The major uncertainties for the Fund in the FY 2021/22 related to the top 12 risks described in the tables below.
Redesign of the Fund’s business model and governance structures to increase agility, improve customer experience and promote an innovative culture.
The current key governance challenge is to effectively manage the organisational redesign process. Ad hoc leadership committees have been established to manage the process.
Litigation is one of the key risks that the Fund is exposed to from time to time; with most of the litigation cases relating to land disputes. The good news is that in majority of decided cases, the Fund has always come out victorious.
As a way of mitigating the risk of successful litigation against the Fund, we conduct comprehensive due diligence before we purchase land, and we have adequate legal resources to defend the Fund’s interest in any litigation.
Sensitisation of all stakeholders helps to minimise non-compliance with regulatory and contractual obligations, which minimises litigations.
Litigation cases are likely to arise from time to time. However, the Fund is well equipped to address any litigation challenges.
The rising interest rates, especially on treasury instruments, is an attractive opportunity for the Fund.
Interest rates are likely to increase as the government intends to increase domestic borrowing by 70%, according to the 2022/23 budget.
In the medium term, stocks are likely to remain volatile due to the current global uncertainties and the upcoming Kenyan elections (for NSE).
The UGX may continue to gain ground against foreign currencies, as dollar inflows to finance the oil project increase.
No major incidents of financial impropriety were reported in the financial year.
The Fund maintained strong internal controls to prevent and/or detect potential financial crimes.
The possibility of an escalation in financial crime gives us an opportunity to strengthen our controls even more.
Financial crimes, especially fraud, are likely to escalate due to deteriorating economic conditions, fuelled by high inflation.
Broadening the product offering has always been a big challenge for the Fund due to regulatory barriers.
However, when the NSSF Act was amended to provide for midterm access and allow the NSSF Board to innovate and develop new products, this challenge was overcome.
Following the amendments of the NSSF Act, the Fund can now broaden its product offering to its members.
In addition to the new product (midterm access), the Fund is currently developing several additional products.
Several new taxes and tax conditions were introduced during the FY; but the ones that had direct implication to the Fund included:
We undertook effective tax planning to minimise the tax burden.
With careful tax planning, tax avoidance opportunities can be identified and exploited.
According to the government budget 2022/23, no new taxes were introduced.