External Environment

Russia Ukraine Conflict

FY (Financial Year) 2022/23 was marked by significant instability stemming from macroeconomic and geopolitical influences, significantly reshaping the business environment. Primarily, the Russia-Ukraine conflict compounded the ongoing impacts of the Covid-19 pandemic. This escalation created considerable disturbances in economic operations and played a role in the emergence of economic collaborations, such as the BRICS Alliance. The resulting supply chain disruptions pushed inflation to its highest levels in decades across much of the globe. To counteract this inflation surge, central banks responded by increasing policy rates, however, this action continues to exert significant pressure on the economic growth of many nations.


Rising inflation has several implications including the increased cost of doing business, high cost of living, reduction in overall consumer spending, and in extreme cases, inflation results in a recession, and civil unrest. The Fund’s Real Estate projects suffered setbacks due to escalation in prices of construction materials and rising fuel costs among other commodities. Construction works slowed down as contractors sought extensions in addition to variations in contractual prices.

Budgets for both operational and capital expenditures were formulated with careful consideration of the increasing costs of goods and services.

Our response

  • Operational Expenditure: The impact on operational expenditure was minimal as the budgeting process considered the escalating prices of goods and services. Additionally, the Fund has budget control mechanisms in place that ensure efficient use of resources
  • Capital Expenditure: Justifiable adjustments to project timelines and contractual prices were granted subject to the necessary approval process
  • Fixed Income Portfolio: Due to the long maturity profile of the Fund’s liabilities, the Fund takes a long-term investment approach for most of its investments. Rising interest rates presented good investment opportunities for the Fund locally

Appreciation of the Uganda shilling

During FY 2022/23, the Ugandan Shilling appreciated against all regional currencies. The UGX appreciated against the Kenyan Shilling by 22.2%. It appreciated by 16.4% against the Rwandese Franc, 5.2% against Tanzania Shilling, and 2.6% against the USD.


The biggest impact was realised in Kenya where the Fund holds significant investments. Currency movements in this fiscal year had a dramatic impact on the Fund’s return and volatility. The net impact was UGX 1.05 trillion in unrealised foreign exchange losses.

Our response

  • Diversification: The Fund mitigates adverse effects on its investments through setting a well-thought-out asset allocation that seeks to balance the emerging risks
  • Long-term investment approach: While performance has been affected by short-term volatility resulting from various factors in this fiscal year, the Fund's long-term investment strategy and diversified portfolio position it to endure these short-term setbacks and facilitate the generation of long-term value

Global Economic Outlook

The International Monetary Fund (IMF) projects a decline in global growth rates from an estimated 3.5% in 2022 to 3% in both 2023 and 2024. The rise in policy rates by central banks to mitigate inflation continues to weigh heavily on economic activity.

On a regional level, Kenya's economic conditions throughout the year were influenced by internal political instability, a growing debt load, and the prolonged drought. That notwithstanding, trade tensions within the East African nations have reduced with all borders open for trade. Furthermore, the impending commencement of the oil pipeline construction from Uganda to Tanzania is anticipated to stimulate economic growth in the region.

On a local level, the Uganda Bureau of Statistics projected that the Ugandan economy would grow between 5.3% - 5.5% in FY 2022/23, compared to 4.6% in the previous year driven by the recovery in the agricultural and services sector. This is further supported by the easing inflationary pressures with the inflation rate decreasing from 10.7% in October 2022 to 4.9% at the end of June 2023. This is a result of Bank of Uganda’s tight monetary policy response that saw the Central bank rate maintained at 10% in June 2023 for the fourth time in a row.

Our response

Through the Fund’s innovation strategy, we aim to create an eco-system and community of innovators. Our efforts focus on nurturing entrepreneurship and providing support to small businesses with the capacity to scale and generate new economic prospects for Uganda. These will enable a future pipeline of contributions and new investment opportunities.

Regulatory landscape

The National Social Security Fund (Amendment) Act 2022 expanded the Fund’s mandate to include all private employers irrespective of the number of employees but also opened the voluntary space. It also allows the Fund to develop innovative products to meet the diverse needs of our customers.

