In 2022, NSL saw several of its investments come under pressure due to a combination of high inflation, supply chain disruptions, rising fuel, and energy prices, the introduction of the Additional Company Tax on the BSP Financial Group, rising interest rates from Central Banks globally but falling yields on local fixed income investments, and the slowed economic growth of the World’s major economies.
NSL CEO Mr. Paul Sayer said in a radio interview today that “NSL employs an investment strategy that aims to diversify risks by running a balanced investment portfolio with about 20% of its investments deployed offshore and about 80% locally. This is done to de-risk the Fund when either the global or local markets perform poorly, however, last year NSL experienced challenges on both fronts which we expect will negatively affect our returns for 2022”.
“Locally the Fund had been contending with the reduction of yields from State securities, which make up nearly 50% of the Fund’s Investment Portfolio. Most of the impact of the reduction in interest rates for State securities will be seen in 2023 but we are expecting at least K50m in reduced interest income for 2022 as a result.”
“In addition, the Fund has experienced additional losses in returns due to a decrease in dividends caused by a tax loss of K6 million on the Fund’s shares of BSP Financial Group Limited. This was a result of BSP accommodating the State’s introduction of the Additional Company Tax in 2022.”
“Our other investment companies like Laga Industries and Ela Motors have also seen much lower profit margins as the population veers away from discretionary spending as the cost of living continues to rise throughout the Country. The ongoing liquor trading restrictions have also continued to be a hindrance on SP Brewery’s performance.”
“One positive from last year was the agreement reached between NSL and the State whereby the State would settle the remaining balance of its rental arrears in K10 million monthly installments. We thank the State, through the Departments of Finance and Treasury, for making payment of K102 million to date.”
“As of February however, the State now owes Nambawan Super K87.3 million. This includes K10 million in rentals for January and a further K10 million in rent for February and we are now into the first week of March which is also due.”
“NSL remains committed to working closely with the State to ensure the payment of all outstanding arrears is made as agreed in the payment schedule. However, any further delays to the scheduled payments will have a further detrimental impact on the returns of Nambawan Super Members.”
“As for NSL’s offshore investments, we have seen a dip in performance and valuations as many of the World’s leading economies faced the prospect of recession. This has caused many of our investments in those Countries, which were traditionally stable investments with consistent growth, to struggle in generating returns in the short term. We remain committed to these investments for long-term gains.”
“While there were many challenges faced in 2022, NSL worked hard to continue delivering some positive outcomes. The Fund injected a total of over K700m into the economy through Exits, including resignation, retirement & Death Benefits Payments, and Monthly Unemployment Benefits payments to over 12,000 Members and beneficiaries.”
“Despite the difficult economic conditions, NSL had worked hard to ensure that our Members’ accounts were maintained and they were able to conveniently access these funds for their retirement purpose. As such, our Members should be reassured that regardless of the state of the economy or investment environment, NSL will continue to protect their savings to help build a better future for them and their families.”
“As the Trustee for over 214,000 hard-working Papua New Guineans, NSL continues to work on mitigating the adverse effects of the current economic state to ensure that we are protecting the savings of our Members now and into the future.”
“The Board aims to approve our financials and make a decision on the annual crediting rate by March 2023, which may be less than previous years but will help in continuing to grow our Members’ savings over the long term.”