For decades, pension funds have played it safe. Pool workers’ savings, buy secure assets, and pay retirees on time. Members feel protected, regulators are satisfied, and managers meet their duties.
But there is a missing link. Uganda’s pension funds-worth at least Shs26 trillion by June 2025-mainly buy listed shares, government bills and bonds, and prime real estate. These assets are liquid and regulator-approved, fitting their long-term liabilities.
The cost is limited impact. Stocks recycle money within established firms. The government paper mostly funds recurrent budgets, not new roads or power plants. High-end property enriches a few urban zones. While savings are safe, society is not built.
The data shows it. As the Uganda Retirement Benefits Regulatory Authority (URBRA)’s 2025 records show, 80 percent of sector assets sit in government securities.
The allure is in yields that can reach 17 percent on secure assets, but heavy concentration creates risk should repayments or macroeconomics change.
Worse, it crowds out private borrowers because less credit means slower innovation and fewer jobs. Economists call this the ‘crowding-out effect.’
Meanwhile, Uganda’s road plan alone requires over $10 billion, Finance Ministry data shows. Each year, more than 30 percent of the national development budget goes to infrastructure-roads, energy, logistics-yet delivery often lags.
The Karuma hydropower dam proves the point.
Built to add 600MW to the grid, it was commissioned a decade late at a cost of $1.7 billion, most of it borrowed from China’s Exim Bank.
For years, Ugandans paid interest on a project that was not delivering power, while factories in Nwoya and Lira postponed investments. While the debt grew, growth gains did not.
The Standard Gauge Railway tells a similar story. Envisioned as a $2.3 billion modern line linking Kampala to Kenya’s port of Mombasa, it remains stalled because there is no funding for it.
Uganda is left with colonial-era metre-gauge tracks, constraining industrial parks in Tororo and Mbale and keeping freight costs among the region’s highest.
Other big projects-from the Bukasa Inland Port to the Kampala-Mpigi Expressway-show promise but stumble on the same hurdles: land disputes, procurement delays, and funding shortages.
The outcome is predictable: sunk money, missed deadlines, and lost competitiveness.
Why pensions matter
This is where pension funds come in. Unlike banks chasing quick profits, they hold long-term capital that fits the lifespan of infrastructure. Properly structured, their money cuts financing costs, secures projects upfront, and enforces delivery discipline.
Ugandans have already shown they will pay for value. The Entebbe Expressway, a 49.6km road built for $476m with Chinese and government funding, introduced tolls in 2022.
Motorcycles above 400cc pay Shs3,000, light vehicles Shs5,000, and large trucks up to Shs18,000. Daily traffic averages 28,000 vehicles-far above the 18,000 forecast.
In just three years, tolls have raised Shs119.8billion (about Shs3.7billion a month). The lesson is infrastructure can fund itself, creating predictable cash flows for bonds and Private Public Partnerships (PPPs).
The wider demand is massive. East Africa needs tens of billions of dollars each year for roads, ports, rail, energy, and water, according to the East African Community Secretariat.
Pension funds, with their patient capital, are natural partners to close that gap.
For them, this is diversification. A careful shift into infrastructure spreads risk, improves returns, and still meets safety and liquidity rules.
In finance terms, if a new market offers higher risk-adjusted returns, funds should enter it. Members gain, economies grow, and development becomes self-financed rather than aid-driven.
But policy lags
Uganda needs deliberate policy to unlock pension capital for development.
The Uganda National Social Security Fund (NSSF)’s rules allow up to 5 percent asset allocation in private equity (PE) and venture capital (VC), yet less than 1 percent has been deployed.
The flaw is structural: there is a cap but no floor, so managers fall back on the comfort of government paper.
As Amanda Kabagambe, chairperson of the East Africa Venture Capital Association in Uganda, notes: ‘If we are serious about growing SMEs and scaling local firms, we should set minimum local allocations.’
Over 70 percent of private equity or venture capital in East Africa comes from foreign investors, mostly Development Finance Institutions (DFIs), 2025 Financial Sector Deepening Uganda research data shows.
As foreign flows dry up, local firms risk collapse. Worse, borrowing in dollars while earning in shillings creates a currency mismatch. Local shilling capital both hedges risk and aligns with local realities.
This is the essence of productive investment-using long-term savings not only for returns but also growth. By pooling millions of small contributions, pension funds provide steady domestic capital. In theory, more savings mean lower borrowing costs.
Governments could depend less on Eurobonds and donors; firms would access cheaper credit. Pension money becomes a growth engine, not just a retirement cushion.
Others show the way. Nigeria’s pension reforms channel billions of dollars into infrastructure bonds and housing. Kenya’s, with 44 percent of assets in government securities compared to Uganda’s 78 percent, invests directly in affordable housing and PPP projects. Both countries use pensions to deepen markets and broaden impact.
Uganda has barely scratched the surface. NSSF, with over Shs26 trillion under management, has built Pension Towers and Lubowa housing estate. But these projects are slow and elite-focused, with little spill over. What is missing are catalytic investments: power plants to lower energy costs, housing for ordinary families, transport networks to cut logistics costs.
