Govt seeks to turn pension savings into patient capital to drive growth

Uganda needs to increase pension coverage, strengthen long-term savings and create credible investment opportunities if the country is to mobilise the capital required to achieve its ambition of transforming the economy from about $50 billion to $500 billion by 2040.

Speaking at the inaugural SBG Securities Pensions conference in Kampala, Simon Mulongo, the minister of state for Labour, Employment and Industrial Relations, said Uganda’s economic transformation would require more than increased production and investment.

He said the country must also build a strong culture of long-term savings capable of providing patient capital for productive economic activity.

According to the minister, long-term domestic savings will be critical to financing enterprises, creating jobs, increasing household incomes, strengthening exports and building the resilience of the Ugandan economy.

“A $500 billion economy cannot be financed with short-term money and low national savings. Uganda must save more, invest better and direct capital towards productive opportunities,” Mulongo said.

He said government’s Tenfold Growth Strategy identifies agro-industrial development, tourism, minerals including oil and gas, and science, technology and innovation as key anchor sectors for Uganda’s economic transformation.

The minister said achieving the country’s economic ambition would therefore require the mobilisation of significant pools of domestic capital, with the pensions sector playing an important role in converting long-term savings into productive investment.

He said the government is targeting an increase in national savings from approximately 20% of GDP to about 40% by 2040, underscoring the strategic importance of strengthening Uganda’s retirement benefits and broader savings ecosystem.

Mulongo cautioned that pension funds must not be channeled into projects simply because they are associated with national development. He stressed that pension investments must remain commercially viable, transparent and aligned with the interests of beneficiaries.

“Development must earn pension capital. Projects and instruments must be bankable, transparently structured and capable of delivering appropriate risk-adjusted returns. Members’ interests must remain first,” he said.

The minister called for stronger governance across the pension’s ecosystem, including competent and independent trustees, transparency and accountability among fund managers and financial institutions, effective regulation, timely remittance of contributions by employers and greater financial literacy among workers.

He emphasised that the growth of the pensions sector must be accompanied by public confidence and strong protection of members’ interests. He commended Stanbic Uganda for convening the inaugural SBG Pensions Conference and congratulated SBG Securities on the launch of its new pension management capability.

The minister’s remarks come at a time when Uganda is seeking to deepen domestic capital markets and increase the role of institutional investors in financing the country’s development.

Mark Ocitti, the Stanbic Uganda Housing Limited (SUHL) Chief Executive said Uganda’s ambition to build a $500 billion economy would require capital that can take a long-term view.

“Our ambition of developing a $500 billion economy will not be built by ambition alone. It will be built by people who work, enterprises that invest, institutions that have trust and capital that is prepared to stay the course,” Ocitti said.

He said the new Pension Management Fund Service represents an extension of SBG Securities’ existing investment management business, strengthening its capacity to mobilise and responsibly manage long-term domestic capital.

“It is an extension of our capacity to mobilise and responsibly steward long-term domestic capital,” he said. He said the initiative reflects SUHL’s commitment to supporting Uganda’s economic transformation through innovative financial solutions.

“At Stanbic Uganda, our purpose is clear: ‘Uganda is our home; we drive her growth.’ We believe the pensions sector has a unique opportunity to contribute to Uganda’s long-term development by mobilising domestic savings and deploying them into productive investments that stimulate economic activity, create jobs and improve livelihoods,” he said.

Grace Semakula, the chief executive officer of SBG Securities Uganda Limited, said their new offering responds to growing demand for professional, transparent and innovative pension fund management services.

“Our objective is to deliver consistent value to retirement schemes through disciplined investment management, strong governance and sound risk management. Pension savings deserve professional stewardship that balances sustainable returns with long-term capital preservation,” Semakula said.

She said strong governance and responsible investment management would be essential to building confidence in Uganda’s retirement benefits sector and ensuring that members’ savings are managed with a long-term perspective.

The Uganda Retirement Benefits Regulatory Authority (URBRA) also highlighted the need to strengthen the structure and management of retirement savings. Daisy Nabakooza, the director of Supervision and Market Conduct at URBRA, said the structure of retirement benefits needed to support both members’ retirement needs and the continued investment of pension savings in the economy.

She cautioned that continued reliance on lump-sum payments when members exit employment could reduce the amount of capital available for long-term investment.

“If we continue paying out pension savings as lump sums whenever members exit, we will struggle to realise our long-term growth aspirations,” Nabakooza said.

She said the sector needs arrangements that adequately meet members’ retirement needs while allowing an appropriate portion of pension savings to remain invested over the long term.

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