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United Republic Pension Schemes

Thursday, January 31, 2013

Chinese Contractor Wins Historic Shs222bn NSSF Towers Project

Chinese Contractor Wins Historic Shs222bn NSSF Towers Project
By Our Reporter:

China Civil Engineering Construction Corporation (CCECC) has beaten two other Chinese companies to the lucrative multi-billion tender to complete the long awaited Pension Towers.
CCECC who tendered to construct the intelligent building at Shs222.3 billion, beat China National Aero-Technology International Engineering Corporation (CATIC) and Sino-Hydro Corporation hands down to the mega-deal- the biggest in the commercial real
estate sector.

According to a best evaluated bidder notice, pinned on the NSSF Notice board, the other two firms failed on various aspects of work methods and proposed staff qualifications.
20 companies fromUganda, Kenya, Switzerland, South Africa and China were in the race for the big-ticket project, but only three Chinese companies were picked for the final phase.
Roko Construction that constructed the first phase of the project and the name behind a number of big-ticket projects in Kampala did not make it to the final round.
Tight Race

According to reliable information obtained by The Red Pepper, even though CCECC price of Shs222.3 billion was slightly higher than that of the other two competitors, CCECC who has a rich construction experience on the African continent emerged victorious because “their bid showed that they knew what they were doing.”

The source intimated to us that in a probable haste to cut down costs, the other two bidders had opted to use less qualified people and rudimentary work methods and in some case proposing unrealistically low timelines.
For example CATIC proposed to use grade 25 reinforced concrete instead of the required grade 35 reinforced concrete. The company also proposed to use rudimentary means of mixing and transporting concrete such as wheel barrows and buckets, instead of
the required mixer trucks and cranes.
SinoHydro Corporation on the other hand failed on work methodology. For example, the firm proposed to do curtain walling before the completion of the main concrete frame on which the curtain walling sits. The firm also proposed to fix electrical installation after completion of structural works yet the two are supposed to be carried out concurrently.
Record breaking
Construction of the first phase of Pension Towers which involved construction of four basement levels and some elements of ground and mezzanine floors, started in April 2008  and was completed in January 2012, This phase cost Shs42.5 billion.

Once complete, Pension Towers will be an ultra-modern ‘intelligent’ tri-tower complex. The Central tower comprises of 25 floors while the other two side towers are each ten storeys.
The three towers sit on four basement Floors, one ground floor, one mezzanine floor and one podium floor, making a total of 32 Floors for the taller tower and 17 floors for the short towers, ultimately making the building the biggest and tallest in Kampala.

The building whose surface area is 75,000 m² has 20,000 m2 of net office area. Net parking area is 10,000 square metres and can accommodate up to 500 cars.
The building is said to be bigger than Workers House, Communications House and Crested Towers combined.

Once completed, the building which has been redesigned twice, will have costs Shs264.8 billion shillings, again making it the most
expensive and biggest building structure in modern times.
The building whose cost was originally Shs36 billion had its price increased to Shs120 billion by the NSSF board in 2008. Following

NSSF’s acquisition of an adjacent plot on Nakasero Road, the project was again redesigned to include the newly acquired plot, pushing the cost to the current Shs264.8 billion.
At an earlier press conference to reveal the new design, Richard Byarugaba, NSSF Managing defended the new design as being commercially viable.
“The current redesign will enable us to optimally utilise all the land and ensure that the property earns a good return for contributors.

We anticipate an annual return of 15%,” he said.
Pension Towers is one of the projects under the Fund’s Real Estate Investments portfolio.
Other real estate projects in the pipeline include a 5000 unit affordable residential housing estate in Temangalo and a 3000 unit estate for high income earners in Lubowa.
Experts have also defended the project saying that it will bridge the supply gap in the sky-high priced commercial rent sector.
Renowned architect William Henry Ssentoogo, a Senior Partner with Ssentoogo&Partners said thatthe building would significantly “bring rental costs as well asaddress the supply gap.”
Then board chairman, Mr Vincent Ssekoono, said that increased demand for modern office space in the city centre meant that the fund would make more returns.

Low cost housing remains a dream


By David Ssempijja 
Publish Date: Dec 08, 2012
newvision
 
With a housing deficit of 1.6 million units, coupled with an annual population growth rate estimated at 3.4%, and a 5.6% urbanisation rate, Uganda needs to move swiftly to match her population explosion with decent and affordable shelter.
 
According to the housing ministry, out of the total deficit, 1.29 million is in rural areas and 211,000 in urban centres. The problem is even more worrying given that Uganda’s population is estimated to hit 42 million by 2020, where more eight million affordable housing units will be required to address the deficit.
 
This is being exacerbated by commercial developers building only super luxurious houses.
According to Daniel Opio, the business development manager at Shelter Consult Uganda, the country suffers from lack of affordable housing units that can be acquired by the majority of the population.
 
“Some people build personal houses for more than two years because the finances required outstrip their capacities. This is time-consuming and detrimental to the efforts to close the deficit,” Opio said. 
 
Much as affordability is relative, in Uganda’s context, a low cost house is usually one-bedroomed, established on 11 decimals and selling between sh45m and 50m, going by the standards of private developers of housing estates. 
 
Anatoli Kamugisha, the president of the Uganda Private Property Developers Association, says developing an affordable housing sector for Uganda remains a dream because of the skyrocketing costs of land, building materials and bank loans.
“Even the house cost range we consider to be within the low-cost bracket is not affordable in reality, as far as low income Ugandans are concerned,” he says.
 
He adds the developers are less attracted to dealing in low cost houses because they command less returns on investment.
 
Kamugisha says making low cost housing a reality requires a public-private-partnership arrangement, where there is a cost sharing with a company and other parties like the Government.
For example, the Government can finance road construction, extension of electricity and water to bring down the final cost of the houses.
 
“When President Yoweri Museveni’s request to extend social amenities to Akright Kakungulu Estate was effected, it pushed down the cost of houses by 30%. This also happened when Akright handled a project in Jinja and the municipal council provided the firm with the social amenities” he said.
 
However, Kiganda Ssonko, an independent real estate broker, advises those intending to buy houses but find them expensive to consider buying land and building for themselves.
 
“Purchasing land and building will save you money. For example, one can buy 11 decimals at sh10m and complete a three-bedroom house using not more sh40m on the outskirts of Kampala,” he says. Ssonko adds that direct purchase of low cost houses from developers is suitable for people with too little time to monitor the purchase of construction materials and overseeing the construction process. 
 
The minister for Lands, Housing and Urban Development, Daudi Migereko says the Government, supports new technology for low cost housing units. 
 
He told participants in a recent African Ministers for Housing and Urban Development Bureau meeting in Kampala that Uganda is looking for affordable construction technology to enable more people have access to cheap but modern shelter.
 
Migereko’s revelations came in the wake of a call by Soita Shitanda, the Kenyan minister of housing, advising EAC countries to consider using newer technologies to bridge the increasing deficit of housing units.
 
In Uganda, developers are still stuck with the costly brick, blocks and motar technology, yet some cost sensitive countries are switching to technologies like building panels that lower the costs by up to 30% and builders can put up an affordable three bed-roomed house within a week.
 
The housing sector is also suffering the burden of higher interest rates on mortgages currently oscillating between 25% and 26% per year.
 
