Material Matters

INTRODUCTION

Material matters are those issues that could substantially affect our ability to create value in the short, medium and long term. These matters influence our strategy and how we manage our associated risks, as well as opportunities we explore as a result of these factors.

 

The process we follow to determine our material matters is as follows:

The outcomes of our materiality process resulted in the prioritisation of the following materiality themes:

REGULATORY
CHANGE

NSSF Amendment Act 2022 

Strategic Objectives impacted

CAPITALS
IMPACTED

The NSSF Amendment Act 2022 was passed into law in January 2022.

 

The Fund is now mandated by law to provide social security services to all workers in formal and informal employment under the private sector. Under provisions of the NSSF Amendment Act 2022 anyone can now save with NSSF for their retirement. 

rISKS

Reputation Risk

  • Inability to pay midterm benefits timeously due to an overwhelming volume of applications

 

Liquidity Risk

  • Liquidity was a key concern in the first half of the year, due to the anticipated amendment of the NSSF Act to provide for midterm access for members

short-term
MITIGATION RESPONSE

  • To ensure adequate liquidity, the Fund adopted a change in strategic asset allocation which resulted in increased investment in fixed deposits at the expense of treasury bonds

LONG-TERM
MITIGATION RESPONSE

  • The Fund will continue to undertake regular cash flow forecasts to maintain sufficient liquidity levels

Opportunities and impact on Business Model

  • The Fund was able to fully automate the benefits application and verification tools. This enabled members to benefit from a seamless experience when they applied for their midterm benefits and receive their funds in a short turnaround time
  • The NSSF Amendment Act 2022 presents many opportunities for the Fund to innovate and develop new products and services to cater for both long-term and short-term savings needs
  • Anyone can now save with NSSF

Targets

  • Setting up a unit trust to cater for short-term products
  • Develop a voluntary customer acquisition model
  • Enable single ID – multiple wallet functionality in the core system

GLOBAL ECONOMIC UNCERTAINTY

Slow economic growth & macro economic variables

Strategic Objectives impacted

CAPITALS
IMPACTED

Global economic uncertainty  is due to the enduring effects of Covid-19, rising inflation because of the War on Ukraine, increased commodity prices, supply chain disruptions and the increasing impact of climate change. 

rISKS

Business/Strategic Risk

  • Negative impact on collections and investment income due to businesses struggling to meet statutory obligations, including NSSF contributions
  • Inability to grow contributions
  • Market volatility negatively impacting investment returns
  • Increased cost of doing business
  • Civil unrest and regional conflict
  • Food insecurity due to prolonged dry seasons

short-term
MITIGATION RESPONSE

  • Improving compliance enforcement and arrears recovery

LONG-TERM
MITIGATION RESPONSE

  • Monitoring market variables and adjusting the portfolio mix to respond to the changing market environment

Opportunities and impact on Business Model

  • Allocating more funds to the fixed income portfolio to take advantage of the rising interest rates
  • Through the Fund’s innovation strategy, we aim to create an eco-system and community of innovators
    • To this end, the Fund promotes entrepreneurship and supports small businesses that have the potential to scale and bring new economic opportunities for Uganda
    • These will enable a future pipeline of contributions and new investment opportunities
  • The Fund now has the legal instrument to develop savings products for the informal sector and grow membership and coverage

Targets

  • Return on Investments 2% above inflation
  • Collections –  UGX 1.5Tn
  • New members recruited – 100,000

ORGANISATIONAL REDESIGN

Creation of a lean and agile structure

Strategic Objectives impacted

Capitals
impacted

The Fund is undergoing an organisational restructure to transform the Fund into an agile and digital organisation that proactively anticipates and quickly responds to our members’ needs and delivers an exceptional customer experience.

rISKS

People Risk

  • Staff concerns regarding job security
  • Resistance to change
  • Inadequate skills and competencies to meet new job requirements

 

Operational Risk

  • Disruption to business operations
  • Possible litigation

short-term
MITIGATION RESPONSE

  • Engagement with staff and key stakeholders to obtain buy-in and co-create an optimal structure
  • Implementation of a reskilling programme to ensure staff are adequately trained to meet the requirements of the new roles
  • Implementation of change management to help staff prepare for their new roles
  • Win-win mutual separation

LONG-TERM
MITIGATION RESPONSE

  • Business process re-engineering
  • Design of an optimal business model to enable significant customer growth

Opportunities and impact on Business Model

  • Elimination of duplicated roles and silos
  • Formation of squads to design and develop products and benefits to meet member demands
  • Creation of new positions providing opportunities for internal promotion and growth
  • Optimise synergies for an organisation-wide digital transformation

Targets

  • Full operationalisation of the new structure by 1 October 2022

Digital acceleration

Pension Administration System – IT infrastructure upgrade

Strategic Objectives impacted

capitals
impacted

The Fund implemented new robust core pension system in December 2021 to improve efficiencies, enable product innovation and create a seamless experience for our customers.

rISKS

Business/Strategic Risk

  • Potential disruption in business operations due to system downtime
  • Inability to fully embrace 4th IR
  • Failure to embrace new ways of work
  • Failure to reorganise/realign business model to changing business/skills/ways of working requirements

short-term
MITIGATION RESPONSE

  • Automation of several key processes
  • Implementation of Robotic Process Automation (RPA) to effectively respond to midterm benefit claims within a short turnaround time

LONG-TERM
MITIGATION RESPONSE

  • Full deployment of supporting digital infrastructure

Opportunities and impact on Business Model

  • The new technology will enable the Fund to deliver seamless digital services via the branch network and the digital channels
  • This deployment is part of a wider IT strategy to automate as many processes as possible so that our staff are free from routine and repetitive tasks to be available to advise members on the best options to meet their savings needs and take charge of their financial future
  • Organisational redesign to embrace innovation and ensure an agile structure
  • New technology will enable the Fund to develop and scale value adding benefits and services

Targets

  • Complete system stabilisation by 1 October 2022
  • A compliance module is being built to aid compliance and arrears recovery

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