, formulation of a strategic plan, financial and valuation modelling.
Leveraging data analytics for strategic decision-making
We heightened our involvement in conducting comprehensive strategic analyses which offered value to both the Fund and individual stakeholders. This has also enhanced our internal capacity through developing a more skilled and analytical team that can provide sophisticated advisory services to the organisation.
Employee development and upskilling the team
We intensified a significant initiative this year to upskill, raise awareness and foster interest in emerging technologies like AI, Data Analytics, Business Intelligence, etc. We also implemented several measures aimed at providing opportunities for professional growth including promotions and movement to other departments within the Fund.
Reporting awards
We remained steadfast in our commitment to financial excellence, supporting the Fund towards achieving its strategic objectives.
This commitment to excellence was recognised through various prestigious awards, both locally and regionally.
Noteworthy awards received during the year include:
Locally, NSSF won five accolades at the 2023 13th edition of the Financial Reporting Awards (FiRe) by the Institute of Certified Public Accountants Uganda (ICPAU):
This is critical in demonstrating transparency and accountability to our members, government, and all other stakeholders.
The Finance Function remains committed to sustaining excellence while continuously adapting to the changing operating environment.
FY2024/25 key initiatives and priorities
Talent development and succession planning: We remain focused on staff training and upskilling across the four critical categories: technical skills, professional knowledge, strategic awareness and leadership capabilities. This will be designed to ensure a knowledgeable and multi-disciplinary agile team that can effectively support the Fund’s objectives with requisite skills for the future.
Efficiency: Inspired by innovation, several projects are underway to implement automation and process enhancements, including the rollout of a new ERP, scaling of Robotic Process Automation (RPA), and deploying a visual database design tool. These initiatives aim to leverage technology to streamline critical business processes.
Additionally, we are improving cost efficiency through the implementation of Value Proposition Budgeting, which enhances the alignment between administrative costs and strategic initiatives.
Business advisor: The department is committed to providing expertise and support across various areas of the Fund in FY2024/25. We will continue providing financial literacy sessions, offering business development services to selected businesses under the Hi-Innovator programme, and delivering tax advisory support, particularly to contracts committees and procurement teams, among others.
Sustainability: In line with our commitment to creating shared value for sustainable growth, we are prioritising the development of an ESG framework for the Fund. This includes establishing an ESG function to drive sustainability initiatives and creating a robust system for tracking and reporting our ESG performance.
Looking ahead, we are excited at the prospect of continuous change through capitalising on the needs of our members and the opportunities presented to the Fund by the NSSF Act Cap 2030. With our expanded mandate, we aim to deliver sustainable value to our members and stakeholders.
The economic environment impact on the Fund
Economic activity remained resilient despite multiple successive shocks. The external current account balance is estimated to have remained relatively stable, but a decline in foreign exchange reserves, along with rising portfolio outflows, increased depreciation pressure on the Ugandan shilling (UGX). In response, the central bank tightened monetary policy as these depreciation pressures worsened the inflation outlook in the second half of FY2023/24.
The Kenyan economy faced challenges from global economic headwinds, including rising interest rates in developed economies, political instability, and reduced investment capital inflows. This resulted in the depreciation of the Kenyan shilling against regional currencies, including the Ugandan shilling, which reduced the value of the Pension Fund's regional investments in Kenya. However, since February 2024, the Ugandan shilling has depreciated against the Kenyan shilling, leading to a noticeable recovery across all our positions in Kenya. The Fund holds significant investments in Kenyan government bonds and equity securities.
Operating environment
Every new day brings with it emerging needs from our membership. In alignment to the new law, the Fund has developed innovative products that meet the diverse needs of its customers. The Fund aimed to launch several new products in FY2023/24, such as the Smart Life Voluntary Savings Plan and a value proposition for mandatory savings, however the necessary regulations were not released in a timely manner, leading to setbacks in the rollout of these new offerings.
Despite this, NSSF remains committed to this mandate and we have realigned our business model e.g. through establishing a new department to manage these innovative offerings and intensifying collaboration through strategic partnerships.
Stakeholder engagement is crucial to NSSF's operating environment. The Fund recognises the importance of maintaining strong relationships with stakeholders, including members, regulators, government, and the wider community. Our business activities and reputation are both directly and indirectly affected by these relationships. By proactively engaging with stakeholders, we align our business strategy, manage social expectations, minimise reputational risks, and influence the environment in which we operate.
The operating environment is dynamic, and NSSF faces a range of internal and external risks. To address these, the Fund has implemented a robust risk management framework that includes risk identification, assessment, monitoring, and mitigation. This framework has enabled the Fund to remain resilient in the face of challenges. Additionally, NSSF has established an internal audit function and an Enterprise Risk function to support and enhance its risk management efforts.
Business and financial performance
The Fund achieved commendable performance across most key performance indicators. Total assets, realised income, cost of administration, and contributions all surpassed their budgeted expectations. The asset size grew to UGX 20 trillion by January 2024, reaching this target nearly 18 months ahead of the expected date of 30 June 2025.
Additionally, the Fund recognised a significant unrealised foreign exchange gain on the regional investments, especially due to the recovery across all our positions in Kenya.
A NEW DAY - CREATING SHARED VALUE FOR SUSTAINABLE GROWTH