MPs Question NSSF Over UGX 11 Billion Loan to Uganda Clays

The National Social Security Fund (NSSF) offered Uganda Clays an unsecured loan of 11 billion Shillings.

This was revealed on Wednesday during a meeting in which the former NSSF Managing Director, Richard Byarugaba, Acting NSSF Managing Director Patrick Ayota, and other officials appeared before the select committee. 

The select committee chaired by Mbarara South Member of Parliament, Mwine Mpaka was named recently to examine corporate governance structures at NSSF, examine circumstances surrounding the appointment of the Managing Director, evaluate the status and safety of savers’ money, examine the extent of stakeholder engagement in decision making and inquire into any other matters incidental thereto.

The probe follows corruption allegations at the Fund stemming from a letter to the NSSF board by the Minister of Gender, Betty Amongi letter questioning the reappointment of the former Managing Director, Byarugaba when his contract expired at the end of November 2022.

 The NSSF Board led by Dr. Peter Kimbowa endorsed Byarugaba’s reappointment for another five-year term. As a result, Prime Minister Robinah Nabbanja asked Amongi to proceed with the appointment  “as recommended by the Board to avoid any managerial gaps, which can put the workers’ funds at risk”.

Amongi protested the move and instead called for an investigation into the conduct of the former Managing Director while at the fund. She accused him of among others abuse of office and mismanagement of investments. She directed that investigations be conducted within two months in line with a resolution by the Board of directors.

Mpaka wondered why the NSSF management extended a loan to Uganda Clays when it was making losses between 2008 to 2010.

This is highlighted in Auditor General John Muwanga’s management letter to the Fund.

According to Muwanga, NSSF disbursed the loan in 2010 and it was supposed to be repaid in 8 years or 96 months.

However, NSSF had not recovered the money from Uganda Clays to date.

 Mpaka tasked Byarugaba, who was then the NSSF audit committee chairman to explain why the savers money has not been recovered. He noted that his committee has been notified that the loan has been written off. 

In response, Byarugaba said that the loan was provided to enable the struggling company to expand production in Mbale, where they sought to start a new factory.

He told the committee that Uganda Clays experienced huge losses and that to redeem it, NSSF took over its management in order to recover the loan. The select committee was informed that NSSF seconded two of its staff to Uganda Clays, a step that turned to the profitability of the company.  

According to Byarugaba, Uganda Clays has since re-instituted the loan on its books and the money is to be recovered.  

His explanation prompted Charles Bakkabulindi, the Workers’ MP to question whether the Savers’ Fund had started operating like a commercial bank.

 Bwamba County MP, Richard Gafabusa asked whether NSSF undertook a risk evaluation on Uganda Clays before providing the loan.   

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