“We are optimistic that the rates will come down with the Central Bank’s prudent monetary instruments, because the rates once hit 30%, but we can see them going down further. We remain hopeful of a better future,” the KCB Uganda managing director, Albert Odong, said in a recent interview. 

Lack of a National Physical Master Plan
 
Kamugisha said the absence of a strictly-adhered-to National Physical Master Plan is also serving as a detriment to the country’s housing sector.
 
“The country’s housing sector is struggling because we have no plan to follow in terms of what housing establishments must be built where, why, how, when and by whom. Master plans are helping countries like Rwanda to nurture a sector that has enabled citizens to have organised settlements,” he says. Taking Kampala and its surroundings as an example, only 10% is planned, according to the industry experts.  
 
Well-planned settlements are some sections of Kololo, Mbuya, Bugolobi, Ntinda, as well as a few housing estates established by private developers such as Akright Housing Estates, National Housing and Kensigton.

Housing Finance Sources of Housing Finance in Uganda

Uganda’s housing finance sector has undergone both qualitative and quantitative transformation and growth over the last decade. The sector has, since 2002, registered substantial growth, expanding from one government-owned institute to 4 privately owned commercial banks and 1 Micro-Finance Deposit Taking Institution (MDI). The commercial banks’ mortgage portfolio has also grown, increasing from UShs 32.4 billion (US $ 1.9 million) in 2002 to UShs 190 billion (US $ 109 million) in 2007. The sector is however small in comparison to the increasing housing needs of country and it has principally been serving middle and high income earners. The lower income earners who constitute over 80% of the population have for a long time been left out of this bracket which is a reflection of the relatively weak foundations made by consecutive governments in building a sound housing industry for the mainly poor rapidly growing population. The average mortgage loan size issued by commercial banks is between UShs 60 million (US $ 34,000) and 80 million (US $ 46,000), an amount too high for the low income earners.

Absence of adequate housing finance for the last 30 years and the weak foundations made by consecutive governments in building the country’s housing industry have greatly crippled the formal private sector to such an extent that their contribution to housing delivery has been relatively insignificant. The housing finance sector is still facing a major challenge of lack of long-term funding schemes within the domestic banking system and nascent capital markets.

Out of 5.2 million households in the country, only 0.68% can access mortgage loans through commercial banks, 19.95% can access housing micro-finance loans through Micro-finance Deposit Taking Institutions, 7.2% can access loans from Micro Finance Institutions and Savings and Credit Cooperatives, 10.3% can only access loans through Savings and Credit Cooperatives only and 62.3% have no access to financial services. Housing demand in Uganda has been constrained by inadequate financial resources for both real estate developers and end buyers. The low income levels of most Ugandans have also constrained the demand side of housing.

Habitat for Humanity-Uganda is one of the Non Governmental Organizations [NGOs] that have been at the forefront of providing low-cost houses for the rural poor. It has built 4,500 houses in the last 2 decades through its 43 grassroots affiliates in 19 districts. Through initiatives pioneered by Stromme Foundation and Habitat for Humanity Uganda, Micro Finance Institutions will be starting a housing micro-finance product where they will lend to low income earners up to UShs 8 million (US $ 4,600), payable between 2 to 5 years.

Sources of Housing Finance in Uganda

Commercial BanksCommercial banks finance mainly residential property and a few commercial property developments. Financed residential property developments which are offered by all the 5 commercial banks include: (i) house construction, (ii) house completion, (iii) home improvement, (iv) purchasing of houses, (v) equity release and (vi) refinancing mortgage. Granting of loans is negotiable depending on the credit rating of the mortgagee and the quality and value of the houses to be built or purchased. All loans offered have set repayment periods

Securing loan financing of residential property development is premised on the borrowers’ income. For those employed in the formal sector (public or private), who wish to secure mortgage loans, employment should be on permanent basis for the period in which one will repay the loan. An individual is also expected to make monthly installations not exceeding 40% of confirmed monthly gross pay.

All institutions offer secured mortgage loans for residential houses between UShs 10 million and UShs 200 million, though Development Finance Company of Uganda [DFCU] Bank can finance up to UShs 1 billion for home completion. Mortgages are given financing to cover 80% of the costs required to meet an individual’s housing needs. Development Finance Company of Uganda [DFCU] and Housing Finance Bank [HFB] also provide up to 80% of the costs for big developers in instances where the construction of houses is jointly financed by the real estate developer, the prospective buyer and the mortgage provider. This approach has encouraged developers to go for bigger and better planned projects and eventually better quality housing units.

The East African Development Bank (EADB) has also undertaken the provision of structured loans though not directly through mortgages. They part financed the construction of up to 29 housing units constructed.
Housing Finance Bank [HFB] holds the largest market share (55%) of housing finance in the country. Its main source of funds has been through the sale of a pool of houses to civil servants that were owned by the state. In 2004, 50% equity investment of HFB was acquired by National Social Security Fund [NSSF]. This has enabled National Social Security Fund [NSSF] use Housing Finance Bank [HFB] as a driver for its lending into the housing industry.

Development Finance Company of Uganda [DFCU] is the second largest player in the housing finance sector. Its source of long-term funds has been through international credit institutions; Proparco (US $ 7 million), Norfund (US $ 3 million) and the local pension’s scheme, National Social Security Fund [NSSF] (US $ 40 million). This was done through the Uganda Mortgage Finance Program and also covering two other banks; Stanbic and Orient.
Housing Micro-financeHousing micro-finance is on the whole a new product in the country’s housing finance sector. It employs a 2- way approach in which individuals can either access cash loans for home improvement or they can actually first get skills on how to build a house and through loaned construction materials, they build their own houses.
Through Micro finance Deposit taking Institutions (MDIs), micro Finance Institutions (MFIs), Savings and Credit Cooperatives (SACCOs) and other support programs, housing micro-finance is expected to grow considerably due to a combination of significant donor funding and government support.

