By Hilary Mare
THE Social Security Commission (SSC) has received back its six-month investment of N$30 million it made with the SME Bank, and has earned interest of N$1.3 million, amid concerns about the “safety” of the money, Confidente has learnt.
The N$30 million, which had matured for repayment, is part of a total of N$150 million invested into the SME Bank by the commission, with another N$70 million one-year investment set to mature on 15 September and the other N$50 million one-year investment poised to reach maturity on 13 December 13.
SSC Chief Milka Mungunda told Confidente that the commission had made a good investment decision, which had yielded its highest ever interest return.
She said that SME Bank had offered the highest comparative returns in the market, in terms of the SSC investment, in comparison to all the other financial institutions in Namibia, before adding that the commission had received assurances from the bank that all the remaining investments are safe and sound.
“When we decided to invest in the bank, we did our due diligence, and hence everything was also done following internal procedures and with the board’s approval,” Mungunda said.
“We are confident that the money invested with the SME Bank will be all returned on maturity, and with interest. We are in constant communication with the bank and we have regular updates on our investment, and hence we have no reason to be concerned,” she said.
SSC Manager for Investments, Lorentha Harases, said that since the commission established an investment department in August 2016, investment policy standards and procedures have been reviewed, and the internal portfolio has been restructured, among other key prudent reforms.
“Investments with asset managers, to the value of approximately N$330 million, have been terminated, resulting in the savings in fees of 1.08 percent or N$3.3 million per annum. The investments were yielding an average of 7.04 percent and were replaced with fixed-term deposits (FTDs) yielding, on average, 9 percent without any fee,” Harases said.
“Trading tool Bloomberg has been implemented and this is being used for the effective management of the investment portfolio. A custody cash and script account has been opened with the current custodian, Standard Bank, for the internal portfolio, for the safekeeping of treasury bills and bonds, and a Centralised SSC Treasury call and current account has been opened with the SSC current bank, Bank Windhoek,” she added.
“Year-on-year (February 2016 to February 2017) the SSC portfolio increased from N$2.97 billion to N$3.24 billion, an increase of N$278 million.
“From the total growth of N$278 million, the external portfolio increased by N$161 and the internal portfolio by N$117 million, representing a growth of 9.52 percent, which is below the benchmark of NCPI+3% (National Consumer Price Index), Harases said.
“The growth is attributable to consistent earnings from the fixed income instruments in the internal portfolio, as well as interest and dividends received on the external portfolio.”
From the N$3.23 billion, only N$809 million is managed internally and N$2.42 billion by external asset managers.
Responding to questions regarding why the SSC invested with the SME Bank, Harases highlighted that the main reasons for investing was firstly that the current SSC investment policy standards and procedures had limited nominal exposures, per banking institution, and most exposures were fully utilised.
“Secondly, to address the concern by the line minister, regarding the underperformance of the portfolio, by restructuring the internal portfolio; and thirdly, due to competitive rates offered by SME Bank, and also to diversify the portfolio, on the back of government shareholding.
“It should also be noted that the current investment policy and standards and procedures do make provision for investments with the SME Bank.
“Furthermore, SSC funds were previously only placed for three months. After identifying the cash flow needs of the projects, it was in the best interest of SSC to extend the maturity profile to three, six, nine and 12 months, and hence the longer maturities, until 12 months. To address the short-term cash flow needs, the Centralised SSC Treasury Call account has been opened with Bank Windhoek/Capricorn,” Harases explained
She further noted that the reviewed investment policy standards and procedures will address geographic asset allocation and support Namibian and Namibian majority-owned companies, in light of the new Public Procurement Act, and to improve the performance of the portfolio, while maximising the returns on the portfolio, for further growth.
The SSC portfolio achieved the N$3 billion level for the first time, in the current financial year.
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