EAC, partners strike deal on growth fund

Saturday, 19 January 2013 08:36

By Bernard Lugongo, The Citizen Reporter  Dar es Salaam. Parliament’s Public Organisations Accounts Committee (Poac) yesterday directed that all social security organisations stop financing government projects unless they enter into sound contracts. Poac said the move would protect the public’s money by minimising the risks associated with venturing into bad investments between the government and pension funds. The Poac has directed that all Social Security Funds should not finance Government’s projects without entering prior legal contracts between them, in a move to avoid risky investments. The House team’s move follows the discovery that many government projects which are funded by social security loans are implemented without contracts, hence creating disagreements during the payment of the debt. According to the Poac chairman, Mr Zitto Kabwe, the government - which owes the pension funds around Sh1 trillion - has been using the social security funds to finance its projects without prior contracts. “We want all pension funds to enter contracts before implementing government projects,” Mr Kabwe said during a meeting with members of the Local Authorities Pension Fund (LAPF) in the ongoing parliamentary committee meetings in Dar es Salaam. He said the social security funds must enter legal agreements before implementing projects, adding that they must also pen deals for payments of loans for such ventures. The Poac boss noted that the move would help to avoid loss of money by pension funds. Mr Kangi Lugola, a member of the Paoc, wondered why LAPF had started implementing government projects without even a memorandum of understanding between the two parties. He said such legal documents were useful particularly when the government was reluctant to pay back the money that was spent on its projects. “Which document would you use in demanding for your money from the government if you don’t have contract papers?” Mr Lugola asked. Currently, the government owes LAPF over Sh40 billion for the construction of the University of Dodoma and over Sh30 billion for putting up Homboro College of Local Authorities. Responding to the committee’s directive, the chairman of the board of directors of LAPF, Mr Hassa Mlawa, said they accepted the directives because they were meant to improve the Fund. He admitted that it was difficult for them to turn down the government’s directives when asked to implement the latter’s projects, even without prior contracts.