The Cash Loans Approach
Uganda Microfinance Limited (UML) is the only Micro-finance Deposit taking Institution (MDI) in the country directly offering loans to the housing industry.
They have been in the housing micro-finance sector for the last 5 years, issuing home improvement loans only until 2006 when they introduced the home building loans. All their loans are secured and they do not exceed Ugandan Shillings (UShs) 50 million (United States Dollar (US $) 29,000), payable within 2 years at an interest rate of 36% per month. As it was noted above, other Micro-finance Deposit taking Institution (MDIs) and Micro Finance Institutions (MFIs) like Pride Microfinance and Women’s Finance Trust have been providing loans that have indirectly gone towards home improvement.
Other initiatives in the pipeline include the introduction of housing micro-finance products in Micro Finance Institutions (MFIs)  by two Non Governmental Organizations (NGOs).These are:
  • Stromme Foundation, a wholesale lending institution is one of these Non Governmental Organizations (NGOs). It plans to introduce a tripartite arrangement in which it will select one Micro Finance Institution (MFI)   from the 19 it finances to start issuing housing micro-finance products to its clients. The third party; National Housing Construction Company (NHCC) will provide planned sites in which low cost houses will be built from the loans issued by the Micro Finance Institution (MFI). Loans will range between Ugandan Shillings (UShs) 6 and 8 million (United States Dollar (US $) 3,500 and 4,600), repayable within a period of 2 – 3 years. Stromme Foundation will also consider setting up a housing micro insurance scheme to cater for the vulnerable. The project is expected to begin in 2 – 5 years.
  •  
  • Habitat for Humanity Uganda (HFHU) is the other Non Governmental Organization (NGO) and it directly issues home improvement loans to low income earners through two of its branches in Luweero and Masindi District. The loans are disbursed in cash at an average loan amount of Ugandan Shillings (UShs) 1.4 million (United States Dollar (US $) 805), payable within 2 years at an interest rate of 2% per month. The UGAFODE – HFHU partnership started in late 2007, where it (HFHU) injected Ugandan Shillings (UShs) 330 million (United States Dollars (US $) 190,000) as a housing micro-finance fund to start the “UGAFODE home improvement loans product”. Habitat for Humanity Uganda (HFHU) also offers technical assistance on how to effectively manage this product. Before embarking on the above housing micro-finance initiatives, Habitat for Humanity Uganda (HFHU) used to employ a product-led approach in which it would design and construct low cost houses for the poor at about Ugandan Shillings (UShs)  2.5 million (United States Dollars (US $)  1437). Using the commodity index system, the poor would gradually pay for these houses within a 10 year period in a revolving fund.
Unfortunately, repayments made were inconsistent and poor. As a result, Habitat for Humanity Uganda (HFHU) adopted strict rules of repossessing building materials which improved on repayments, though not satisfactorily. This factor and the imperative need for more creative innovations in providing housing to the poor created a strong impetus for Habitat for Humanity Uganda (HFHU) to move from a housing provider to a housing micro-finance supporter.

Community Self-Help Projects
Four self-help projects have been undertaken in Uganda to provide low-cost housing for the poor. They have all had a Public-Private approach and donor support.

Non Conventional Housing Finance
Through rotating credit societies, saving clubs and Savings and Credit Cooperatives (SACCOs) which are under the Ugandan Government’s program of “Prosperity for All”, the poor (who are unable to access the above means of housing finance) have been able to finance small scale businesses and in some cases they have enabled the construction of houses.

In Uganda, Savings and Credit Cooperatives (SACCOs) have a relatively wide institutional outreach into the rural areas. They have great potential as rural financial intermediaries though most of them have weak financial positions and their inability to operate strictly on commercial principles further minimizes their chances of becoming sustainable. Since many poor individuals cannot provide conventional collateral to ensure compliance with loan repayment responsibilities, Savings and Credit Cooperatives (SACCOs) issue loans on a revolving fund mechanism in which they do group lending where the borrower is not only responsible for the repayment of his loan, but also for the outstanding loans of other group members.

Personal Financing
Self financing through personal savings forms a key element in housing finance in Uganda as institutional frameworks for lending are not fully developed. This process is faced with many pitfalls because it takes a long time as savings may not be available for housing but used to meet other pressing needs such as medical and school fees. As a result investments may be undermined over time as materials that are bought may waste away, be stolen or construction could be abandoned representing large losses. A number of households frequently sublet rooms and run small businesses out of their homes meeting both domestic financial needs in an effort to provide for longer term economic expansion. Personal finance of housing includes three components: self-financing from personal savings, contributions from family and remittances and finance from extended from social security sources (ie. pension, gratuity, medical benefits) and contributions from saving groups/ Savings and Credit Cooperatives (SACCOs).

Challenges of the housing Finance Sector in Uganda
Commercial banks have in the past mainly concentrated on financing the demand (mortgage) side. This is so because mortgages provide more definite security, given that it is tied to the income of the mortgagee as well as the physical asset itself. Also, the current systems in place do not allow for developers to prove the effectiveness of demand for their products, making it more difficult for them to receive financing.
The other major challenge with regard to financing housing in Uganda is the lack of long-term funding schemes within the domestic banking system and nascent capital markets. Though government has channeled funds through NSSF to HFB and DFCU Bank to support the mortgage financing industry, the lack of long-term funds has stalled the provision of affordable mortgage finance and in turn limited the supply of housing.

The sector is however small in comparison to the increasing housing needs of country and it has principally been serving the middle and high income earners. The lower income earners who constitute over 80% of the population have long been left out of this bracket which is a reflection of the relatively weak foundations made by consecutive governments in building a sound housing industry for the mainly poor and rapidly growing population.

The sector has principally been serving the middle and higher income earners. The average mortgage loan size issued by commercial banks is between UShs 60 (US $ 34,000) and 80 million (US $ 46,000), an amount too high for the low income earners. Absence of adequate housing finance for the last 30 years and the weak foundations made by consecutive governments in building the country’s housing industry have greatly crippled the formal private sector to such an extent that their contribution to housing delivery has been relatively insignificant.

The housing finance sector is still facing a major challenge of lack of long-term funding schemes within the domestic banking system and the nascent capital markets. Out of 5.2 million households in the country, only 0.68% can access mortgage loans through commercial banks, 19.95% can access housing micro-finance loans through Micro-finance Deposit taking Institutions, 7.2% can access loans from Micro Finance Institutions and Savings and Credit Cooperatives, 10.3% can only access loans through Savings and Credit Cooperatives only and 62.3% have no access to financial services.

NSSF ready for liberalisation

Ivan Kyayonka was recently appointed as chair of the Board of Directors of the National Social Security Fund (NSSF).  He spoke to Joan Akello about the future of the Fund. Excerpts.

What is your vision for NSSF? What are you bringing on board?
I would like to see NSSF as the leading retirement benefits fund in the country. We would like see employees come to NSSF by choice because we are reliable, efficient and we offer competitive returns.
I have set a short term target that we must pay returns of at least 2% higher than the 10-year average inflation. If the interest in the last 10 years was 8%, then we should pay 10% interest. This will mean restructuring NSSF so as to minimize operational costs.

What are the opportunities and challenges of liberalizing the pension sector?
I think it will help to change the quasi nature of NSSF because it started off as a branch of the government then transitioned into a stand alone fund and enjoyed the benefits of a monopoly.   Also, it will change the culture of the employees of NSSF who think government will protect them as they harass people to save. They must begin working like employees at a private firm.  We have to clean up our act to attract customers.
We have to manage our costs because the new kids on the block will try to better the sector. We have a big portfolio of funds and the market though we have a bad history. I think we are better than someone who is just starting up.

How prepared are you for it?
We have started with a new board. Everyone is required to think of how differently they will perform in the future.  Liberalization and change of mindset is on every NSSF employee’s scorecard today.

NSSF depends on the USE, treasury bills and bonds. What other investment portfolio are you considering because the interest rates are falling and you made profits last year because they were high?
We have a board in the committee which advises on investments and projects. We have a matrix on what to invest in such as bonds (fixed income assets) and real estate. Lately, the equities have not performed because of the limitation on companies to invest in and the low activity on the Uganda Securities Exchange. We are lending banks and also to government through treasury bills. We would like to have our money in long term investments but we have to have maximum returns and mitigate risks.

The government has been discussing how we can float an infrastructure bond. If government wants to build roads and other long-term projects, it will float and very secure it because it is tradable; we can sell it and get money or keep if the returns are high. Insurance companies are looking to bonds too.
People are very scared about it but government paper is the most secure. If it borrows it must pay otherwise the whole monetary system collapses. Government earns only $4 billion from taxes but it would like to spend more billions in the long term projects. We are a long-term investor but have been forced to invest in the short term because of limited economic activity.

