Public pension’s manager, the National Social Security Fund, looks set to venture into infrastructure development for long-term growth as the drive to diversify and weather competition intensifies.
In an exclusive interview, NSSF managing trustee Alex Kazongo said the pensions manager would take a plunge into construction of residential houses, bridges and roads, among others, through infrastructure bonds in one-and-half years.
“The potential for NSSF is much more than what we currently have,” he said. “We want to go into infrastructure development through issuance of infrastructure bonds.”
Revenue base The fund will also invest in government securities to grow its revenue base as directed by Finance minister Uhuru Kenyatta in his Budget speech, Kazongo said.
Already, NSSF has brought on board six investment consultants to advise it on its risk exposure in a bid to shield billions of shillings in workers’ contributions from being wiped out through bad investment decisions.
The six include Old Mutual, AIG Kenya, Stanbic-CfC Financial Services, Coop Trust Investment Services and Genesis Kenya Investment Management Ltd, Mr Kazongo said.
The managing trustee stated that with the advisers on board, NSSF was now looking up to smart investment decisions devoid of legal complexities as has happened in the past.
“We have got the best consultants in the market who are also the largest in the region through a competitive process,” he said and added.
“What we are doing now is to invest prudently, governed by our investment policy. We are not going to invest in any property surrounded with suspicion or doubt.”
But of immediate concern to Mr Kazongo is a transformation of the fund’s structures and processes to ensure that it retains its status as the premier provider of social security to the Kenyan workers, he said.
Reforms have began and will take between 12 and 18 months but will touch on all the organisation’s departments to restore confidence in the management of NSSF, which has hit its lowest ebb following a series of financial scandals over the past one year and a management crisis that had paralysed its operations early this year.
The managing trustee disclosed that the Fund was in the process of bringing a world class IT infrastructure to replace the worn out one currently in existence.
Mr Kazongo’s first major task is to automate systems and inter-link branches. At the moment, he says, the branches operate as if they are independent of each other.
Interlinking the branches would reduce the number of days it takes a member to get a cheque from 12 to less than five,” says Mr Kazongo.
And the speed and dependability of the highly anticipated SEACOM and TEAMS underwater fibre optic cables would be godsend to the Fund.
NSSF has also met all the requirements set by the Retirement Benefits Authority for pension managers.
Fixed deposits “At the moment, we are only keen on fixed deposits but we want to grow the fund to two or three times bigger than it is currently through the best strategies reflected on our investment decisions.”
The managing trustee has been quoted in the pastas saying he intends to grow the Fund in the next three years from the current Sh90 billion to Sh150 billion.
In spite of tougher economic conditions and government plan to introduce an alternative pension’s scheme for the civil service in general, the managing trustee remains confident the Fund would weather the storm.
“We have become more competitive and even revamped our image,” he said.