The pension sector remains shallow. Uganda Retirement Benefits Regulatory Authority data shows 3.37 million members in 2023/24, just 12 percent of Uganda’s 9.4 million workers by 2025.
Life expectancy is rising, meaning longer retirements but little savings. Without reform, Uganda faces two risks: old-age poverty and wasted capital.
Pension funds should not be viewed solely as retirement vehicles, but as powerful nation-building institutions.
With their large scale and long-term investment horizons, they have the capacity to drive economic transformation and support national development. And some funds are already testing this role.
Uganda’s NSSF is edging in this direction. It has pledged to co-finance the Kampala-Jinja Expressway and is weighing in on the Bombo-Kampala road that is expected to pay for itself through tolls. Energy projects are also under review.
‘Each project must meet our criteria for returns, risk, and long-term sustainability,’ says Patrick Ayota, the NSSF’s managing director.
Regionally, momentum is building. NSSF Uganda, NSSF Kenya, and Tanzania’s Workers Compensation Fund have formed a task force for joint investments.
The case is scale: African pension funds control about $700billion, according to data from the Africa Social Security Association (ASSA).
Pooling just 1 percent-around $7 billion-could finance five Kampala-Jinja expressways, or fully fund Ethiopia’s Grand Renaissance Dam, which cost about $5billion to build and now supplies power across the region.
Legally, cross-border investment is possible; politically, it is harder. ‘Why put our money in Kenya instead of here?’ some ask. But Ayota insists the test should be what benefits members, not politicians.
The ASSA is pushing for harmonisation. Some countries already allow cross-border flows while others still block them. Partnerships with the Africa Finance Corporation and TDB Bank are helping funds build expertise and manage risk.
‘The goal is a single voice on Africa’s infrastructure agenda. With the right expertise, nothing is impossible,’ says Meshach Bandawe, ASSA’s Secretary General.
The economics also favour diversification. Spreading assets across borders lowers risk and improves returns.
‘We just declared a 13.5 percent interest rate, driven by our diversified portfolio across East Africa,’ says Ayota.
Liquidity is sacred: ‘We promise safety and liquidity. Even if 1 percent of the Fund faced trouble, members would still be paid.’
The resources are already there. The African Union (AU) counts $1.3 trillion in pension assets, $483 billion in public revenues, $427 billion in private savings, $24 billion in sovereign wealth, and $100 billion in remittances.
The gap is not money but mobilisation. ‘Aid is shrinking, geopolitics is shifting, and Africa carries its heaviest debt in 50 years. Fifteen of Africa’s top 20 donors have cut funding,’ says Leonard Zulu, the UN’s resident coordinator for Uganda.
His message: Africa must turn inward-mobilising pensions, savings, and remittances-and move ‘from aid to trade.’
Uganda’s own plans demand it. The Fourth National Development Plan (2025-2030) targets tenfold growth-from $61 billion to $500 billion by 2040 and that is not expected to happen without domestic capital.
Pensions are rising fast: the sector is now worth Shs26 trillion, up nearly 19 percent in a year.
Alongside insurance funds, green bonds, and diaspora flows, pensions are Uganda’s most reliable pool of long-term money.
Examples prove the point. Ethiopia’s Grand Renaissance Dam was funded largely by citizens and diaspora.
‘Local capital must lead local development. We should not be sending our startups to Europe to pitch mobile money to people who have never used it,’ says Kabagambe.
ASSA is launching a continental infrastructure fund, backed by 15 countries including Uganda, Kenya, and Tanzania.
‘Our aim is to mobilise resources, share risks, and pool expertise for roads, energy, ports, health, and education,’ says Bandawe.
Africa’s infrastructure gap is $170 billion a year, while one in three Africans still live in poverty. Mobilising even a slice of pension assets could close part of that gap and strengthen the funds’ long-term stability.
Closing the gap could lift Africa’s Gross Domestic Product by 2.6 percent annually, create jobs, and expand social security membership, according to ASSA’s conservative estimates.
National development plans differ, but most align with the AU’s Agenda 2063, the Sustainable Development Goals, and the Africa Continental Free Trade Area (AfCFTA).
The path challenge is execution.
Too many African states still borrow at 13-18 percent on international markets, punished by ratings that ignore fundamentals.
Uganda has kept inflation under 5 percent for years yet pays nearly 18 percent to borrow abroad.
‘If we use our own domestic capital responsibly, we can cut reliance on expensive debt and finance infrastructure at fairer rates,’ Zulu says. ‘That would speed up the SDGs.’
With only five years to 2030, donor aid is drying up. Uganda alone has lost at least $800 million in aid since 2023, according to data from Bank of Uganda.
‘The time has come for Africa to look inward. Just as families use their own savings to build homes, countries must use theirs to build economies. We must all have skin in the game,’ Zulu concludes.
Who funds what ?
It is fair to ask why private equity, venture capital, and DFIs often shy away from the long-horizon projects pension funds are being urged to embrace. The reason is mandate.
Infrastructure pays off over 15 to 20 years-too slow for PE or VC funds that need quicker exits. Their role usually comes later, financing the companies and services that spring up once the roads, power plants, or ports are in place.