Therefore we are looking at investing in infrastructure bonds. We would like to ply the East African region because we have been limited to Uganda yet it has low activity.

When are you embarking on real estate ventures like Temangalo, Nsimbe, etc?
We would like to unlock a lot of investments in real estate though it has been bedeviled by challenges. Literally, the only success we have is the Workers House, which took us many years to complete. Scandals have passed us and we have to invest in land without any legal problems.  We have a lot of projects such as Pension Towers, Nsimbe and Temangalo.
The people who save with us desire to have housing so if we build the houses; we not only sell but also provide a desirable product. We are planning to build low and middle income estates in Lubowa, Temangalo and Nsimbe. Lubowa is at the design stage, Temangalo is at the pre-qualification stage of securing consultants.

There are reports about corruption in NSSF. How are you tackling this issue?
If there is corruption in Uganda, so is NSSF.  We are proposing to change the way we procure large-scale projects by outsourcing procurement to reduce influence peddling.  We want to establish systems that promote a corruption-free environment that rewards people when they excel and punish those who willfully err.  We are going to do a pilot that can help Uganda promote a transparent and efficient procurement process.  It does not matter at which corruption is.
Transparency and competition in procurement will reduce corruption and influence peddling. By setting up a procurement environment where all the bidders feed in their input in the presence of other bidders. The bidding system will encourage open competition and transparency in tendering.
We will also give bonus to those who bring a return higher than the target and whatever good thing done on the scorecard. Instead of stealing the money, we should share it out with everybody who delivers.  It will take time to eliminate corruption.

What is your relationship with the government? How independent are you from government control?
We derive our mandate from an Act of Parliament so we cannot be independent. If government had not legislated that any company employing more than five people must contribute 10% the employee 5%, NSSF would not have thrived. The act of empowers us to collect and invest the funds.
We have oversight from the Minister of Finance who appoints the board and must be consulted on all major investment decisions. We act as stand alone on equities because we manage the business but have common interests with government in securing long-term savings for workers, stimulating a saving culture and the economy.

When the client has more power than the lender, they can choose to pay or not. This has happened in countries like Greece. What safeguards are in place to protect workers’ money from a wasteful government that may not pay back?
Workers’ money is very safe. We need to ensure that it is prudently invested and earning sufficient interest to maintain or grow its value.  We have the liberty to invest in what we have agreed with the minister.  We have been lending to government through the Treasury at 20 plus per cent and people have been investing in Uganda because the returns are good.
The relationship with the minister may change as we liberalize whereby we shall account to the Uganda Retirement Benefits Authority.  It will audit and check our performance, and will also require us to have a fund manager, a custodian and actuary who values assets and liabilities. These controls will improve the ways we safeguard workers’ money.

What challenges does the pension sector face generally?
The poor saving culture and low number of savers in Uganda are a challenge. The fund has barely 500,000 savers.  There are nearly nine million people without any formal saving yet there are many people who make more money than those in formal employment. In the last 20 years NSSF has been able to collect Shs 3 trillion, which has excited many workers who do not realize that their money grows over time.
I hope that we don’t get ‘cowboys’ with the liberalization, which could compromise quality of services.

Why did NSSF decide to buy Umeme shares on the last day of its IPO?
We have bid to buy shares and we are waiting for the decision of whether we have been allocated. Did people expect us to jump in without carrying out any due diligence? We had to study Umeme, the energy sector; how it is likely to grow, the pitfalls and the risks. For instance, Umeme does not generate but only sells power. We had to do all

Our members get real value, says NSSF

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Our article titled, “NSSF on the spot,” (The Independent, March 02- 08), which was based on the Auditor General’s report of 2011, pointed out a range of issues mainly revolving around the Fund’s performance. The Independent sought out the Managing Director Richard Byarugaba to get a response to the issues raised. Excerpts.



Are NSSF members losing more than they are benefiting from their savings or not?

NSSF investments are long-term and should be evaluated on a long-term basis (long term is generally considered to be more than five years. For NSSF, the investment cycle is typically 5-10 years: for example, real estate cash inflows will generally begin in year 5). It is thus unreasonable to compare the return declared by NSSF to annual inflation rate.
Over the past 10 years, the Fund has paid a positive real return on the members’ savings, contrary to the article’s illusion that member value is not increasing. Ten year inflation rate from July 2001 to June 2011 averaged 6.7% while NSSF 10 year interest rate averaged 6.8%.
It is erroneous to compare the NSSF declared financial year (FY) 2010/2011 interest rate, to the 28% monthly inflation rate of September 2011, and not to the actually inflation for the financial year FY 2010/2011  which was 6.4%.
It also erroneous to say that is only in 2008 that the Fund paid an interest rate that was above inflation. The fact is that in five of the last ten years, NSSF paid rates that were above the respective annual inflation.

Why are members not able to utilise part of their deposits for mortgage deposits, or be covered for medical by the Fund?
The NSSF Act limits the products NSSF is allowed to offer to its members.  The eligible products are; Age, Withdrawal, Survivors, Invalidity, Exempted Employment and Immigration Grant benefits. The current Act does not cover mortgage or medical coverage.
The good news is that the proposed pension Bill has provisions for Mortgages, Education and Medical coverage. NSSF is eagerly waiting to roll out these products when the Bill becomes law.

How come that NSSF made capital gains worth Shs 26 billion in 2010, yet it declined to just Shs 5 billion in 2011?
Return on equity investments depends on the stock market performance. In FY 2009/2010, the Uganda Securities Exchange as measured by the ALSI gained 28%. NSSF made significant unrealised gains on its equity investments that year. However, in FY 2010/2011, the growth in the stock market declined by 19%. Notwithstanding the decline and tumultuous movement in the market, NSSF made a Shs 5 billion gain!   It must be noted that this was just a capital gain on equities, and not the Fund’s profit.

Administration costs shot to Shs 44 billion from about Shs 32 billion in 2010 while total expenditure rose to Shs 58 billion from Shs 47 billion. Why?
A simple analysis of the administrative expense reveals that the main increase between 2010 and 2011 was Shs 12 billion reported under legal expenses.  Further inquiries show that Shs 11 billion of the Shs 12 bn was due to provisions for the ongoing cases in the court. That is, it was not expenditure to satisfy current administration consumption, but rather a prudent and necessary provision for the Fund’s historical problems.
Without these provisions, overall administration costs and total expenditure would have been at the same level as last year FY 2009/2010 - Shs 32 billion and Shs 47 billion respectively.
One measure of efficiency is what is referred to as cost income ratio, which is the percentage of gross revenue that is utilised.  In 2010, this ratio was 29%. In 2011, this ratio, including the provisions was 37%. Without the provision, this ratio would have been 30%. 2011 was the first year of restructuring and the exercise included one off costs.

The increase in liabilities was primarily driven by the provisions for the legal cases. Part of the provision was impacted by a depreciated Uganda Shilling. Secondly an increase in liability, especially, short term liability demonstrates a good cash management strategy.
How come the Fund spent more than Shs 438 million on its 10-member board; an average of Shs 43m per person per year?
The board expenses are in line with the structure of the Fund.  Coming from a chequered history, the Board prudently dedicated an extraordinary amount of time in the affairs of the Fund, meeting on average at least twice a month. The results of these efforts were a better Fund at the end of 2011.

