It was illegal for the National Social Security Fund (NSSF) to give out loans to different entities, the Uganda Retirement Benefits Regulatory Authority (URBRA) has said.
Established under the URBRA Act, 2011, URBRA is obligated to regulate the establishment, management and operation of retirement benefits schemes in Uganda in both the private and public sectors.
NSSF is currently under parliamentary probe over alleged mismanagement under the reign of former managing director Richard Byarugaba. Among the select committee findings are that NSSF extended an unsecured Shs 11 billion loan to Uganda Clays Limited in 2010. The loan has not yet been recovered and has accumulated interest and now totals Shs 20 billion.
Another Shs 29 billion loan was extended to the Housing Finance bank. Select committee chairperson Mwine Mpaka said that the financial books of NSSF currently show that Housing Finance bank has a balance of Shs 9 billion but there is no trail indicating payment of Shs 20 billion.
Appearing before the MPs, URBRA chief executive officer Martin Nsubuga said it was irregular for NSSF to give loans since it is just a scheme and therefore not supposed to extend loans. Rita Faith Nansasi, URBRA director legal services quoted Section 68 of the URBRA Act that restricts 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.
Mpaka further questioned the URBRA officials whether they have details about the Shs 11 billion loan advanced to Uganda Clays Limited and URBRA CEO, Nsubuga said that when they learnt about the loan, they raised issues with NSSF about the matter.
He further explained that the loan has now been restructured and that NSSF has since secured Uganda Clays’ land title as security.
“Our interest is to protect savers’ funds. URBRA performed an onsite visit and has demanded for a loan repayment plan,” said Nsubuga.
Mpaka further questioned whether the land title is equivalent to the loan amount, but Nsubuga noted that there has not been any valuation of the land. The committee also learnt that URBRA had not seen the land title in question and has no other specifics regarding the land.
This was after Daisy Nabakooza, URBRA director of supervision and market conduct told the committee that information regarding the land was only sent to them by NSSF recently and part of it was verbal.
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