SOCIAL SECURITY FUND INVESTMENT PRACTICE AND CHALLENGES IN ETHIOPIA: THE CASE OF SOCIAL SECURITY AGENCY

Abstract

The present research attempts to assess Social Security Fund Investment Practice and Challenges in Ethiopia: The case of Social Security Agency, mainly in the two pension fund administering organizations PSSSA and POESSA. The primary data were collected from twelve interviewees purposely selected from the two organizations based on their relation to investment activities of the organizations and structured questionnaire were also prepared for twenty eight management team members of both organizations to gather information about management issues concerning pension fund investment. These were supplemented by secondary data. The researcher used descriptive research design and mixed approach both quantitative and qualitative data analysis techniques. The study result shows that there are internal and external challenges of managing the investment of pension fund. Internally, there is lack of a statement of investment principles to guide their investment decisions and monitor their investment and fund management staffs. Trustees lack of competencies to manage pension fund investments. Externally, the current regulatory system is restrictive in that it prohibits pension funds to invest in different investment portfolios other than Treasury Bills. It also limits the organizations mandate from investing in profitable situations and currently the fund is totally used to cover government expenditures. This implies that there is a very high government intervention. Therefore, recommendations were made to consider the improvement of the proclamation for policy makers and adjustments of internal challenges for the board, high officials and also for the investment and fund management directorate itself for better usage of the fund in the long run.