Uganda’s unfinished buildings are monuments to a familiar financial mistake.
Drive through almost any town, and you will notice concrete frames frozen mid-construction, scaffolding gathering rust, and construction sites abandoned behind locked gates.
Short-term bank loans were deployed against investments that needed decades to generate returns. Eventually, the repayment schedule arrived before the cash flows did.
Pension capital is the financing that should have been doing this work all along. It is patient, long-dated, and structurally suited to assets that take decades to mature.
The question Uganda has not yet answered is why it has taken this long to make that connection.
Borrowed comfort
Uganda’s retirement savings industry managed approximately Shs35 trillion ($9.2b) in assets under management as of the 2025/26 financial year, a figure industry players expect to double within five years as formal sector employment expands and contribution rates hold.
The country’s pension and retirement benefits industry covers approximately 4.06 million workers, according to data from the Uganda Retirement Benefits Regulatory Authority (URBRA), accounting for roughly 16 percent to 18 percent of the country’s total working-age population, which is north of 20 million.
The remaining 84 percent largely consist of agricultural and informal sector workers who operate outside the formal social security system.
This shortfall is attributed to the fact that the traditional pension system was exclusively designed for formal, salaried employment.
Traditional schemes such as National Social Security Fund (NSSF) require fixed monthly contributions, a structure that excludes workers with irregular or seasonal incomes.
To address this gap, government, through URBRA, is rolling out the Uganda Long-Term National Savings Scheme, which combines micro-pensions, micro-insurance, and digital savings tools for informal workers.
It will materially accelerate the growth of assets under management beyond what the formal sector alone can deliver, with assets under management projected to double within five years.
At $9.2b, pension assets now represent roughly 15 percent of Uganda’s gross Domestic product (GDP), a ratio that, while still below Kenya’s pension depth, places Uganda ahead of Tanzania, Rwanda, and Ethiopia in absolute terms.
Pension funds in Uganda allocate as much as 70 to 80 percent of their assets to government securities.
The attraction is not difficult to understand. Sovereign bonds are liquid, familiar, and at present yield of around 17 percent, generously remunerative. It is also, increasingly, a path leading toward a cliff.
‘Government assets are best understood, but that doesn’t mean it remains the only product for allocation,’ notes Ivan Wangolo, an Investment Manager with Pearl Capital Partners, who was speaking at a forum organised by CFA Society East Africa last month, one of a series of preparatory sessions ahead of the Alternative Investments Conference 2026, scheduled for next month.
The conference brings together financial and property leaders to interrogate trends reshaping institutional investment across the region, and the question of where Uganda’s pension capital goes next sits at the centre of that conversation.
The problem, as Wangolo and others see it, is that the industry has mistaken familiarity for strategy.
The irony
Uganda wants to grow its economy tenfold, from roughly $60b today to $500b within 15 years. Oil commercialisation, long delayed but still anticipated, is expected to accelerate the course.
Infrastructure investment, demographic expansion, and rising tax revenues are all cited as catalysts. It is an ambitious programme. It is also, for pension fund managers who have not thought carefully about second-order effects, a threat.
A government that grows richer has less need to borrow. A government that generates oil revenues, expands its tax base, and develops alternative financing instruments does not need to offer 17 percent to attract domestic savings.
Allan Lwetabe, the Deposit Protection Fund director of investments, says the course of the bond market is likely to change with a ’25-year bond today that is at 17 percent likely to be at 12 percent 10 years from today.’
Oil production is expected to begin generating material fiscal revenues within the next three to five years. As those revenues flow, government’s dependence on domestic borrowing will ease, and the premium it must offer to attract pension capital will fall with it.
A Fund calibrated to deliver 15 percent returns to beneficiaries on the back of 17 percent sovereign yields will find that arithmetic brutally altered when those yields compress.
In essence, pension funds are helping to finance the development that will make their favourite investment obsolete.
‘It is unlikely that government will continue to borrow and pay the levels of interest they are currently paying. That is not sustainable for the development of the country,’ Wangolo notes.
