About 2.4 million National Social Security Fund (NSSF) savers will, next week on Thursday, learn how much their savings earned during the past financial year, with analysts projecting a favourable interest rate better than that of last year.
Finance Minister Henry Musasizi is expected to announce the Fund’s interest rate payout, following what NSSF top management described as a strong financial performance of 85 percent posted over the past year.
According to the Fund, the total income performance, revealed to journalists yesterday ahead of next week’s big announcement, grew from Shs3.5 trillion to Shs6.51 trillion.
Although the actual rate has not yet been disclosed, which is the role of the Finance Minister, analysts said the Fund’s performance and favourable market conditions could support a higher payout than last year’s 13.5 per cent.
Interest rates
Mr Delick Manishimwe, an investment analyst at Sanlam Allianz Investments Uganda, projected an interest rate of 14 percent or higher.
‘I expect the interest rate from NSSF next week to be like 14 percent and above based on the performance,’ Mr Manishimwe said.
He said the Fund’s income had increased significantly compared with the previous financial year, providing room for a higher declaration.
‘When they declared 13.5 percent last year, the revenues were nearly Shs3.5 trillion. So, if you are looking at the last Shs6.5 trillion, then you would expect the interest rate to go up,’ he said.
Mr David Calvin Bateme, a financial markets analyst at Crested Capital, also expects the Fund to maintain or improve last year’s rate, citing movements in the bond market during the financial year under review.
‘NSSF is reporting for the last financial year, when yields in the bond market were going up. Yields started falling at the end of the last financial year,’ Mr Bateme said.
He said the changing market conditions would, however, have implications for the Fund’s performance in the 2026/2027 financial year.
‘I think NSSF will give an interest rate of 14 percent and above,’ he said.
The interest rate declaration is closely watched by savers because it determines how much their accumulated contributions grow before they become eligible to access their benefits.
The anticipated payout will also come amid competition from other investment products, including unit trusts that offer returns averaging about 11.5 percent.
NSSF’s assets under management grew 26 percent during the financial year (FY) 2025/2026, from Shs26.0 trillion (about $6.76b to Shs32.8 trillion (about $8.52b), making it the largest social-security fund by assets in East Africa.
Total income, which is the return generated on those assets, before costs, rose 85 percent, to Shs6.51 trillion from Shs3.51 trillion.
Member contributions grew by a more modest 13 percent, to Shs2.42 trillion, while benefits paid to retiring, deceased or otherwise-eligible members rose 17 percent, to Shs1.549 trillion, a bill the Fund settled faster than in the past.
The average payout turnaround fell to 4.5 days, down from close to two weeks back in 2021/2022.
NSSF’s managing director Patrick Ayota said: ‘When you put those numbers side by side, you notice that contributions minus benefits paid left the Fund with a net cash inflow of about Shs870b from membership activity alone to add to its investment pool.’
This is a meaningful secondary driver of the year’s Shs6.8 trillion increase in total assets. The larger driver, by a wide margin, was investment performance itself.
At Shs32.8 trillion in assets, the compounding return on capital already under management matters far more to long-run outcomes than the flow of new contributions, however healthy.
It is also, for the same reason, the more volatile of the two, which is where the analysis needs to slow down.
Decomposing the income
Of the Shs6.51 trillion total income the Fund made in FY2025/2026, about Shs3.88 trillion was realised income, which is cash actually received, up by 24 percent on the year.
Mr Ayota said interest income from NSSF’s government-bond holdings, which make up the bulk of its portfolio, accounted for Shs3.49 trillion of that, up 21 percent.
Dividend income from listed companies added Shs369b, up by 55 percent. Real-estate income contributed Shs16b, down by four percent.
The remaining Shs2.62 trillion, a 587 percent increase on the prior year’s comparable figure, was unrealised.
This is the accounting mark-up of assets the Fund already held, arising almost entirely from two sources.
First is the revaluation of listed shares as East African stock markets rallied hard during the year.
