SSNIT assures ‘prudent’ investments

After enduring scathing public criticism for making poor investments, the Social Security and National Insurance Trust (SSNIT) says it has learnt its lessons and will henceforth focus solely on ‘high yield’ investments.

The fund intends to increase its investment in the banking sector, which has been its golden goose on the stock exchange, as well as the promising oil and gas sector.

“We are seriously considering a stake in ADB once the IPO is successful this time, and we are also looking at the oil industry,” Noel Addo, SSNIT’s General Manager in charge of Investment and Development Division, told the B&FT at Ecobank’s dividend presentation to the fund on Wednesday.

Ecobank presented the fund with a cheque for GHC39.88million as dividend for its 16.19 percent stake in the bank, which is a 189 percent increment from the payment in 2013.

SSNIT has investments in about 25 listed companies, but more than 60 percent of its dividend earnings come from just the eight banks on the list.

“We have learnt a lot from our mistakes, and going forward we are being careful with some of our investments. We are being very prudent and very cautious with whatever investment we undertake.

“That is why we are looking for high yield companies - companies with very good corporate governance and management structures; and I think regulations in the banking sector are very good. Apart from the banks we have only a few oil companies to invest in,” he added.

“The dividend yields from other listed companies have not been very encouraging, but the banks have given us very good value within our portfolio…banks are very predictable in terms of dividend income,” he said.

Mr. Addo explained that the fund is being careful in choosing stocks to invest in, so as to avoid some of the bad investments it has undertaken in the past.

While it is yet to release its 2015 financials, the fund’s total investment portfolio increased from GHC5.2billion in 2013 to GHC6.6billion at the close of 2014, which represents a positive variance of 27.9 percent. The 2014 figure is made up of GHC2.35billion in equities; GHC3.61billion in fixed income and GHC640.51million in alternative investments.

Some of the fund’s key banking stocks are held in Cal Bank, 33.18 percent; GCB Bank, 29.81 percent; HFC Bank 26.14 percent; Societe General Ghana, 22.14 percent; Ecobank Ghana Limited, 16.19 percent; and Standard Chartered Bank, 14.34 percent.

In the area of real estate, SSNIT has heavily invested in residential properties, car park complexes, community markets and malls, and property management firm Broll.

SSNIT has been heavily-criticised in the public sphere for what people consider to be ill-advised investments like the struggling State Transport Company (STC).

The Public Accounts Committee (PAC) of Parliament has often taken on management of the fund, which has usually defended its decisions over what the parliamentarians consider to be poor investments that diminish workers’ pension funds.

Its sale of Merchant Bank to Fortiz Private Equity Fund was heavily criticised, but at a thanksgiving service during its 50th anniversary celebration in November 2015 Prof. Joshua Alabi, the board chairman, defended the fund thus: “People accused us of selling the bank without any tangible reason, but as a custodian of people’s money SSNIT could not have continued to pump money into an institution that was not performing to expectation”.