As oil revenues materialise and fiscal capacity strengthens, he argues, the pressure on pension funds to find alternative allocations will shift.
Looking across the border
The solution, or at least a version of it, exists elsewhere on the continent, and Uganda’s investment professionals are paying attention.
Edward Wachira, chief executive officer of Genghis Capital in Nairobi, explains that in Kenya, purpose-built student accommodation, constructed to hotel standards and marketed to the swelling ranks of university enrollees, has been generating returns approaching 25 percent, attracting institutional capital from US investors who see the demographic tailwind clearly.
In South Africa, specialist retirement living real estate has become a high-performing asset class.
Pension-backed commercial development in Botswana and Zambia has demonstrated that long-term capital, matched to long-term assets, can outperform government bond market on a risk-adjusted basis, provided the structuring is done properly.
‘Investors who understand the sector are more often than not better placed to invest in that sector,’ Wachira says. ‘The failure mode in real estate is not typically the asset, but the mismatch between capital and expertise.’
Pension funds, having spent decades learning the language of sovereign debt, are now being asked to become fluent in warehousing yields, student housing demand curves, and the economics of healthcare infrastructure.
That is not impossible. It is, however, a genuine undertaking, not a portfolio reallocation form to be filed and forgotten.
The opportunity, Wachira argues, lies in segments that fall outside that habitual line of sight, like student accommodation, agro-storage, warehousing, education facilities, where supernormal returns persist precisely because most institutional investors haven’t looked yet.
The mismatch in the mortar
The deeper argument is one of capital duration. Property developers have, for years, attempted to build 25-year assets using three-year commercial bank loans.
‘We are seeing many projects stalling in the middle, after the second floor, because the bank says, ‘pay me this year’. And you don’t have the money. The building is not complete,’ Lwetabe notes.
Pension funds, by design, carry no such urgency. A contributor enrolled today at 25 will draw savings in 2065. The investment horizon is, thus, matched to the assets that Uganda most needs to build.
‘By the time the person is leaving the pension fund,’ Lwetabe argues, ‘that project is done, and the returns are there’.
‘The natural capital for real estate is institutional and long-term. What Uganda has instead been doing is the financial equivalent of planting a forest with money borrowed by the week.’
Susan Khainza, a chartered financial analyst, cuts to the heart of the tension, arguing that pension funds operate under strict asset allocation rules, and real estate breaks nearly every one of the constraints that matter. It is illiquid, slow to return capital, and fixed in place. You cannot move it when circumstances turn against you.
The liquidity problem alone is disqualifying at scale. A fund like NSSF now faces shorter withdrawal horizons than ever, partly because early withdrawal is permitted. Pour too much of the fund into real estate, and you court a crisis the moment members arrive in numbers wanting their money back.
Pooling funds with multilateral partners partly solves this. It reduces the pension fund’s direct exposure and keeps the portfolio within legal allocation limits. But it does not solve the deeper problem, which is the nature of real estate itself.
Some have tried. Real Estate Investment Trusts were designed to liquidize the illiquid, to let investors trade in and out of property-backed assets like shares.
But Khainza is unconvinced: ‘You’re trying to change the nature of the investment. It’s long-term, and it’s not liquid. Even if you convert it into a REIT, the success of your investment is still based on the illiquid real estate underneath.’
The argument here is that you are committed, permanently, to one place and all the uncertainty that place carries forward. It is this tension, between the structural promise of real estate and the structural constraints of pension capital, that has drawn URBRA into the conversation.
‘The only unfortunate thing is that it’s coming now, and it was needed yesterday,’ says Martin Nsubuga, the URBRA chief executive officer.
URBRA’s own regulations already permit pension schemes to allocate up to 50 percent of their portfolios into real estate.
That ceiling has existed for years, yet actual allocations across the industry sit at approximately $411m (Shs1.6 trillion), accounting for roughly 7 percent to 7.2 percent of the sector’s total investments.
The allocation is less than a quarter of what URBRA has allowed.