Road to Kapeeka and origin of the crisis at NSSF
On December 6, 2022, board members of the National Social Security Fund (NSSF) travelled to Kapeeka, about 60 kilometres outside the capital Kampala, to meet with Gen (rtd) Caleb Akandwanaho, aka Salim Saleh.
On paper, Gen Saleh is the coordinator of Operation Wealth Creation, a loosely regulated programme set up for army veterans to distribute agricultural inputs. In reality, he is widely seen as the most powerful person in the country after his brother, President Museveni.
The journey to Kapeeka had started at least seven months earlier, in May 2022, when Gender and Labour minister Betty Amongi declined to approve the NSSF budget as presented by the board. The amendment to the NSSF Act had come into force in January 2022 and expanded membership of the Fund to voluntary savers and firms with fewer than five employees.
In a May 30 letter addressed to then NSSF managing director, Mr Richard Byarugaba, the minister said the NSSF budget should consider sensitisation and engagement of employers and workers, strengthening compliance of labour laws, establishing a mechanism for monitoring the welfare of workers, including use of an online system, and establishing a corporate social responsibility fund to help low salaried workers impacted by Covid-19.
“This will require some budget allocation under operating funds that will support the joint activities with the ministry in charge of labour, labour unions, federation of employers, private sector, government ministries departments and agencies (MDAs) and Members of Parliament representing workers and those in the Parliamentary Committee of Gender, Labour and Social Development.”
Mr Byarugaba pushed back in a letter to the minister two weeks later. The submitted budget, he said, already included allocations for these activities. In addition, he said a proposal by the minister to reduce the operating budget by Shs23 billion “will significantly erode our ability to deliver on the budgeted 10.5 percent return to the member”.
This letter and a meeting three days later over the budget failed to resolve the matter. On June 16, Ms Amongi responded in a letter to NSSF Board chairperson Peter Kimbowa, the board chairperson.
Once again, she asked the board to rework the budget and pay special attention to “strengthening compliance with labour laws, sensitisation and engagement of employers and workers to scale up the expansion of social security, and engagements of Parliamentarians and other strategic stakeholders”.
Specifically, she asked the Board to carve Shs6 billion out of the Fund’s operating budget to cater for the areas she had identified. It is this money that has since raised controversy, and which will be revisited later.
However, Ms Amongi wasn’t done. In the same letter, she also blocked Shs400 billion that had been earmarked for strategic land purchases in the budget. The minister asked for it to be parked in fixed income investments awaiting submission of a due-diligence report. This, as our reporting will also show, would also emerge as a source of conflict within the Fund.
Ms Amongi kept Shs76 billion meant to build an office complex at Yusuf Lule Road in the budget but deferred approval for the works pending a resolution of a contractual dispute. This, again, would also emerge as a pain-point between the minister and the NSSF managing director.
The minister also pushed for an explanation on a planned staff restructuring exercise at NSSF, as well as plans by the Fund to build a specialised court for the Judiciary to handle social security cases.
By this time, however, relations between the board, the minister, and the NSSF managing director had become frosty, officials familiar with the matter say. They were about to become ice-cold.
Mr Byarugaba and the current NSSF acting managing director, Mr Patrick Ayota’s careers were intertwined. They had worked together at Barclays Bank and had been reunited at NSSF when Byarugaba became managing director and Ayota chief finance officer. When Geraldine Ssali, the deputy managing director left in 2017, Mr Ayota was promoted to the number-two position.
Under them the Fund had grown from Shs2.7 trillion in 2012 to Shs17.2 trillion. In 2018/2019 revenues from investments had outstripped collections from members from the first time, and were 29 percent higher in 2021/2022. The effects of the coronavirus pandemic pushed returns to members below double-digits for the first time in a decade in 2021/2022, but the 10-year average return to members outstripped inflation.
NSSF was a quiet, money-printing machine, but not everyone was happy with the performance. In mid-July 2022, weeks after the tug-of-war over the budget, both Byarugaba and Ayota were reminded that they had reached (and passed) the retirement age of 60.
The Board had, on July 1, 2022, recommended to the minister to reappoint the two officials given their relatively good performance. For that to happen, however, they had to officially retire, according to the minister. On July 18, Mr Ayota notified the minister of his intention to retire at the end of 90 days. Two days later Ms Amongi accepted the retirement but based on the Board recommendation, reappointed him on a one-year contract, as long as there was no objection from President Museveni.
But no retirement was forthcoming from Mr Byarugaba. He noted, in discussions with the board chairperson and close associates, that he did not have to retire before the end of his contract at the end of the year.
On July 22, 2022, Ms Amongi wrote to Byarugaba noting his failure to retire, and directed him to stop exercising the mandate and functions of the office of the managing director NSSF with effect from July 26.
“The deputy managing director who has retired and has been appointed on contract will act as managing director,” the minister noted.
A potential stand-off was avoided by a letter an hour later from Deputy Solicitor General Pius Perry Biribonwoha who advised that Mr Byarugaba’s term of office ended on the last day of his contract – December 1, 2022 – not on his sixtieth birthday. But the writing was on the wall.
President Museveni joined the fray on August 6, 2022, with a letter to Minister Amongi urging restraint and wider consultation. “It is better one consults quietly about these appointments before deciding,” he wrote.
“In the case of NSSF, the present group seem to have done a good job, growing the fund from Shs1.7 trillion in 2010 to Shs17.2 trillion currently. Good performance is not very common in parastatals. Where it occurs, the actors should be appreciated.”
The President proposed a meeting later that month with the minister, the vice president, the prime minister, the finance minister, and the Attorney General, to discuss the matter further. “I have been told that Mr Byarugaba’s term ends in December 2022. Hence, there is still time.”
At the State House meeting, Ms Amongi reported that the board had recommended new contracts for both NSSF top officials, but she had received several petitions, whistle-blower reports, and allegations of mismanagement directed at the MD. She proposed a meeting so that the President could hear directly from the NSSF Board, which was agreed to.