OUR BUSINESS:

MATERIAL MATTERS

MATERIAL MATTERS

OUR BUSINESS:

MATERIAL MATTERS

Material matters process

Material matters are issues that could significantly impact our ability to create value in the short, medium, and long term. These matters influence our strategy, how we manage associated risks, and the opportunities we explore as a result.

The process we follow to determine our material matters is as follows:

Our materiality process has prioritised the following themes. While these themes do not differ significantly from those identified in FY2023, governance-related challenges involving investigations into the Fund following negative press from the Parliamentary probe, as well as investigations by the Auditor General and Inspector General of Government (IGG), have been adequately addressed (see risks 8 and 10).

A new material matter for the Fund is the strategic execution of Vision 2035, which is critical for NSSF's long-term viability (see material matter #2).

1. Regulatory Restrictions

What it means to NSSF

NSSF faces persistent challenges in expanding its product range due to regulatory restrictions. These limitations hinder our ability to enhance our product offerings.

Short-term mitigation response

  • The Fund is in the final stages of obtaining regulatory approval for new products, particularly in the voluntary savings space
  • To address immediate and medium-term savings needs, NSSF has developed and piloted the Smart Life Savings Plan product

Long-term mitigation response

  • NSSF plans to roll out several new products in the medium and long term, aligning with our mission to promote savings as a lifelong habit

Opportunities and impact on the business model

  • Potential membership growth: Once the regulatory framework that supports the provision of our voluntary product offering is finalised, there is an opportunity to attract new members
  • Increased outreach: New products are expected to expand membership, particularly among Ugandans in the informal sector, supporting our goal of making saving accessible to more people

Targets

  • Accelerate delivery of value-adding products: Insurance Partnerships, Unit Trusts, Wealth Management
  • Implement a new business model to enhance product and service offerings
  • Roll out the Smart Life Savings Plan to promote voluntary savings

Risks

Capitals

2. Strategic execution of Vision 2035

What it means to NSSF

The ambitious goals outlined in Vision 2035 are critical for NSSF's long-term viability. As our membership base ages and accesses benefits, contributions may not keep pace, potentially impacting the Fund’s and members’ financial health. To ensure a sustainable future, we must focus on three key areas:

  • Maximise contributions: By creating a willingness and capacity to save for our members
  • Maximise earnings within our risk tolerance: Through creating a stream of alternative investments for the Fund
  • Maximise value to members so they do not exit

Short-term mitigation response

  • Establish and operationalise a dedicated department to develop partnerships with organisations that can support the informal sector
  • Scale-up the successful Hi-Innovator programme, empowering a larger number of young entrepreneurs through financial support
  • Define a clear roadmap to foster a culture of innovation and agility, aligning our employees with Vision 2035 goals
  • Expand existing financial literacy initiatives to educate Ugandans on the importance of saving and responsible financial management

Long-term mitigation response

  • Empowering farmers: Agriculture is a crucial sector for Uganda's development and NSSF's success. We will create programmes to:
    • Improve market access: Connect farmers with reliable domestic and international markets to ensure fair prices for their produce
    • Boost productivity: Provide resources and support to help farmers increase their yields and overall income
  • Empowering rural women: Recognising their critical role in Uganda's economy, the Fund will develop initiatives to financially empower rural women
  • Livelihood programme: Expanding our membership base by reaching grassroots communities within the informal sector

Opportunities and impact on the business model

  • Innovative investment approaches: Rethinking our investment strategies to address long-term societal issues like unemployment
  • Economic stability: Increasing domestic savings to significantly impact Uganda's economic stability

Targets

  • Set up a venture fund as part of the alternative asset class offering, focusing on social impact to establish a more sustainable model for the Hi-Innovator programme
  • Finalise the establishment of the National Marketing Company (NAMCO) with the aim of improving farmers' livelihoods by granting them access to markets with advantageous pricing, thereby empowering them and facilitating savings

Risks

Capitals

3. Global economic uncertainty

What it means to NSSF

The ongoing Russia-Ukraine conflict and the resulting global economic uncertainty pose a significant challenge. Additionally, the situation in some East African countries, including potential for renewed political unrest, adds to the overall uncertainty. This volatile market environment could impact the performance of our investment portfolio, potentially leading to slower membership growth and contribution levels as economic downturns affect household income and willingness to save.

Short-term mitigation response

  • The Fund is a long-term investor; hence our strategy is not to respond to short term market movements

Long-term mitigation response

  • Monitoring market variables and adjusting the portfolio mix to respond to the changing market environment

Opportunities and impact on the business model

  • There is an opportunity to acquire stock at a cheap price for companies whose investment fundamentals are strong
  • There is an opportunity to acquire assets at low prices as soon as there are indications of economic stability in Kenya

Targets

  • Return to members is at least 3% above 10-year average inflation
  • Collections - UGX 1.93Tn
  • New members recruited – 180,000

Risks

Capitals

4. Digital acceleration

What it means to NSSF

NSSF has implemented a robust core pension system aimed at improving efficiency, enabling product innovation, and creating a seamless customer experience. However, maximising the system's potential and ensuring security requires a particular focus on:

  • Automating manual processes (registration, collection, claims initiation) to ensure effective system use and faster member benefit payouts
  • Increased automation creates efficiencies but introduces potential vulnerabilities to cyberattacks, requiring robust security measures
  • Leveraging member data effectively for informed decision-making and improved member services

Short-term mitigation response

  • We are rolling out an Enterprise Resource Planning (ERP) system to centralise data management and decision-making processes
  • We continuously monitor our systems using advanced tools to quickly identify and resolve vulnerabilities. This proactive approach ensures a high-performing and secure environment for our members

Long-term mitigation response

  • Developing a strategic roadmap for digitisation that aims to enhance our core system with advanced digital solutions, utilising our in-house talent
  • NSSF places a high priority on continuous cybersecurity training for employees and conducts regular system testing and scenario analysis. These measures are aimed at enhancing the organisation's resilience against future cyber threats and technological disruptions

Opportunities and impact on the business model

  • Our ongoing digitisation efforts, which have led to the automation of several processes, have significantly improved the customer experience and expanded our coverage. Our members can now register from any part of the world at any time, making our services more accessible and convenient as reflected in our customer satisfaction score
  • The implementation of new systems has enhanced our ability to serve customers globally, ensuring efficient and timely support regardless of their location, significantly reducing turnaround time for benefits payments

Targets

  • The ERP deployment will centralise data and decision-making, including the implementation of virtual customer service agents and language-based support to enhance customer interactions
  • We are developing a robust internal compliance module to ensure adherence to regulatory requirements and enhance overall system integrity
  • We will introduce new value-driven features and improvements within OctoPAS, leveraging our internal expertise

Risks

Capitals

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