Wouldn’t a decline in the Fund’s surplus for the year from Shs 132 Billion in 2010 to Shs 81 Billion imply that there will be less in the basket for members to share in terms of interest?
Included in the Shs 132 billion for FY 2009/10 is Shs 64 billion of unrealised gains coming from revaluation of property and changes in stock market prices. The Board wisely adopted a policy to only revalue Real Estate investment assets once every two years (unless circumstances warrant more frequent revaluations). No revaluation was performed in 2011.  Revaluation will be performed in 2012, which means members do not lose out in the “basket” because it is recovered in the long term.

The Fund’s assets have grown by 25% in 2011 while revenue grew by 8%, yet the benefits accruing to members continue to decline. Why?
It is erroneous to assume that additional assets resulting from a 25% growth means these assets are available for investment for the entire fiscal year.  The reality is that   assets are invested as they are received. At any point, the return on investment is impacted by the dynamics of the prevailing economic environment. For example, treasury rates dropped in the early part of the year with assets invested during that time yielding lower interest income. It is a credit to the Fund that despite the FY 2010/2011 turbulence in the economic environment, it was able to provide members a competitive return.
Also, the Minister of Finance declared an interest return of 6% in September 2011. As pointed out earlier, the interest declared was for FY 2010/2011 and should therefore be compared to the FY 2010/11 inflation rate of 6.4% and not the monthly inflation of September 2011.

The Auditor General’s report expressed concern about the Shs 27.7 billion which lies unallocated to members’ accounts. What is your explanation for that?
In the same report the Auditor General stated the cause of the balance that had not been allocated, the effort that the Fund is doing to allocate these funds, and this balance represented a significant drop of the balance that had been outstanding at the beginning of the year (Shs 53 Billion).
All Members’ savings whether allocated or not unallocated earn the same interest as declared at the end of the financial year in July.   It is not true that the unallocated accounts do not earn interest.

What is your comment on staff loans to acquire/ build houses over a period of 15-20 years?
The products eligible to be offered by the Fund are stipulated in the NSSF Act (Age, Withdrawal, Survivors, Invalidity, Exempted Employment and Immigration Grant). All these benefits are currently offered by the Fund. Only parliament can amend the Act and increase the product range.
The NSSF Staff Housing Loan Scheme is not a Fund’s product. It is a benefit to staff, just as salary is. All employees worldwide have benefits, both direct and indirect by virtue of employment with their employers. For instance, most bank employees in Uganda have similar loan structures that allow their staff to buy or build personal homes. It is highly misrepresentative to confuse staff benefits and with Fund products. But anyway the Fund withdrew that facility.

The accounts of many members have not been updated for the last six months. Why?
The Fund is upgrading its Management Information System (MIS) to make it more efficient and support automation of business processes to reduce turnaround time. All system upgrades go through a transition process and this is what happened between September and December 2011. As of today, the system is successfully running and members’ accounts are being updated. It is not true that the accounts are not updated for 6 months. The current target for updating members’ accounts has been set at 2 days upon receipt of members’ contributions. Further, there is no strand off between management on whether to purchase a system (the system was already purchased) or outsource data management to banks (has nothing to do with systems). Robust internal debates are encouraged whenever the Fund has to make a significant decision.
In light of previous allegations of corruption and poor management, some analysts say NSSF would be paying out an interest rate of not less than 25% to its members?
The current management NSSF has not been involved in any corruption scandal. But also, worldwide, the investment objectives of pension funds are to ensure safety of member savings and a provision of an optimal return within an acceptable and reasonable risk profile.  These remain the primary investment objectives of NSSF. It is widely recognized that return and risk move in the same direction; the higher the return, the higher the risk. Pension funds are long-term investors. They (Pension Funds) thus take on long-term assets to match their liability structures. Currently, the longest treasury instrument in Uganda is the 10-year government bond, which yields 13.23%.

For the calendar year 2011, the stock exchange had declined by 27%.  Real estate by its nature, takes a long time to come on board. With careful planning, real estate may provide meaningful long-term returns.
Professional asset management requires that a portfolio be diversified to minimize risks and maximize income.  Therefore, the Fund cannot invest all members’ funds in only one asset class, be it real estate, equities or fixed income.  The Fund has to have an appropriate portfolio mix.
Believing that the Fund should deliver a 25% return in this market while safeguarding member savings is fallacious and indicates an unsophisticated view of portfolio management. Return and risk are joint investment decisions that should never be considered in isolation.

The audit report shows that withdrawal benefits paid out in 2011 rose by four times to a record Shs 63 billion from just Shs 16 billion in 2010. Why?
Once a member meets a given criteria, and upon application, the Fund is obligated to pay benefits to that member. The Act has prescribed six ways in which members become eligible to get their benefits. Withdrawal benefits are paid members who reach the age of 50 years and have been unemployed for 1 year.  The fact that Withdrawal Benefits increased, is a reflection of the economic situation i.e. level of unemployment had increased drastically.  The Fund pays every member who qualifies to receive their benefits. As a result of the efficiencies that the Fund implemented, in 2011, the Fund paid Shs 80 billion in benefits compared to Shs 64 billion in 2010.
Your last word?
Rather than extravagance, this administration has been very prudent in the way it manages member funds. A key question governing each spend has been “show me value” before we spend. That philosophy then looks at not only the level of spends, but rather the value of each spend. So, does 2011 spend show that there was value for that spend?
An ‘unqualified opinion’ in the financial report for the first time 10 years! This opinion, reflects, the amount effort and resources that has gone into improving the overall Fund’s internal processes; including cleaning of member data, improving on the fiscal operations of the fund. So was there value? Yes, there was.

New channels that serve our members including: NSSF Go, Online access to accounts, SMS access to balances. Was there value? Yes, there was value. Significantly, reduced benefit processing time from one time high of 105 days to an average of 12 days. Was there value? Yes there was. Increased benefit total payout from Shs 64 Billion to Shs 80 Billion. Was there value? Yes, there was. There is a new upgraded IT operating system that will further improve processes for our members. Was there value? Yes, there was. Overall, realised income between the two years increased by 8%. This increase was achieved, excluding provisions, with, approximately, the same level of costs. Was there value? Yes there was.

