The Sunday Mail
>> NSSA accused of making bad investment decisions, neglecting its fundamental mandate
As the National Social Security Authority (NSSA) celebrates their 20 years of service this year, economic and social experts have expressed diverse views towards the organisation’s two decades of service saying its contrasting business practices are unfortunately the highlight of its journey
NSSA, which was formed in 1994 to administer social security and pension schemes, is one of the few entities in the country to boast a robust revenue inflow and an impressive investment portfolio.
The authority also assumes a heightened importance as it is a readily available source of liquidity, bailing out struggling entities, particularly in the finance sector during a period plagued with liquidity constraints and limited fiscal space.
However, despite turning into an investment bank of sorts, NSSA has also been accused of making bad investment decisions as well as neglecting its fundamental mandate which is to administer social security schemes.
The pension fund administrator’s beneficiaries have also complained about the cumbersome process of claiming their benefits caused by shortage of staff at the authority’s offices.
Some have questioned why in this day and age NSSA has not yet fully digitalised its operations considering the fact that ICT is fast and requires less manpower.
Currently NSSA looks like it’s facing staff shortages.
Economist Mr Christopher Takunda Mugaga summed NSSA’s twenty years of existence as being “up and down” adding that at times the organisation failed to utilise the pensioners’ funds properly.
“My assessment of their journey so far is that it has been up and down for them. They (NSSA) are one of the most liquid companies in the country but they have failed to utilise their funds well,” he said.
“They went into an investment overdrive without doing research of how viable some of the projects they funded were, for instance, the Capital Bank saga.
“Where is it (Capital Bank) now? They don’t seem to be able to explain that, they ought to have made viability researches before making some of these decisions.”
Mr Mugaga said NSSA has spent too much money in the finance sector, a situation which left them exposed and vulnerable as a lot of banks are struggling.
While Mr Mugaga’s summation of NSSA’s operations in the past decade may sound harsh, he raises some critical facts which may shape the authority’s fate in the next 40 to 50 years.
For example, their clumsy investment projects may end up affecting the institution’s finances in the long run.
To support his claims he uses the example of NSSA’s failed Capital Bank project.
Research shows that in 2012 NSSA splurged US$24,2 million for an 84 percent shareholding in the then Renaissance Merchant Bank, which was renamed Capital Bank.
The project, however, crumbled after the bank failed to raise the minimum capital required by the central bank, a development which reportedly led NSSA to write off the investment which had amassed to over US$30 million by way of equity.
The capital Bank is just one of NSSA’s many failed investment projects.
One would also question the rationale of replacing a shopping mall, Ximex, with a car park. NSSA said it was going to construct another state-of-the-art building in place of Ximex but is now leasing the space to car dealerships.
In addition, in 2014 NSSA was involved in a US$50 million scandal after the cost of the hotel it was building in Beitbridge ballooned from US$17 million to US$50 million in murky circumstances.
It is believed that NSSA paid funds to constructor Costain so that it could work even though it had been awarded a US$17 million tender by the State Procurement Board.
Nonetheless the authority claimed to have accrued more benefits in the Capital Bank project than it had invested although experts say the authority lost the pensioners’ funds through unfulfilled investments.
Another economic analyst and University lecturer Dr Cecilia Mapfidza equated NSSA to a naive “good Samaritan” who gets in trouble for doing what is right.
“NSSA had become like a safe haven for most institutions in the country because it became a source of liquidity. That is good,” she said.
“But then they did it naively because lots of funds were lost and some of them never recovered. What they should have understood is that security comes first in business, whether you are investing or lending there should be security.
“If they had done proper research and before using some of those funds they would have known what to expect ahead.”
Dr Mapfidza said NSSA should stop investing for the sake of it and prioritise the worker and the pensioner in their day to day business.
Despite being critical, Dr Mapfidza was adamant that NSSA is the greatest blessings the country has had.
She said she felt NSSA had done its core business fairly well, adding that issues of delays in claims processing are inevitable given the fact that the authority has limited control of issues that causes the delays.
She added that given the current economic situation it was far-fetched to expect satisfactory premiums since even those who are working are not getting satisfactory income.
Dr Mapfidza’s assessment of NSSA seems a fair one. She manages to highlight the good work that NSSA has done through its misfortunes.
Her comments about premiums and delays in processing claims may however not go down well with most pensioners.
A lecturer in the department of Social Studies at University of Zimbabwe said it was sad that NSSA was taking for granted the worker’s funds and spending it wildly.
“We are dealing with a very serious matter here but what saddens me is that nobody seems to realise that,” said the lecturer.
“Imagine someone is yet to receive their benefits five or even ten years after leaving work and then you hear that some US$25 million spent on dubious projects cannot be recovered just like that.
“It pains because you cannot have something which rightfully belongs to you and you don’t even know where your next meal will come from yet someone is playing with your funds.
“The other issue is the slow pace at which things are done at NSSA house. The process of filing claims is long and tedious.”
Efforts to get a comment from NSSA were not fruitful as its Public Relations Department gave the paper the run around saying they needed more time to respond to our queries.
Among those (enquiries) were issues relating to the challenges the organisations are facing in their operations and a response to claims by most pensioners that the organisation is letting them down due to their cumbersome and long processes.
Also their take on claims of maladministration, corruption and mishandling of funds pensioners are levelling against them.
NSSA, however, did say while some of its investments highlighted in the media recently have not gone down well well, others have done well, with the overall result being that they have added value to contributors’ funds.
Figures published by the authority show that investments with a total actual cost of almost $662 million as at January 31 this year had a market value at the same date of more than $701 million.
NSSA has also said the investments it is making today will benefit the future pensioners as it is still a fairly young pension fund which cannot pay huge premiums even if the gap between its income and expenditure suggest they can.
“The gap between NSSA’s income and its expenditure on the National Pension Scheme is often highlighted in the media, implying that NSSA could afford to pay higher pensions,” reads the statement.
“As has been pointed out before, the size of this gap is due to the fact that there are considerably more contributors than there are beneficiaries.
“This is to be expected with a pension fund that is still fairly young and has minimum contribution of 10 years for pensions to be payable,” read a statement pulled of their website.
Investigations, by the paper, did show that NSSA has about 70 percent of its investments in the equities market, and has interests in 64 of the 69 companies listed on the Zimbabwe Stock Exchange, holding 10 percent on 12 counters.
At a glance NSSA looks a company enjoying the benefits of being liquid but struggling to maintain balance between what they earn and what they invest.
But the NSSA’s investment portfolio -analyst say – is doing well overally, despite the losses experienced with some of them.
Contributors’ funds are secure and have grown.
They also continue to grow.