Uganda’s own Exchange index rose from 1,287.64 to 2,063.98, Tanzania’s climbed by about 72 percent, and Kenya’s and Rwanda’s rose by comparable margins.
Second is the currency translation gains, as the Ugandan shilling depreciated against the Kenyan, Tanzanian and Rwandan currencies in which some of NSSF’s regional holdings are denominated.
A foreign-currency asset, translated back into a weaker home currency, looks larger in shilling terms even if nothing about the underlying asset has changed.
This distinction is the single most important fact for judging how repeatable the year was.
Cash income of Shs3.88 trillion is money the Fund has in hand, available to be distributed, reinvested, or held as a cushion regardless of what markets do next.
The additional Shs2.62 trillion is a paper gain, real under prevailing accounting rules but dependent on markets holding their value through to the next reporting date.
What positioning had to do with it
NSSF did not simply get lucky. Its portfolio was structurally positioned to benefit from the conditions that materialised.
The Fund entered the year with 13.3 percent of assets in equities, near the middle of its five to 20 percent policy range, and ended it at 18.4 percent, near the top of that range.
NSSF’s deputy managing director Gerald Paul Kasaato said this is partly through fresh purchases where management judged shares undervalued, and partly through the mechanical effect of share prices rising sharply across the region.
Fixed income fell from 80.5 percent to 76.5 percent of assets, still comfortably inside its 70 to 94 percent range, while real estate slipped from 6.2 percent to 5.1 percent, within its one to 10 percent band.
Mr Kenneth Owera, NSSF’s chief investments officer, said this is a decline driven by falling rental income following tenant exits in Kampala and the secondary city of Jinja.
‘By spreading its money across different investments such as bonds, stocks, property and different markets, NSSF made sure it could win from whatever performed best each year, instead of risking everything on one bet,’ he said.
Mr Owera explained that this is a defensible approach to managing a pool of capital this size, and it is precisely why the Fund benefited from both the equity rally and the currency movements.
It is worth noting, though, that diversification cuts both ways. The same structure that captured this year’s tailwinds would also transmit next year’s headwinds, should regional markets or the currency move in the opposite direction.
One asymmetry in the regional picture deserves mention.
Kenya’s stock exchange benefits from inclusion in the Morgan Stanley Capital International (MSCI) Frontier Markets Index, which compels international frontier-market funds to hold Kenyan shares, generating a structural pool of foreign buying and faster price discovery.
Uganda’s exchange is not included, largely because its listed companies are not yet large or liquid enough to qualify.
‘The practical effect is that Ugandan equities, even when attractive, may be more thinly traded and slower to reflect their true value than comparable Kenyan assets,’ Mr Kasaato noted.
Mr Kasaato added: ‘This is a market-structure constraint that affects how efficiently NSSF’s domestic equity holdings can be priced and exited, independent of the companies’ own performance.’
The less volatile half of the story
Investment income naturally goes up and down with the market. That is outside NSSF’s control.
But when you look at NSSF’s operational performance – the things it can actually manage day-to-day – the improvement has been steadier and more consistent.
This is the area where credit is really due to NSSF’s own management.
Administrative costs came to about Shs277b, or 0.84 percent of assets under management, below the Fund’s own one percent internal target and well below both a cited global average of around two percent and regional peers said to run in the two to three percent range.
Mr Ayota said: ‘NSSF now spends just 7.7 percent of its income on running costs, far more efficient than comparable commercial banks, which typically spend over 50 percent.’
‘Staff engagement, measured through internal surveys, rose to 93 percent, some 15 percentage points above a cited African benchmark of roughly 78 percent. Customer satisfaction rose to 89 percent,’ he added.
These figures matter for a different reason than the investment numbers do. They are not a function of regional stock-market sentiment or currency movements.
They reflect decisions the Fund’s management actually controls, like staffing, digitisation, and process design, and are, therefore, a more reliable indicator of whether NSSF is becoming a genuinely better-run institution.
