Dar pension fund eyes real estate

The Arusha International Conference Centre.

LAPF and AICC will build an ultra-modern shopping mall at the premises. Photo/File  Nation Media Group

By ADAM IHUCHA Special Correspondent

Posted  Saturday, September 29  2012 at  14:58

In Summary

• LAPF director-general Eliudi Sanga said the funds will be directed towards projects in Mwanza, Arusha and Morogoro regions.
• The projects in Mwanza and Arusha, which will include a shopping mall, will cost about $53.7 million, while the planned Morogoro ultra-modern bus terminal will cost up to $24.4 million upon completion.
• The project should help LAPF raise more funds to meet rising pension obligations and expand its portfolio

Tanzania’s Local Authorities Pension Fund (LAPF), one of the country’s large retirement funds managers, is planning a major foray into the real estate business, with an investment of over $78 million.

LAPF director-general Eliudi Sanga said the funds will be directed towards projects in Mwanza, Arusha and Morogoro regions.

The projects in Mwanza and Arusha, which will include a shopping mall, will cost about $53.7 million, while the planned Morogoro ultra-modern bus terminal will cost up to $24.4 million upon completion.

“This will boost LAPF’s real estate investment to 18 per cent of total investment portfolio value of $288.4 million as of June 2012, up from 15 per cent in June, 2011,” Mr Sanga said.

The project should help LAPF raise more funds to meet rising pension obligations and expand its portfolio.

Dar pension funds

The LAPF is one of Tanzania’s six pension funds, the others being the National Social Security Fund, Parastatal Pensions Fund, the Public Service Pension Fund, Government Employees Pension Fund and the Zanzibar Social Security Fund.

The ultra-modern Arusha shopping mall will be undertaken jointly by LAPF and Arusha International Conference centre (AICC).

The AICC managing director Elishilia Kaaya, said the construction is expected to begin before the year ends.

According to Mr Kaaya, the shopping mall, to be housed at the AICC premises, will offer a range of facilities including supermarkets, banking halls, restaurants as well as offices for airlines and tour companies.

Other offices will be rented out for bureaux de change and cinema halls.

In the fiscal year ended June 2012, LAPF’s pension bill stood at nearly $24,551. 282 annually, up from $16,794.871 in June 2011.

Long term investment

Daniel Mghwira, market analyst with Miradi associates in Tanzania, said the real estate market offers plenty of opportunities for institutions like social security pension funds to make huge gains on a long-term basis.

“What they need is to invest once and reap profits for years,” Mr Mghwira said, adding that investments in the real estate sector could also be used as collateral for the funds to secure long-term loans from financial institutions.