The National Social Security Fund (NSSF) of Uganda has significantly expanded its investment footprint across East Africa, allocating UGX 5.15 trillion in fixed income and UGX 1.2 trillion in equities in Kenya for the 2024/2025 financial year, positioning the neighbouring country as its top external investment destination.
According to the fund’s latest Investment Portfolio Distribution report, Kenya continues to attract the largest share of NSSF Uganda’s regional portfolio, reinforcing cross-border financial integration and the growing role of institutional investors in the region’s capital markets.
The report shows that Kenya commands a dominant share of NSSF Uganda’s regional investments, ahead of Tanzania and Rwanda. The fund’s total fixed income investments rose to UGX 13.7 trillion in FY2024/25, up from UGX 11 trillion in the previous financial year. Of this, Uganda accounted for the bulk at UGX 13.7 trillion, followed by Kenya (UGX 5.15 trillion), Tanzania (UGX 1.65 trillion), and Rwanda (UGX 15 billion).
In the equities segment, NSSF Uganda’s holdings stood at UGX 1.45 trillion in Uganda and UGX 1.2 trillion in Kenya, further consolidating the two countries as the fund’s largest investment destinations. Tanzania and Rwanda trail at UGX 717 billion and UGX 35 billion respectively.
The fund’s total regional exposure in equities and fixed income now surpasses UGX 22 trillion, underscoring NSSF’s expanding role as one of the region’s most influential institutional investors.
Fixed income instruments, which include government bonds and treasury bills, continue to form the backbone of NSSF Uganda’s investment portfolio. The 2024/25 financial year saw an increase in allocations from UGX 11.05 trillion to UGX 13.7 trillion, signalling a conservative but stable approach amid fluctuating regional markets.
Kenya’s government securities remain attractive to institutional investors, driven by competitive yields and a maturing bond market. Analysts note that cross-border participation in Kenya’s fixed income market has risen sharply in recent years, buoyed by reforms promoting investor confidence and regional financial harmonisation.
Tanzania and Rwanda, though smaller markets, also feature in the fund’s diversification strategy. Their combined contribution to the fixed income portfolio, while modest, highlights NSSF’s intention to spread risk and capture growth opportunities across East Africa.
NSSF Uganda’s diversification strategy is designed to balance returns and manage risks associated with local market volatility. By expanding into Kenya’s more liquid markets, the fund mitigates concentration risks tied to Uganda’s domestic economy.
According to financial analysts, Kenya’s market depth, improved regulatory framework, and dynamic private sector make it a natural choice for regional investors seeking stability and liquidity. The Nairobi Securities Exchange (NSE) remains the largest in East Africa by market capitalisation, hosting blue-chip firms across banking, telecommunications, and energy sectors.
The bond markets across the East African Community (EAC) partner states; Kenya, Tanzania, Uganda, and Rwanda remain relatively small and illiquid. Primary market listings are limited, while secondary market trading volumes are minimal.
This underdevelopment stems not only from the trading, clearing, and settlement frameworks, but more fundamentally from the absence of essential market drivers that underpin any robust financial system. Knowledge and expertise in fixed income instruments remain limited and uneven among market participants, constraining growth and innovation in the sector.
Banks currently dominate government securities trading, giving them a competitive edge over brokerage firms. However, a few Kenyan brokers have taken a proactive approach by specializing in fixed income trading, successfully carving out a niche in the segment. Similar efforts in Uganda and Tanzania could play a vital role in deepening and strengthening their respective bond markets.
“Beyond the traditional investment classes; fixed income, equities, and real estate, pension funds need to invest in other areas that will directly and significantly drive Africa’s economic growth.” said Patrick Ayota, Managing Director of the NSSF, during a conference held in Kampala earlier this month.
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