Anxiety grips defaulters as NSSF moves to repossess houses Updated Tuesday, December 25 2012 at 00:00 GMT+3 Kibaki President KIbaki and NSSF Board in Nairobi. The Fund has threatened to repossess over 300 houses if owners don’t pay up. [PHOTO: FILE/STANDARD] By Nicholas Waitathu and Frankline Sunday The Fund has issued a 14-day ultimatum in which tenants pay up their arrears or forgo their property Hundreds of families risk being rendered homeless this festive season as the National Social Security Fund (NSSF) moves to repossess houses and plots in six estates in Nairobi City. In a Kenya Gazette notice dated December 24, 2012, NSSF issued a 14-day ultimatum that buyers pay up their arrears or forgo their property. The ultimatum applies to tenants in its Tenant Purchase Scheme, TPS in Mountain View, Kitsuru, Kibera Highrise, Tassia I, Embakasi II and Embakasi III estates. Rescind agreement “On expiry of the said period, the Fund will rescind the Tenant Purchase Agreements of the tenant purchasers aforesaid and offer the property to other deserving Kenyans without further notice to the defaulters,” read the notice in part. The notice by NSSF has caught more than 300 property owners unawares with senior government officers, diplomats and former trustee managers at NSSF being part of the defaulters who owe the institution up to Sh51 million. Some of the defaulters include former NSSF Managing Trustee Alex Kazongo who owes the social security provider Sh331 920.70. Mr Tirop Kosgey, ministry of Housing PS, listed as one of the defaulters owing the Fund Sh114,114.30 denied he owes NSSF any arrears but confirmed to have bought a plot in Tasia from the institution. Peter Wamoto, an ambassador is also another defaulter NSSF claims he owes them Sh235,505.15. NSSF’s Chief Executive and Managing Trustee Tom Odongo said the repossession was part of NSSF’s resolve to recover all the debts accrued to it including land rates and rent arrears. “As at December 21, 2012, NSSF had creditors that owed the Fund more than Sh51 million,” said Odongo. “We disposed of houses and plots to interested buyers some years back but they have not been paying rent and rates.”

Updated Tuesday, December 25 2012 at 00:00 GMT+3
Kibaki
President KIbaki and NSSF Board in Nairobi. The Fund has threatened to repossess over 300 houses if owners don’t pay up. [PHOTO: FILE/STANDARD]
By Nicholas Waitathu and Frankline Sunday
The Fund has issued a 14-day ultimatum in which tenants pay up their arrears or forgo their property
Hundreds of families risk being rendered homeless this festive season as the National Social Security Fund (NSSF) moves to repossess houses and plots in six estates in Nairobi City.

In a Kenya Gazette notice dated December 24, 2012, NSSF issued a 14-day ultimatum that buyers pay up their arrears or forgo their property. The ultimatum applies to tenants in its Tenant Purchase Scheme, TPS in Mountain View, Kitsuru, Kibera Highrise, Tassia I, Embakasi II and Embakasi III estates.

Rescind agreement
“On expiry of the said period, the Fund will rescind the Tenant Purchase Agreements of the tenant purchasers aforesaid and offer the property to other deserving Kenyans without further notice to the defaulters,” read the notice in part.

The notice by NSSF has caught more than 300 property owners unawares with senior government officers, diplomats and former trustee managers at NSSF being part of the defaulters who owe the institution up to Sh51 million.

Some of the defaulters include former NSSF Managing Trustee Alex Kazongo who owes the social security provider Sh331 920.70.

Mr Tirop Kosgey, ministry of Housing PS, listed as one of the defaulters owing the Fund Sh114,114.30 denied he owes NSSF any arrears but confirmed to have bought a plot in Tasia from the institution.
Peter Wamoto, an ambassador is also another defaulter NSSF claims he owes them Sh235,505.15.

NSSF’s Chief Executive and Managing Trustee Tom Odongo said the repossession was part of NSSF’s resolve to recover all the debts accrued to it including land rates and rent arrears.

“As at December 21, 2012, NSSF had creditors that owed the Fund more than Sh51 million,” said Odongo. “We disposed of houses and plots to interested buyers some years back but they have not been paying rent and rates.”

Since last year, the National Social Security Fund’s top management has been engaging the defaulters with the view to recovering the dues but this has proved difficult.

“On expiry of the said period the affected tenants who would not have cleared their arrears by January 7, 2013 will be expected to give vacant possession of the premises to the fund immediately,” Odongo warned.


MCHIKICHINI PROJECT


NSSF Partner
The USD 450m project in which the fund expects to partner with Ilala Municipal Council and Symmetric Link of Malaysia is scheduled for completion in 2013.
According to the fund’s senior investment officer, Salvatory Hinju at least 30 acres of land have been acquired for the project.
“It is a huge investment which once completed will be more than the Mlimani City mall and is expected to improve the skyline of Dar es Salaam,” he said.
Under the plan, Hinju said, the fund is going to construct three high rise office towers, a three storey shopping mall, recreation park, cinema centre and three residential towers with apartments to cater across three different segments of the population (to be sold to interested individuals).
The project’s initial study, according to him, shows that the low cost apartments will comprise 480 units in a 15 storey building, 1,165 units in a 25 storey medium cost apartments and 604 units in a 30 storey building for luxury apartments.
Apart from residential houses, he said, the business complex will comprise shopping malls, supermarkets, banks, a five star hotel and a three star hotel.
He said a block will be constructed to accommodate about 300 inhabitants of the Ilala Municipal Council houses located in the project area to give room for demolition.
These will be given preferential rates to buy apartments in the block and those who will opt to just be tenants will pay rent at an affordable rate, he said.
The Mchikichini project is one among the fund’s many investment projects that will not only serve as the fund’s source of income, but will also create employment and help solve the city’s housing crisis, he added.
 

 Project Management 

 To ensure that the project is implemented successfully, firms and organizations that are properly qualified and experienced will be engaged for their respective services by the Development Company.

The Developer will engage a Project Management Company to undertake the Management, Planning and Architectural Design, Civil and Structural Engineering Design, Contract Administration professional services.

Supporting Professional Services

A qualified Project Management firm will be engaged to provide the overall project management services, and this will be supported by sub-professionals for providing the relevant professional services.
The Scope of Work shall be assigned to the various professionals as follows:
Planning and Architecture - PAKATAN AKITEK SDN BHD
Civil & Structural Engineering - JURUTERA PERUNDING ZAABA
Mechanical & Electrical Eng - MEGAJATI CONSULT
Quantity Surveyors - DMA Quantity Surveyors

All the companies listed above have undertaken similar and larger projects internationally. They will also be required to associate with respective local (Tanzanian) firms to ensure that local conditions and coordination with local authorities and related parties are executed efficiently.

MCHIKICHINI PROJECT


Project Management 

 To ensure that the project is implemented successfully, firms and organizations that are properly qualified and experienced will be engaged for their respective services by the Development Company.

The Developer will engage a Project Management Company to undertake the Management, Planning and Architectural Design, Civil and Structural Engineering Design, Contract Administration professional services.

Supporting Professional Services

A qualified Project Management firm will be engaged to provide the overall project management services, and this will be supported by sub-professionals for providing the relevant professional services.
The Scope of Work shall be assigned to the various professionals as follows:
Planning and Architecture - PAKATAN AKITEK SDN BHD
Civil & Structural Engineering - JURUTERA PERUNDING ZAABA
Mechanical & Electrical Eng - MEGAJATI CONSULT
Quantity Surveyors - DMA Quantity Surveyors

All the companies listed above have undertaken similar and larger projects internationally. They will also be required to associate with respective local (Tanzanian) firms to ensure that local conditions and coordination with local authorities and related parties are executed efficiently.
DEVELOPMENT PLANNING CONCEPT

Attachment 4 contains the basic Planning Concept for the development.

DESIGN MIX

1. Low Cost 15 storey apartments
- Low cost 15-storey apartment blocks shall be built.
- Minimum number of units required is 480 units.
- Area per unit is 80 sq.ft., 3 bed-rooms

Facilities Contained in the Apartments

The Apartments shall provide the following facilities:
Three (3) Bedrooms of which one shall be a self contained master bedroom
Living Room cum Dining Room
Fitted Kitchen with Small Yard
Common Toilet
Common Shower

Other Amenities

A common car park adjacent to the low cost tower blocks shall be provided for the use of these apartments.