A member weighing whether to trust the Fund with long-term savings should, if anything, weight this half of the report card more heavily than the investment return, precisely because it is less likely to reverse when market conditions change.
What went less well
An objective account has to include the parts of the year that were not clean wins.
A Shs11b loan NSSF extended to Uganda Clays, a construction-materials company, in 2010, has been restructured more than once and now carries an outstanding balance of roughly Shs25b.
Mr Kasaato explained: ‘This amount has already been fully accounted for as a loss on NSSF’s books, meaning, for accounting purposes, its value has been reduced to zero. However, no actual cash has been recovered yet.’
Management maintains the company’s finances have improved and the loan remains recoverable, but the honest position is that this is an unresolved legacy exposure.
Real-estate income fell four percent, the only asset class to post a year-on-year decline in income, as vacancies rose following tenant departures.
This is a reminder that real estate, while only 5.1 percent of the portfolio, has historically been the asset class management itself describes as generating disproportionate operational difficulty relative to its size.
NSSF also continues to hold a pool of unclaimed member balances, which are contributions collected on behalf of workers who later become untraceable, often because employment records list only a first name or an informal identifier.
Mr Stevens Mwanje, NSSF’s chief finance officer, said: ‘These are at Shs46.6b as of June 2026, a number which has been falling from Shs100b in the past.’
He added that these balances earn interest and remain payable when claimed, but the underlying identification problem has no clear resolution timeline.
There is also a structural friction the Fund’s own executives acknowledged.
They said operating a public institution with private-sector performance expectations slows some decisions that a purely private investor could make quickly, since procurement and governance processes must follow public-sector rules regardless of commercial urgency.
Looking forward, the macro conditions that supported this year’s result show early signs of turning.
Ugandan inflation, a contained 3.7 percent in June, had already risen to 4.4 percent by August according to central-bank commentary at the briefing, with official guidance pointing toward 5.5 to six percent over the coming year.
Financial markets analysts flagged the possibility of the central bank raising its benchmark policy rate for the first time in roughly two years, alongside a recent increase in the cash reserve requirement.
Should yields rise and equity markets cool in response, the unrealised gains that made up nearly 40 percent of total income in 2025/2026 could just as easily turn into unrealised losses in the following period, even if realised cash income continues to grow steadily.
A headwind building in the bond book
There is a second, less obvious risk to NSSF’s return trajectory, and it sits specifically inside the asset class the Fund relies on most, which is government bonds, at 76.5 percent of its portfolio.
It is worth separating carefully from the equity story above, because the mechanism runs in the opposite direction.
When bond yields fall, as they did across East Africa in FY2025/2026, an investor who actively trades bonds books an immediate capital gain, which is the same falling-yield effect that lifted equity valuations.
NSSF, however, holds the large majority of its government bonds to maturity rather than trading them.
It earns its return primarily as the coupon interest each bond pays, not as a change in the bond’s market price.
For a buy-and-hold investor of this kind, falling yields are not a windfall on bonds already owned.
They matter only when an old, higher-coupon bond matures, and the proceeds must be reinvested, at whatever yield is on offer at that moment. That is where the picture darkens.
Uganda’s government has been unusually explicit, over the past year, about wanting exactly this cheaper domestic borrowing.
In July, the Treasury rejected about Shs900b of a Shs1.2 trillion offer on a 25-year bond auction because investors demanded yields of 16.5 to 17 percent, and rejected nearly Shs5 trillion of bids across auctions that month more broadly.
This is a government turning down money it was offered, specifically because the price being asked was too high.
The reasoning has two clearly identified sources. First, oil production due to begin in the second half of 2026 is expected to reduce the government’s dependence on Treasury bill and bond issuance to fund itself, easing the urgency to pay elevated coupons simply to attract buyers.
Second, more aggressive revenue mobilisation by the Uganda Revenue Authority is intended to widen the domestic tax base, achieving the same effect from the collections side rather than the borrowing side.