Our response

Considering our new mandate, the Fund pursued the refinement of its business model particularly focused on enhancing processes to better serve its customers. To cater for the diverse requirements of voluntary and informal savers, the Fund embarked on creating new products to meet their needs. This approach requires adopting a different Relationship Model, one that aligns more closely with the specific circumstances of the voluntary and informal savers. The Funds efforts continue to be directed toward ensuring that the varied needs of members are met, with the overarching goal of promoting both financial security and inclusive prosperity for all.

Evolving social and regulatory expectations to climate risk and ESG-related topics

In response to evolving social and regulatory expectations regarding climate risk and ESG-related matters, a global trend is emerging wherein regulators and investors are emphasizing the need for ESG-related disclosure requirements. Many companies are now conducting comprehensive assessments of their ESG (Environmental, Social, and Governance) strategies and disclosure practices.

Financial regulators are increasingly prioritising the management of climate risk and its implications for financial stability. This shift comes in the wake of the adoption of the Paris Agreement on climate change and the UN (United Nations) 2030 Agenda for Sustainable Development in 2015. Governments worldwide are actively pursuing the transition to low-carbon and circular economies, presenting both risks and opportunities for the economy and financial institutions. Moreover, the physical damage resulting from climate change and environmental degradation can profoundly impact both the real economy and the financial system.

On the social front, numerous instances of unrest, boycotts, growing unemployment and poverty, gender-based violence, and calls for greater inclusivity and empowerment are evident.

Our response

This year, we are pleased to present our inaugural Environmental, Social, and Governance (ESG) report covering the period ending on 30 June 2023. This comprehensive report highlights the combined outcomes of our ESG initiatives, reflecting our commitment to creating value and promoting shared prosperity for our members, the economy, and society. Read our full ESG Report.

NSSF is dedicated to embedding a culture of continuous ESG improvement across its operations. This involves a cyclical process of assessment, adaptation, and alignment with ESG goals. ESG audits, both internal and external, will assess key metrics to ensure strategy effectiveness.

To stay current with ESG best practices, we will designate a team or individual to monitor industry trends, attend conferences, and engage with networks. Regular reviews against evolving standards will guide strategy adjustments based on audits, stakeholder feedback, and emerging practices. Stakeholders will participate in strategy review sessions, informing adjustments to ESG goals and initiatives. Employee contributions will also be encouraged through cross-functional teams focused on ESG domains.

Leadership commitment spans from the board of directors to the executive committee, advocating for ESG, allocating resources, and actively participating in feedback and dialogues.

Technology Acceleration

Benoni Katende, Chief Technology and Enterprise Solutions Officer

In the realm of fintech, there is a mix of successes and setbacks. While some fintech companies have secured more funding and recognition, others have struggled to deliver on their initial promises of changing the game. This contrast highlights the diverse nature of the fintech landscape.

Artificial intelligence growing in prominence

A notable change is taking place in the field of artificial intelligence (AI), particularly with generative AI. This shift is not only changing how productive we can be but also redefining what human creativity means. With generative AI gaining prominence, its potential to collaborate with human innovation is being explored, possibly leading to groundbreaking levels of creativity.

Consumers face a wider range of options

Consumers are now facing a wider range of options across different market segments. This abundance of choices has shifted the balance in favour of buyers in the middle to upper tiers, creating an environment where buyers have more control. However, there is a concerning trend as this surplus of options tends to leave out those in lower economic segments, emphasising the existing inequalities.

Our Response

The Fund has embraced technology and strategies driven by data. Key initiatives include the use of machine learning for back-end processing, Artificial intelligence driven financial literacy, simplified customer authentication, facial recognition, and channel ecosystem development, among others. By taking these innovative approaches, the Fund aims to not only attract new customers but also enhance the experience of our current clients. This concerted effort anticipates fostering growth that proves advantageous for all our stakeholders.

Refer to Chairman, MD , CIO’s and Head of ERM statements for a detailed account of the impact of the external environment on the Fund.