The relationship between the social security fund scheme and economic growth in Uganda.

Abstract

This study examined the relationship between the social security fund scheme and economic growth in Uganda, focusing on National Social Security Fund (NSSF) total assets and contributions. Despite substantial growth in NSSF resources over time, Uganda’s economic growth has remained variable, creating a need to establish how the different components of the social security fund scheme are associated with economic performance. The study employed a quantitative explanatory time-series design using annual data for the period 1995–2025. Economic growth was measured by annual real GDP growth, while NSSF total assets and NSSF contributions were expressed as percentages of GDP. Gross fixed capital formation, inflation and population growth were included as control variables. The Autoregressive Distributed Lag (ARDL) approach was employed after unit-root tests established a mixture of I(0) and I(1) variables, with none integrated of order I(2). Two separate objective-specific ARDL models were estimated for NSSF total assets and NSSF contributions. The ARDL bounds tests provided evidence of long-run levels relationships in both models. For the first objective, NSSF total assets/GDP had a negative long-run coefficient of −0.310, statistically significant at the 10 percent level. For the second objective, NSSF contributions/GDP had a positive long-run coefficient of 0.342, statistically significant at the 5 percent level. Gross fixed capital formation and population growth were statistically insignificant in both models, while the relationship between inflation and economic growth differed across the two specifications. The error-correction coefficients were negative and statistically significant, indicating relatively rapid adjustment towards the estimated long-run relationships following short-run disturbances. The post-estimation diagnostic tests generally supported the adequacy of the estimated models. The study concludes that NSSF contributions and accumulated assets exhibit different long run relationships with economic growth in Uganda. Contributions were positively associated with economic growth, whereas total assets exhibited a negative association over the period examined. These findings should be interpreted as conditional associations rather than causal effects, given the possibility of endogeneity and reverse causality. The study therefore recommends that contribution mobilization and asset accumulation be considered separately in social security and economic-policy discussions, while maintaining prudent management and ix protection of members’ retirement savings. Keywords: Social Security Fund; NSSF Contributions; NSSF Total Assets; Economic Growth; Uganda.