The stakes for the government are unusually high because of a shift in the composition of its own debt.
Domestic debt now makes up the majority of Uganda’s total public debt at around 54.5 percent as of late 2025, having overtaken external debt for the first time in years, and domestic debt is more expensive, carrying an average interest rate near 14.6 percent, against about 2.3 percent on external debt.
A government whose debt has become mostly domestic and mostly expensive has an unusually strong incentive to bring domestic yields down, and the bond-auction behaviour in mid-2026 suggests it is acting on that incentive.
This same squeeze is already showing up next door, in the commercial unit trusts and money-market funds that everyday Ugandans use as an alternative to NSSF.
Several of these funds were posting yields above 13 percent in 2024, and by mid-2025 the reference short-term rate, which is the 91-day Treasury bill, had fallen to 11.31 percent, and comparable money-market funds had settled closer to 12 percent.
That compression happened in the same market NSSF’s own fixed-income book is priced against, and there is no obvious reason NSSF’s future bond purchases would be exempt from it.
None of this threatens the interest rate members receive this year because that rate is backed by cash income already earned.
What it does mean is that the coupon NSSF locks in on every new government bond it buys from here forward is likely to be lower than the coupon on the bonds it bought during the high-yield, election-year borrowing spree of FY2024/2025.
As those older bonds mature over the coming years and get replaced at lower rates, the average yield on 76.5 percent of NSSF’s portfolio will drift down, gradually and independently of whatever happens in equity markets.
Utility
KEY INFORMATION
NSSF’s total income grew by 85 percent from Shs3.5 trillion to Shs6.51 trillion.
Total Realised Income increased by 24 percent from Shs3.13 trillion to Shs3.88 trillion
Interest Income increased by 21 percent from Shs2.88 trillion to Shs3.49 trillion
Real Estate Income slightly reduced by four percent from Shs16.6 billion to Shs16 billion
Dividend Income increased by 55 percent from Shs238.14 billion to Shs 369billion
Other income increased by 587 percent from Shs 381billion to Shs 2.62trillion
NSSF Member contributions increased by 13 percent from Shs2.13 trillion in FY 2024/25 to Shs2.42 trillion in FY 2025/2026
NSSF Benefits paid (withdrawals) increased by 17 percent from Shs1.32 trillion in the FY2024/2025 to Shs1.549 trillion in the FY2025/2026.
Unclaimed balances: Shs46.6 billion as of June 2026.
WHAT PERFORMANCE SIGNALS FOR MEMBERS
For an individual member, the practical question is whether this year’s performance means a better declared interest rate, and does it mean the Fund is becoming a more reliable place to keep long-term savings?
On the first question, the maths is genuinely supportive. NSSF’s management has publicly tied its interest declarations to a ‘Return Promise’ of beating the ten-year average inflation rate by at least two percentage points, and the year’s realised cash income, which is a 24 percent increase.
Historical declared rates have also trended upward over the past
several years, and management strongly signalled at a media briefing yesterday that this year’s number would continue that pattern.
Mr Delick Manishimwe, an investment analyst at Sanlam Allianz Investments Uganda, said: ‘I expect the interest rate from NSSF next week to be like 14 percent and above based on the performance. When they declared 13 and a half last year, the revenues were nearly Shs3.5 trillion. So, if you are looking at the last Shs6.5 trillion, then you would expect the interest rate to go up.’
Mr David Calvin Bateme, a financial markets analyst with Crested Capital, believes that last year’s
13.5 interest rate might not differ much, improving on the more income the Fund made.
‘NSSF is reporting for the last financial year when yields in the bond market were going up. Yields started falling at the end of last financial year. This current movement in the market will affect NSSF’s performance in 2026/2027. I think NSSF will give an interest of 14 percent and above,’ he said.
Currently, most unit trusts in the market are averaging 11.5 percent. The outlier is Cornerstone Asset Managers, which is giving its investors 15 percent. NSSF has a chance to beat the market.