PRESS STATEMENT

May 03, 2013

The Fund has received information relating to a report submitted by an anonymous individual to the Inspector General of Government (IGG). The report contains a number of unsubstantiated allegations against the Fund, which have been reported in the media today.

The Fund is open to any investigation by the IGG. We will provide the required information to enable the IGG carry out investigations.

We commit, in line with transparency and accountability, to cooperate with the IGG to conclusively investigate the allegations.

Nevertheless, we wish to clarify that these allegations are absolutely false and are intended to tarnish the reputation of the Fund.

1. Buying of Umeme Shares The Fund has purchased a total of 131.5 million shares in Umeme to date through the initial public

offering and secondary market transactions, resulting in an 8.1% holding of the total shares.

Our investment in Umeme was undertaken in line with our investment procedures and after a thorough

due diligence. The investment was approved at all levels of authority from management up to the

Minister of Finance, Planning and Economic Development. Currently, Umeme is trading at UGX 315, up

14.5% from the listing price.

With all the Fund’s trades in the secondary market executed at UGX 275, the Fund’s average purchase

price inclusive of trading fees is only UGX 276. The value of our investment has therefore appreciated by

UGX 5 billion in less than 6 months.

Umeme declared a dividend per share of UGX 15 for the year ending 31 December 2012, implying a

dividend yield of about 1.97 billion.

2. Disposal of land at Namirembe This land was purchased in 2008 at UGX 650m, together with other plots in Ndeeba, Arua, Gulu, Hoima,

Mbarara and Masaka. The idea was to build branch offices countrywide. The Fund resolved to dispose of

all the plots as they were idle assets tying up money that would otherwise be earning income. This

resolution was adopted and approved by the Board of Directors.

The Namirembe land in question had no access road, a fact confirmed by the Commissioner for Surveys

& Mapping and which was not taken into account at the time of purchase in 2008 as boundaries were

not opened then. The impaired value on account of lack of access road has now been confirmed by the

Chief Government Valuer.

The Fund did not deem it necessary to apply for an access road because it was not intending to develop

the land, and the prospective buyer owned all the surrounding land [Plot 436], reason why PPDA

approved direct disposal to that bidder; furthermore, the Fund had by then already contractually

committed to sell the land to the buyer.

The land sale was authorized by PPDA, Contracts Committee, Accounting Officer and the Solicitor

General. The land was valued at UGX 600m by the Chief Government Valuer while the Fund sold it at

Shs. 650 Million. The hitherto locked up value of the land is now invested in income generating assets.

3. Joint Venture with SBI for planned housing estate at Lubowa

The Fund purchased over 563 acres of land at Lubowa, Kampala to develop a modern housing estate in

2003. In 2004, a Joint Venture company Victoria Properties Development Ltd, was formed to implement

the housing estate.

The JV was unfavourable to us because it made SBI a majority shareholder in the company yet NSSF was

to provide both the land and cash for the project. After a lengthy negotiation, SBI agreed to forego its

rights under the Joint venture agreement in exchange for the design and supervision contract without

competition. These JV dissolution terms were approved by the board of directors, Contracts Committee,

Management Investments Committee, PPDA, and the Solicitor General paving way for progress on the

project.

Designs have been completed and submitted to Wakiso District Council for approval to pave way for

construction. The US$ 1 million loan was to the joint venture, NOT SBI and the money was spent by the

joint venture company to prepare a master plan for the project. The guarantee SBI issued for 51% of the

loan expired and the JV Company was wound up. The loan was deemed a sunk cost and written off by

the NSSF Board of Directors.

Upon dissolution of the JV, the ownership of the Master Plan was transferred to NSSF, together with all

unspent balances on the JV bank account worth approximately Shs. 40 million.

The Fund is fighting encroachers on that land who include Pastor David Kyambadde and Hassan

Katamba of Resurrection Life Church and Mathias Jumba. A bailiff engaged by the Fund to evict the

encroachers was violently assaulted, injured and his vehicle destroyed .The matter has been handled by

office of the RDC, Police, DPP, and is due in court. Furthermore, a Surveyor from the Commissioner,

Surveys and Mapping has also been engaged to determine the extent of encroachment and identify all

encroachers on the land so that they are dealt with at one go.

4. Waivers to contributions defaulters In 2011, the Fund launched an Amnesty and Whistleblowers campaign to encourage employers who

were defaulters to pay their employee’s NSSF contributions and in turn, the Fund would offer a waiver

of the penalty as provide for in the NSSF Act. A number of employers have responded and are paying the

arrears in installments, which has resulted into our increased monthly contribution rates.

URC was sued way back in 2008 by NSSF represented by Crane Advocates. After a protracted litigation

and lengthy audit, URC admitted it owed arrears being under remittance of standard contributions in

respect of its workers from 1995 to 2001 plus interest. URC agreed to pay on condition the penalty is

waived, and appealed through the Hon. Minister of Finance for a waiver. The penalty was 6 times the

value of the arrears. As part of our relationship model, a consent judgment was entered under which

the MD waived the penalty [NOT contributions] and asked URC to meet legal expenses, on condition the

Principal and interest are paid by 30th May 2013.

The first instalment of Shs. 3.89 billion has been remitted, and the lawyer’s fees paid off by URC. Bottom

line is workers contributions have been recovered by the lawyers at no cost to the fund. The case is still

pending in court for a portion of the arrears that URC disputes I.e. contribution arrears in respect of its

workers from 1995-2006 and is awaiting Judgment.

The “waivers of contributions” was a subject of a recent IGG investigation (report of 7th March 2013);

where the IGG identified some very historical weaknesses in the controls and procedures and these

were immediately addressed. Though the IGG identified these weaknesses, it was also clearly

established that there were no personal gains or motives behind these lapses.

5. Staff issues and remuneration

The Fund has clear and empirical performance targets and a performance appraisal system. The circumstances under which a member of staff may be let go due to poor performance are also very clearly stipulated in the Staff Handbook (duly approved by the Board). At other times, a person may be let go in response to business needs. NSSF closed 4 branches it was no longer tenable to have staff at management level without branches to manage. The Fund regularly conducts training as part of staff development. To date, 84% of all current staff have been trained following the FUND’s staff TRAINING and development strategy.

The whistleblower alleges that the Fund paid UGX 11.4 million phone bill of the Corporation Secretary. This is an office line, used for official communication. When roaming, the charges are substantially higher due to the fact that the service providers charge incoming and outgoing voice and data. It is not true that the handset is replaced “every 3 months.”

6. Land title for National Farmers Federation land This was a BOOT agreement signed in 2008 for construction of a 12 storey building on the UNFF at Plot

27 Nakasero Road, Kampala. The cost of the project approx. US$12 Million would be provided by NSSF

and recovered from rent over a period of 25 years after which the property would be retransferred to

UNFF. UNFF appealed to NSSF to reconsider the investment and management has held a series of

meetings on an amicable dissolution. Management is verifying the costs of terminating the Joint

venture, including Stamp Duty, Rent and rates. KCC requires a valuation of the plot before advising on

the applicable rate. However, the title has no acreage indicated on it and therefore cannot be valued

until that matter is clarified.

RICHARD BYARUGABA

MANAGING DIRECRTOR