A series of investment blunders made by the National Social Security Fund has cost it billions, resulting in huge financial losses for pensioners. According to an audit report, that translates to a loss of nearly Sh1 billion.
Investment Failures in Stock Market and Housing Projects
The biggest losses were in the stock exchange market and in non-performing housing projects. Auditor General Nancy Gathungu criticized NSSF managers for their persistent investment in failing companies. Key among them is the Sh247 million invested in Consolidated Bank of Kenya shares, whose value later dropped to Sh38 million, thus causing a loss of Sh209 million. Other investments, including East Africa Portland Cement, Sameer Africa, and Athi River Mining, went down by Sh50 million.
Unrecovered Payments and Failed Projects
The NSSF lost a Sh215 million advance payment paid to a contractor for the stalled Embakasi housing project, that was stopped due to lack of approval by the Nairobi City County government. The members’ contribution is unrecovered due to this breach of law. The members’ contribution of Sh9.54 billion was not disclosed in the financial statement, making the given balance of Sh26.8 billion not accurate.
Risks to Key Assets
The pensioners risk losing such precious assets as a plot in Kisumu where one businessman has opened a garage and has been paying uneven rent to NSSF, which has no formal agreement with this person. A number of projects and services on which the fund expends its money have also been raised. A Sh31 million spent on the SSH Gym Centre and Bulk filers lacked a completion status report, while Sh12.5 million was spent on a travel service provider after the contract had expired.
Possible Impact
This string of investment mistakes and failures in the management of NSSF present grave risk to the pensioner’s assets and thus call for urgent reforms to ensure better management of the fund and transparency in future investments.