The URBRA team, led by their Chief Executive Officer Martin Nsubuga, appeared before the select committee inquiring into the supervisory role activities of NSSF. They were replying to a query on whether it was regular for NSSF to give out savers' money in the form of loans.
Uganda Retirement Benefits Regulatory Authority (URBRA) officials have told parliament that National Social Security Fund (NSSF) is prohibited from giving out loans to different entities.
URBRA Chief Executive Officer Martin Nsubugaand Diane Nabakooza
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The select committee established on Wednesday that the Fund management had extended a loan of Shs11 billion to Uganda Clays Limited in 2010. The unsecured loan has accumulated interest and has now amounted to Shs20 billion. Over the past 13 years, NSSF had not recovered the loan from Uganda Clays Limited.
The committee was also presented with documents indicating that the fund extended another loan of Shs29 billion to the Housing Finance Bank.
Mwine Mpaka, the select committee chairperson, said that the fund's records show that Housing Finance Bank has a balance of Shs9 billion, although there are no records of payment of the Shs20 billion.
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In his submission before the committee yesterday, URBRA's head stated that it is irregular for the Fund to conduct loans since it is a scheme.
The Director of Legal Services URBRA, Rita Faith Nansasi, added that it is illegal for the fund to give out loans according to Section 68 of the URBRA Act which prohibits savings Funds from giving out loans to private companies.
“The funds of a retirement benefits scheme shall not be used for speculative investments, be lent to any person, except through securities sold on the open market, used to make direct or indirect loans to any person, be used as security for loans,” reads part of Section 68 of the URBRA Act.
Legislator Mpaka further inquired from URBRA officials if they have details concerning the Shs11 billion that was given to Uganda Clays Limited. Nsubuga said that they raised the issue with NSSF when they first learnt about the loan.
Nsubuga further explained that NSSF has since secured a land title from Uganda Clays Limited as loan security.
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“Our interest is to protect savers’ funds. URBRA performed an onsite visit and has demanded a loan repayment plan,” said Nsubuga.
However, there has not been a valuation of the land and it is unknown if it's equivalent to the money owed, according to URBRA. Moreover, the Authority has not seen the land title nor any other specifics regarding the land.
The Director Supervision and Market Conduct, Daisy Nabakooza prior to the URBRA presentation, had told the committee that NSSF had sent information on the land, part of which was verbal.
The URBRA Act was established in 2011 to regulate the establishment, management, and operation of retirement benefits schemes in Uganda in both the private and public sectors.