2. Medium Cost 25-Storey Apartments
- Total number units - 1165 Units
- Medium cost apartments shall be built 25 storey high
- Area shall be 1150 sqft to 2400 sqft per unit.

Facilities Contained in the Apartments

The Apartments shall provide the following facilities:

Three (3) Bedrooms of which one shall be a self contained master bedroom
Living Room
Dining Room
Medium Size
Fitted Kitchen with Small Yard
Common Toilet
Common Shower

Penthouses

There shall be a total of Twenty Four (24) Penthouses, of two types. Type 1 shall measure 224sqm and Type 2 shall measure 220 sqm. There shall be a total of Four (4) penthouses per floor, Two of Type 1 and Two of Type 2, the penthouses shall be housed on the 23rd to 24th Floors on each of the 6 blocks.

Facilities Contained in the Penthouses

The penthouses shall be very generous in size and constructed and finished to a good standard, the penthouses shall provide the following facilities:

Three (3) large Self Contained Bedrooms of which the master bedroom shall be super sized.
Living Room
Dining Room
Fitted Kitchen with Small Yard
Common Toilet
Common Shower

Other Amenities

Other amenities for the medium cost apartment?s blocks shall be housed on the Ground Floor, while the basement and Ground Floor shall be dedicated to car parking.

3. Luxury 30-Storey Condominiums
- Total number of units – 604 Units
- High cost apartments shall be built 30 storey high
- Area per unit is 1477 sqft to 1840 sqft.

4. Three High-rise Office Towers
- 1 Office Tower for Ilala City Council
- 1 Office Tower for Developer
- 1 Office Tower of Others (Or Future Development)

5. One 5-Star High-rise Hotel tower with Convention Hall
- 400 rooms
- Convention Centre

6. One 3-Star Medium-rise Hotel Tower.
- 100 rooms

7. One 3-Storey Shopping Mall
- 2 Basement Car park
- 3 storey shopping mall podium
- 1 supermarket anchor tenant

8. Recreation park – Bowling
Modern bowling facilities with multiple lanes, including facilities such as cafetarie, video room, etc.

9. Cinema Centre
Modern cinema centre with several halls with the latest up to date cinema systems.

10. Infrastructure Services
Roads, drains, sewerage reticulation and treatment system, water supply system, electric power supply system, fire fighting system.

11. Open Parks and Green Areas

ARCHITECTURAL CONCEPT

The Architectural Concept can best be reflected in the following promotional presentation.

A neighbourhood that has it all
The Residences
Affordable Comfortable Homes for the Citizens
High Quality Modern Homes for the Professionals
Luxurious and Spacious Homes for the Privileged

The Shopping Mall
A treasure for the investors and the operators alike,
the Mchikichini Heights is the hub for Dar Es Salaam.
The business and recreational centre where all kind of people from all walks of life converge.
As an emerging economy, business and sales can only go in one direction – growth! Value of properties at Mchikichini Heights can only go in one direction – up!

The Office Towers
Linking business between Tanzania and the Rest of the World
World Class modern physical and communications facilities.
Access to World Class commercial centers, shops, high quality five star and budget hotels and to food outlets and restaurants provides convenience to the international businessmen and professionals that cannot be matched.
Modern architecture and serene surroundings reflecting your status as the successful businessman and promoting your image as a global player.

The World Class Hotel and Convention Facilities
Convenience for the international businessman
The Centrepoint for business, cultural, social and academic activities alike
Nowhere else in Dar Es Salaam

Supermarkets and Modern Food Outlets
World class supermarket chains for your daily convenience
Modern clean restaurants for the adventurous
World class fast food chains for the busy businessman and family

The Kindergarten
Living at Mchikichini Heights provides the best for your child?s needs
World standard education for the children of progressive parents

The Hospital
Care for the sick and less healthy
Modern medical facilities and treatment with leading medical experts
Convenience for the old and their next of kin

The Promenade and Central Park
A place to play after the hard work
A greenery that refreshes the air and the eyes
A landscape to form the backdrop of your working and living spaces
An escape fort the family at your own doorstep

A REVIEW OF CURRENT MARKET TRENDS OF THE VARIOUS SECTORS UNDER THE PROPOSED DEEVELOPMENT

Annotated hereunder is a brief analysis giving the major highlights of the current market trends of the various sectors that shall make-up the proposed development namely, Residential, Office, Commercial and Hotel accommodation.

An aerial view of the Buildings on Mchikichini Project worth USD $450M


of the Council
 

Another Aerial Photo
PRESIDENT Jakaya Kikwete's 2005 election slogan - better life for all Tanzanians - is now being realized in deeds following the signing of an agreement to construct a multi-billion shilling project in Dar es Salaam. 

The long-awaited project to be executed at Mchikichini in Ilala District follows an agreement between the Ilala Municipal Council, the National Social Security Fund (NSSF) and a Malaysia-based Symmetric Link SBN BHD company.

"For a long time, the Ilala Municipal Council authorities have been looking for an investor to put up a huge multi-use structure at Mchikichini but those efforts have been in vain," says the Ilala Municipal Council Mayor Abuu Jumaa.

He adds: "But today we can breathe with a sigh of relief following the partnership between the NSSF and the Symmetric Link firm from Malaysia, the project is now on the cards and it will soon be realized."

Under the project, which will make Mchikichini look like a development village, there will be housing for accommodating 400 residents at the project area, over 1,600 flats covering 50 floors and office structures covering 25 floors and international standard hotels covering another 50 floors.

According to the project's implementation programme, there will also be medium level hotels in 10 floors, a modern shopping arcade covering three floors and elegant office for the Ilala municipal authorities covering 40 floors.

Architectural designs and artistic impressions for the project has already been drawn out indicating that initial construction stages will involve building of two flats with 17 floors each, with a total number of 480 houses.

The project, the first of its kind to be implemented in Tanzania, addresses the issue of affordable housing for majority poor Tanzanians and provision of special commercial services that were initially available in the central business district.

"This huge investment which we have been looking for a long time will turn Ilala municipality into a beehive of business activities," says Mayor Jumaa wearing a broad smile.

"The first beneficiaries of the project will be the 400 residents in the area," says the mayor, adding that some of the residents will be paid handsome amounts for compensation as they will be required to give way for the project.

He says construction will be done in phases with the first phase involving construction of residential houses, to be followed by the second phase covering commercial structures such as offices and hotels.

"Implementation of the project will take four to five years before completion," says the mayor, adding that all the hotels and offices to be constructed at the area will be sold or rented to Tanzanians.

He adds: "Definitely this project is going to stimulate development not only for Ilala but for the entire country, as it will attract businesses from the country's four corners."

The project will help to showcase the state-of-the-art houses, hotel structures and office accommodation in addition to creating employment to majority young Tanzanians and it will also act as a source of revenue for the government.

