NSSF must cease to be a milch-cow: Rethink the massive Mavoko project

What you need to know:

  • After all, we all know that the State hasn’t done a good job of its fiduciary responsibility over the Fund. Had it done so, the NSSF would not be paying those meagre lump sums amounts it pays to retirees.

Chief executives of the National Social Security Fund rise and fall at a frenetic speed.

They are usually removed from office at the whim of politicians depending on whoever is calling the shots at State House.

It does not matter whether you are doing a good job. I have lost count of the number of individuals who have occupied this position in the last 10 years.

They include Pius Masika, Jos Konzolo, Ben Mutueta, Naphtally Mogere, Ruth Lumbasyo, Alex Kazongo and Tom Odongo.

What can be done to bring this boring ritual to a stop? I have a few ideas.

First, the NSSF, as an institution, including its trustees, must be made to account principally to its membership.

The biggest tragedy with it is that it is run as if it was any other state corporation owned by the government.

The truth of the matter is that the Fund belongs to the ordinary pensioner. The State does not have a cent in there.

Indeed, beyond its fiduciary responsibility of protecting the interest of the pensioner, and the fact that at the end of the day, the NSSF debts and liabilities are more or less contingent liabilities on the books of the State, the government has no business in it.

After all, we all know that the State hasn’t done a good job of its fiduciary responsibility over the Fund. Had it done so, the NSSF would not be paying those meagre lump sums amounts it pays to retirees.

If the State and its board were doing a good job, the ratio of administrative expenses to the Fund’s net assets would be way below what it is now.

There were times when administrative expenses consumed almost half of monthly contributions.

If the State and its appointed trustees were doing a good job, the money credited to member’s accounts very year would have be much higher.

Today, billions of shillings of members’ savings still sit in a suspense account.

Every year, it has almost become a ritual that the Auditor-General must cast doubts on the validity of some of title deeds held by the Fund.

Contrary to the RBA rules, the fund still holds a big proportion of its assets in immovable property.

I keep praying that some public-spirited MPs will one day come up with a Bill to amend the NSSF Act to allow for the election of trustees by members at an Annual General Meeting.

Which brings me to a decision made by the Cabinet last week.

I have a lot of faith in the Cabinet of the new administration.

It not only have fewer members but is also comprised of individuals with solid credentials in matters to do with finance.

That is why I was surprised when it rushed last week to approve a plan by the NSSF board to go into a multibillion shilling property development project in which the Fund is to co-finance the construction of 30,000 houses in the Mavoko area.

In today’s world, you do not go into such a massive infrastructure development project before conducting a thorough assessment of the corruption risk.

Mark you, the fund is currently on a property development spree. The Hazina House extension project which will consume a whopping Sh7billion has already been awarded to a Chinese contractor.

Another Sh2.9 billion property development project in the Embakasi area has also been signed and awarded to the same Chinese contractor.

Huge projects come with huge rent-seeking opportunities. Mr Tom Odongo had to give way.

However, the more pertinent questions are these: Where is the voice of the ordinary contributor in all these decisions?

What are these projects likely to do in terms of the size of the Fund’s property portfolio, especially with regard to limits on asset classes set by the Retirement Benefits Authority?

Before going into more property development, have we interrogated the present property portfolio on such parameters as the Inter-Bank Rate of Return to see whether more property will lead to more money for retirees?

Recently, I saw a January 2010 forensic investigation report by the audit firm PriceWaterhouseCoopers on NSSF’s property portfolio.

It presents a catalogue of misdeeds and mismanagement.

Let’s rethink the Mavoko project. The NSSF’s core mandate is old-age retirement income. Period.