By Dickson Ssembuya, Director, Research & Market Development
In a significant announcement, the National Social Security Fund (NSSF) generated a return of 22.53%, translating into UGX 5.44 trillion being credited to members’ accounts for the financial year 2025/26. This is indeed a win for Uganda’s financial sector. We congratulate the supervising ministries, the board, management, staff and contributors for this stellar performance. NSSF remains our valued partner as the largest institutional investor, with the savings in the Fund remaining the most reliable source of long-term capital for Uganda’s real economy. What lessons can be drawn from this brilliant performance for Ugandans saving to meet different goals, preserve the value of their savings and earn a return within an acceptable risk limit? In this article, I highlight some key lessons from the NSSF performance.
The role of capital markets assets such as Treasury bonds and shares in generating returns for members was pronounced. Bonds generated UGX 3.5 trillion in interest income, while dividends from shares listed in Uganda and across the East African region generated UGX 369.1 billion. What does that tell us about capital markets assets? This is indicative of the fact that holding assets in the capital markets can be a source of income for investors. The most important thing is getting appropriate investment advice from CMA-approved persons to guide you in selecting capital markets assets that will enable you to meet your goals within risk limits that are suitable for your personality. We normally encourage Ugandans to hold some assets in the capital markets in addition to land, cattle and other assets in order to diversify their risk. This is important because a loss in one asset can be offset by a gain in another. They say that diversification is the only free lunch in the world, hence the need to spread your holdings across several asset classes whose performance doesn’t move in the same direction.
Social security savings such as those managed by the NSSF seek to provide an income in retirement, with contributions remaining invested until eligibility. It is notable that savings generate returns and the returns generate more returns, creating a continuous cycle of returns earning returns upon returns. This is the power of compounding that accrues to those who remain invested in the long term. Long-term investing allows compounding to take effect, contributing to growth in wealth. The lesson from this is the importance of taking a long-term view of investing. This will allow compounding to kick in. Additionally, taking a long-term view can be a source of predictable long-term returns and can allow an investor to weather volatile environments such as downswings and upswings in the economy. While both NSSF and CIS compound returns, a stark difference is the fact that CIS compound returns daily, while NSSF compounds annually, making accumulation through CIS higher.
While NSSF savings are social security-related, we can also save for other milestones in life through channels such as Collective Investment Schemes (CIS). CIS pool savings from different individuals for investment as a single portfolio by a CMA-licensed professional manager. The beauty of CIS is that they are professionally managed and collect savings at scale, enabling investment in a diverse portfolio of holdings that an individual might never have invested in single-handedly. CIS also have favourable tax treatment, increasing the net returns to investors. You can future-proof your goals and ambitions by saving through a CIS, while letting your NSSF savings provide you with an income in retirement. With as little as UGX 10,000, you can save through a CIS for future goals in a safe, regulated manner that delivers growth in wealth. At the end of June 2026, over 240,000 Ugandans had saved through CIS, with over UGX 7 trillion mobilised. A key difference between your NSSF savings and what you save in a CIS account is that NSSF contributions are accessible only at the mid-term access point and on attaining the age of 55 years, while CIS savings remain accessible, especially for near- to medium-term goals, making them more liquid.
It is observable that NSSF operates within a regulated environment. NSSF operations are governed by the NSSF Act and the Uganda Retirement Benefits Regulatory Authority Act. The regulatory framework ensures that NSSF operations are conducted with the highest degree of prudence and care expected of a fiduciary in the position of NSSF. The regulatory framework requires a fiduciary to act at all times in the best interests of beneficiaries. The achievements of NSSF were attained in a regulated environment. The point here is that Ugandans need to invest and put their money only with regulated entities. Regulation provides recourse in the event that anything goes sour in the process of investing. Regulation ensures that those who collect funds from the public fulfil the promises that they make. This is the difference between investing through a regulated entity and investing through one that is not regulated. It is thus critical that Ugandans at all times ensure that they are dealing with regulated entities as a control to safeguard their hard-earned money. A list of persons approved to provide solutions in Uganda’s capital markets can be found on the CMA website. Regulation is a safeguard measure that ensures those collecting funds from Ugandans have the capacity, qualifications and integrity to serve Ugandans. It sets high standards of probity for those handling funds on behalf of Ugandans.
Uganda’s capital markets industry will continue performing solidly in the next few years as the macroeconomic environment remains stable. For Ugandans, it will be important to diversify into the capital markets to tap into returns from capital markets assets, while avoiding putting all their eggs in one basket. As you do this, ensure that you seek advice from approved persons, deal only with regulated entities and take a long-term view towards your investment endeavours. This will enable you to build a “mini-NSSF” to complement your contributions to the NSSF for social security purposes. I rest my case.