Will NSSF’s infrastructure gamble pay off for savers?

A growing push to channel National Social Security Fund (NSSF) savings into infrastructure projects has sparked debate over whether Uganda’s largest retirement fund should prioritise national development or maximise returns for workers.

At the centre of the discussion is President Museveni’s renewed call for the Fund to move away from heavy investment in government securities and instead finance major infrastructure projects such as roads, energy and technology.

The proposal, which the President says would “strengthen the bone marrow of the economy,” has raised concern among savers and financial analysts who fear that workers’ retirement savings could be exposed to long-term risks and political influence.

During this year’s Labour Day celebrations in Buikwe District, President Museveni urged the Fund to invest in “profitable infrastructure” rather than keeping billions of shillings in treasury bonds.

The President has repeatedly argued that lending workers’ money back to government through bonds does little to transform the economy compared to direct investments in productive sectors.

His remarks come at a time when the Fund’s assets under management have grown to about Shs26 trillion, making it one of the country’s biggest pools of long-term capital.

The bigger question for savers

While infrastructure investments are often associated with economic growth, contributors are increasingly asking what such projects mean for their retirement savings.

For years, NSSF has built public confidence by investing mainly in low-risk and predictable assets that guarantee stable annual returns above inflation.

The Fund currently allocates about 79 percent of its portfolio to fixed-income investments such as treasury bonds and corporate debt, 14 percent to equities and seven percent to real estate.

This strategy has enabled NSSF to maintain relatively stable earnings while protecting contributors’ savings from major losses.

However, infrastructure financing introduces a different level of risk.

Large-scale projects such as highways, energy plants and fibre optic networks often require huge upfront capital, long repayment periods and are vulnerable to delays arising from land acquisition disputes, regulatory approvals and engineering challenges.

Financial analyst Susan Khainza says infrastructure investments can provide long-term returns and portfolio diversification, but warns that the process through which such decisions are made is as important as the outcome itself.

“NSSF’s duty is owed to savers and beneficiaries, not to political actors,” she says.

“The investment team should make decisions based on research and risk-adjusted returns, not pressure from government.”

According to Ms Khainza, infrastructure financing sits between safer government bonds and riskier growth assets such as equities and real estate.

She argues that because such projects lock up capital for many years, the Fund should only participate where returns sufficiently compensate for the risk.

Patriotism or business?

The debate has also revived questions about whether retirement savings should be used as a tool for national development.

Commentator Patrick Asiimwe Ndahura argues that NSSF should remain strictly commercial in its investment decisions.

“The Fund was created to generate returns for workers, not to finance patriotism,” he says.

He insists that national infrastructure should be financed through government budgets and borrowing rather than workers’ retirement savings.

According to him, any attempt to lower returns in favour of public projects could trigger withdrawals by members eligible for the 20 percent mid-term access benefit.

He further argues that contributors keep their money in the Fund because of financial value rather than national sentiment.

NSSF, however, maintains that infrastructure investment does not necessarily contradict profitability.

Managing director Patrick Ayota says the President’s comments should not be interpreted as political interference in the Fund’s operations.

“The President is not forcing NSSF to invest anywhere,” Mr Ayota says.

“He is advocating for profitable infrastructure projects that can deliver long-term value to members.”

Mr Ayota notes that projects such as toll roads, energy ventures and fibre infrastructure can generate sustainable income over time if properly structured.

He cites the proposed Kampala–Jinja Expressway as one of the projects under consideration but clarifies that the Fund would only release financing once the project is investment-ready.

Why infrastructure is attractive

Infrastructure projects are increasingly attracting pension funds globally because of their potential to deliver predictable long-term cash flows.

Road tolls, electricity distribution and utilities often provide steady revenue streams with lower exposure to short-term economic shocks.

Such projects can also protect investors from inflation because user charges and tariffs are periodically adjusted.

For governments, pension funds provide what economists call “patient capital” — long-term financing that can support projects that commercial banks may avoid because of lengthy repayment periods.

This is partly why President Museveni has intensified calls for NSSF to participate more directly in economic transformation.

Earlier this year, while speaking at an infrastructure financing summit hosted by the Africa Finance Corporation and the Government of Kenya, the President emphasised the need for African countries to mobilise domestic long-term capital for infrastructure development.

In Uganda’s case, analysts say NSSF remains the largest available source of such financing.

Balancing risk and return

Even then, experts warn that infrastructure financing must be approached cautiously.

New construction projects often face cost overruns, legal disputes and delayed completion timelines that can reduce profitability.

Road projects, for instance, depend heavily on traffic volumes and users’ willingness to pay toll fees.

Others rely on government guarantees, exposing investors to sovereign repayment risks.

Ms Khainza says the Fund’s current investment structure reflects a deliberate effort to balance growth with capital protection.

“NSSF has a long-term horizon, but it must still preserve members’ value and maintain liquidity to meet benefit obligations,” she explains.

Uganda’s retirement savings system is contributory, with employers contributing 10 percent of workers’ salaries while employees contribute five percent.

The money is invested by NSSF on behalf of contributors, meaning the risks and rewards are ultimately borne by the savers themselves.

This is why analysts insist that any shift toward infrastructure financing must remain guided by the law, independent research and prudent risk management rather than political pressure.

As debate over the future of NSSF investments intensifies, contributors are likely to keep asking one question: will infrastructure projects grow their retirement savings or expose them to unnecessary risk?