"The entire project area will not look the same when implementation of the project is completed," says Mahamed Hussein, a representative of the Malaysian firm.
The new project will improve Dar es Salaam's skyline with its new high-rise buildings making it the largest city in Tanzania and it is the country's important economic centre.
NSSF Partner
The USD 450m project in which the fund expects to partner with Ilala Municipal Council and Symmetric Link of Malaysia is scheduled for completion in 2013.
According to the fund’s senior investment officer, Salvatory Hinju at least 30 acres of land have been acquired for the project.
“It is a huge investment which once completed will be more than the Mlimani City mall and is expected to improve the skyline of Dar es Salaam,” he said.
Under the plan, Hinju said, the fund is going to construct three high rise office towers, a three storey shopping mall, recreation park, cinema centre and three residential towers with apartments to cater across three different segments of the population (to be sold to interested individuals).
The project’s initial study, according to him, shows that the low cost apartments will comprise 480 units in a 15 storey building, 1,165 units in a 25 storey medium cost apartments and 604 units in a 30 storey building for luxury apartments.
Apart from residential houses, he said, the business complex will comprise shopping malls, supermarkets, banks, a five star hotel and a three star hotel.
He said a block will be constructed to accommodate about 300 inhabitants of the Ilala Municipal Council houses located in the project area to give room for demolition.
These will be given preferential rates to buy apartments in the block and those who will opt to just be tenants will pay rent at an affordable rate, he said.
The Mchikichini project is one among the fund’s many investment projects that will not only serve as the fund’s source of income, but will also create employment and help solve the city’s housing crisis, he added.

 Project Management 

 To ensure that the project is implemented successfully, firms and organizations that are properly qualified and experienced will be engaged for their respective services by the Development Company.

The Developer will engage a Project Management Company to undertake the Management, Planning and Architectural Design, Civil and Structural Engineering Design, Contract Administration professional services.

Supporting Professional Services

A qualified Project Management firm will be engaged to provide the overall project management services, and this will be supported by sub-professionals for providing the relevant professional services.
The Scope of Work shall be assigned to the various professionals as follows:
Planning and Architecture - PAKATAN AKITEK SDN BHD
Civil & Structural Engineering - JURUTERA PERUNDING ZAABA
Mechanical & Electrical Eng - MEGAJATI CONSULT
Quantity Surveyors - DMA Quantity Surveyors

All the companies listed above have undertaken similar and larger projects internationally. They will also be required to associate with respective local (Tanzanian) firms to ensure that local conditions and coordination with local authorities and related parties are executed efficiently.
DEVELOPMENT PLANNING CONCEPT

Attachment 4 contains the basic Planning Concept for the development.

DESIGN MIX

1. Low Cost 15 storey apartments
- Low cost 15-storey apartment blocks shall be built.
- Minimum number of units required is 480 units.
- Area per unit is 80 sq.ft., 3 bed-rooms

Facilities Contained in the Apartments

The Apartments shall provide the following facilities:
Three (3) Bedrooms of which one shall be a self contained master bedroom
Living Room cum Dining Room
Fitted Kitchen with Small Yard
Common Toilet
Common Shower

Other Amenities

A common car park adjacent to the low cost tower blocks shall be provided for the use of these apartments.

2. Medium Cost 25-Storey Apartments
- Total number units - 1165 Units
- Medium cost apartments shall be built 25 storey high
- Area shall be 1150 sqft to 2400 sqft per unit.

Facilities Contained in the Apartments

The Apartments shall provide the following facilities:

Three (3) Bedrooms of which one shall be a self contained master bedroom
Living Room
Dining Room
Medium Size
Fitted Kitchen with Small Yard
Common Toilet
Common Shower

Penthouses

There shall be a total of Twenty Four (24) Penthouses, of two types. Type 1 shall measure 224sqm and Type 2 shall measure 220 sqm. There shall be a total of Four (4) penthouses per floor, Two of Type 1 and Two of Type 2, the penthouses shall be housed on the 23rd to 24th Floors on each of the 6 blocks.

Facilities Contained in the Penthouses

The penthouses shall be very generous in size and constructed and finished to a good standard, the penthouses shall provide the following facilities:

Three (3) large Self Contained Bedrooms of which the master bedroom shall be super sized.
Living Room
Dining Room
Fitted Kitchen with Small Yard
Common Toilet
Common Shower

Other Amenities

Other amenities for the medium cost apartment?s blocks shall be housed on the Ground Floor, while the basement and Ground Floor shall be dedicated to car parking.

3. Luxury 30-Storey Condominiums
- Total number of units – 604 Units
- High cost apartments shall be built 30 storey high
- Area per unit is 1477 sqft to 1840 sqft.

4. Three High-rise Office Towers
- 1 Office Tower for Ilala City Council
- 1 Office Tower for Developer
- 1 Office Tower of Others (Or Future Development)

5. One 5-Star High-rise Hotel tower with Convention Hall
- 400 rooms
- Convention Centre

6. One 3-Star Medium-rise Hotel Tower.
- 100 rooms

7. One 3-Storey Shopping Mall
- 2 Basement Car park
- 3 storey shopping mall podium
- 1 supermarket anchor tenant

8. Recreation park – Bowling
Modern bowling facilities with multiple lanes, including facilities such as cafetarie, video room, etc.

9. Cinema Centre
Modern cinema centre with several halls with the latest up to date cinema systems.

10. Infrastructure Services
Roads, drains, sewerage reticulation and treatment system, water supply system, electric power supply system, fire fighting system.

11. Open Parks and Green Areas

ARCHITECTURAL CONCEPT

The Architectural Concept can best be reflected in the following promotional presentation.

A neighbourhood that has it all
The Residences
Affordable Comfortable Homes for the Citizens
High Quality Modern Homes for the Professionals
Luxurious and Spacious Homes for the Privileged

The Shopping Mall
A treasure for the investors and the operators alike,
the Mchikichini Heights is the hub for Dar Es Salaam.
The business and recreational centre where all kind of people from all walks of life converge.
As an emerging economy, business and sales can only go in one direction – growth! Value of properties at Mchikichini Heights can only go in one direction – up!

The Office Towers
Linking business between Tanzania and the Rest of the World
World Class modern physical and communications facilities.
Access to World Class commercial centers, shops, high quality five star and budget hotels and to food outlets and restaurants provides convenience to the international businessmen and professionals that cannot be matched.
Modern architecture and serene surroundings reflecting your status as the successful businessman and promoting your image as a global player.

The World Class Hotel and Convention Facilities
Convenience for the international businessman
The Centrepoint for business, cultural, social and academic activities alike
Nowhere else in Dar Es Salaam

Supermarkets and Modern Food Outlets
World class supermarket chains for your daily convenience
Modern clean restaurants for the adventurous
World class fast food chains for the busy businessman and family

The Kindergarten
Living at Mchikichini Heights provides the best for your child?s needs
World standard education for the children of progressive parents

The Hospital
Care for the sick and less healthy
Modern medical facilities and treatment with leading medical experts
Convenience for the old and their next of kin

The Promenade and Central Park
A place to play after the hard work
A greenery that refreshes the air and the eyes
A landscape to form the backdrop of your working and living spaces
An escape fort the family at your own doorstep

A REVIEW OF CURRENT MARKET TRENDS OF THE VARIOUS SECTORS UNDER THE PROPOSED DEEVELOPMENT

Annotated hereunder is a brief analysis giving the major highlights of the current market trends of the various sectors that shall make-up the proposed development namely, Residential, Office, Commercial and Hotel accommodation.