(NAIROBI, KENYA) – The National Social Security Fund is planning to increase its investments in offshore listed shares and private equities as it looks to diversify its portfolio away from domestic government securities and property markets.
The State backed pension fund is seeking to appoint an investment manager to establish and manage an offshore multi asset portfolio, largely denominated in foreign currencies such as the US dollar. The portfolio will form the foundation of its alternative investments programme.
The move will help the fund reduce its exposure to government securities, which currently make up 70% of its portfolio, with a total of KES 389 billion invested as of June 2025. That is about $3 billion and £2.37 billion.
The fund is also seeking to deploy its new found cash after workers’ annual contributions jumped by more than KES 100 billion on higher monthly savings. Monthly savings rose from KES 200 per worker in 2023 to KES 6,480 in February. That is about $771 million and £610 million in total contributions, with monthly savings now about $50 and £39.50.
NSSF is now seeking to cap its investments at not more than 60% and reduce reliance on blue chips like Safaricom, KCB, EABL and Equity Bank to drive its returns.
The fund said in a disclosure that the objective of the assignment is to reduce structural concentration in domestic government securities and a narrow listed equity base, and provide diversification of returns and currency exposure away from the Kenya Shilling and Kenya sovereign credit.
Among the asset classes NSSF seeks to expand into are global equities, most of which it expects to come from North America, largely the United States, some in Asia Pacific and a few in Africa.
It also wants an increased portfolio in regional and local private equity and venture capital, trade finance and increased participation in privatisation, including initial public offerings of State corporations.
The plan sets a target net return of 3% to 4% above the Secured Overnight Financing Rate for the offshore multi asset portfolio over three to five year periods. The broader diversification programme is expected to target a minimum average 6.5% net return.
The Secured Overnight Financing Rate currently stands at 3.64%, meaning the overall targeted return on the offshore and alternative investment portfolio will be at least 10%.
Last year, NSSF realised a net return of 17% on all its investments.
Currently, the fund has only KES 2.5 billion in offshore investments, accounting for 0.47% of its portfolio. That is about $19.3 million and £15.2 million. The Retirement Benefits Authority allows up to 5% of a fund’s assets to be invested in offshore equities.
Its offshore investments rose from KES 1 billion in 2024, or 0.27% of its assets. That is about $7.7 million and £6.1 million.
Similarly, its portfolio in private equity and venture capital more than doubled from KES 3.3 billion in 2024 to KES 7.3 billion, rising from a share of 0.85% to 1.31%. The Retirement Benefits Authority allows up to 10% exposure in this asset class.
NSSF also targets to invest some of the Kenyan workers’ money in infrastructure projects and affordable housing, in which it currently has zero exposure. Its recently started joint venture with China Road and Bridge Corporation in the construction of the Rironi Mau Summit toll road is set to be the first.
For infrastructure, NSSF plans to invest alongside development finance institutions through equity, fund commitments, mezzanine debt or joint venture structures like the one with China Road and Bridge Corporation.
NSSF declined to comment on what level of exposure it targets for the offshore, venture capital and infrastructure investments in the long run, saying it does not comment on ongoing procurement processes.
Its disclosures on the tender show that the fund manager it settles on will have discretion to execute trades within parameters set by NSSF’s Investment Management Agreement and Alternative Investments Policy Statement. The offshore strategy will include active positioning and rebalancing across approved markets and asset classes.
The fund also disclosed that the fund manager will need to build NSSF’s internal investment capacity to manage the offshore and venture capital activities, indicating that it plans a long term participation in those markets.
The successful manager will be required to transfer investment processes and systems to the fund’s investment team, provide software, dashboards and reporting templates, and conduct at least three formal training sessions each year covering areas including offshore investing, alternatives, foreign exchange risk and performance attribution.