Dar NSSF to diversify into agriculture

By ADAM IHUCHA Special Correspondent

Posted  Saturday, March 9  2013 at  18:28

In Summary

• Establishment of a $40 million sprawling Inland Container Depot (ICD) in Kisarawe area, nearly 85 kilometres outside Dar es Salaam Port and a $35 million cashew nut processing plant in Mtwara are some of the two projects the NSSF is eying.

Tanzania’s pension fund, the National Social Security Fund (NSSF) plans to venture into strategic investments in infrastructure and agriculture as it seeks higher returns on workers contributions.

NSSF, the country’s largest state-run-pension fund plans to pump $75 million into this new foray, as the investment manager seeks to diversify its portfolio which has traditionally been skewed towards government securities, bank deposits, equities, corporate bonds and real estate.

Establishment of a $40 million sprawling Inland Container Depot (ICD) in Kisarawe area, nearly 85 kilometres outside Dar es Salaam Port and a $35 million cashew nut processing plant in Mtwara are some of the two projects the NSSF is eying.

The volatility of the stock and money markets is shepherding public pension managers in the region into real estate where they hope to get better and more stable returns for their shareholders.

State-run schemes from Uganda and Kenya also plan to pump millions of dollars into real estate or infrastructure projects in coming months.

This is driven by the realisation that the region faces extreme levels of old age poverty in the next 20 years as the number of people aged 60 and above doubles with no corresponding increase in pension coverage.

This, together with faltering youth employment and a shrinking formal sector, presents a recipe for social upheaval as the elderly look up to a helpless younger generation for support.

In Tanzania, NSSF director for planning, investments and projects Yacoub Kidula said plans are underway to acquire 100 acres of land to set up an Internal Container Depot at Vihingo.

“Tentatively, the construction of the ICD project will commence in July 2014 and its initial capacity will be 1, 000 twenty-foot equivalent unit (TEU) to decongest the Dar port” Mr Kidula said. “A long-term plan is to expand the ICD to be able to handle 3,000 TEU” he said.

NSSF Tanzania director general Ramadhan Dau said the cashew nut processing business was emerging as a lucrative area to venture into as Tanzania seeks to expand its exports.

Traditionally, Tanzania has been exporting its cashew nuts in a raw form, effectively fetching low prices.

“Its easy for NSSF to initiate the projects because they have capital, but to run them sustainably and profitably is a different issue altogether…it has to be careful not to burn its fingers since these are public funds” said Abdallah Saqware who teaches at the Institute of Finance Management.

The NSSF boss said these investments will be carried out through a special purpose vehicle (SPVs), which will be responsible for implementation and management of the projects. The fund will assume either full control of the companies or will partly own them through joint venture arrangements, Dr Dau said.

Elifuraha Laltaika, a lecturer at the Tumaini University Makumira said large-scale food production was an area NSSF should venture into.

“Food is the second most lucrative business globally, next to oil. NSSF stands a high chance of not only making huge profit, but also addressing a social challenge that impacts negatively on its members as a major driver of inflation” he noted. 

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With 550, 000 members base contributing Tsh594 billion ($371.250 million) annually, NSSF total assets stand at Tsh1.8 trillion ($1.125 billion), while its investment portfolio is currently estimated at around Tsh1.6 trillion ($1 billion).