By ADAM IHUCHA
Tanzania’s National Social Security Fund (NSSF) is
whetting appetite to venture into new areas of infrastructure and agriculture,
a move suggesting a historic shift in fund’s investment attitude.
NSSF, the country’s largest state-run-pension
fund, has traditionally been skewed towards government securities, bank
deposits, equities, corporate bonds and real estates to a greater degree.
But now NSSF plans to pump a $75 million into these new forays, as investment manager seeks to diversify portfolios into alternatives offering the potential for superior returns with more stability.
Establishment of a $40 million sprawling Inland
Container Depot (ICD) in Kisarawe area, nearly 85km away from Dar Es Salaam
Port and a $35 million cashew nuts processing plant in Mtwara are the two
ambitious projects on the NSSF investment hit list.
NSSF Director for Planning, Investments and
Projects, Mr Yacoub Kidula says that plans are underway to acquire 100 acres of
land to set up ICD at Vihingo Village in Kisarawe area.
“Tentatively, the construction of ICD project will
commence in July 2014 and its initial capacity will be handling a 1, 000 twenty-foot
equivalent unit (TEU) to decongest the Dar port” Mr Kidula said.
Available data shows that in 2011/12 fiscal year,
Dar Es Salaam port, the country's main gateway for imports and exports, handled
475,000 TEU, surpassing its design capacity of 250,000 TEU per annum.
“This creates an opportunity for us to invest in
the ICD to reap superior returns” Mr Kidula noted, stressing that a long-term
plan is to expand the ICD to be able to handle 3,000 TEU.
NSSF Director General, Dr. Ramadhan Dau says that
they also saw the importance of venturing into cashew nut processing not only
to rake in profits, but also to create employments.
Traditionally, Tanzania has been exporting its
cashew nuts in a raw form and fetches low prices.
The World market price for raw cashew nut is less
than $1 per kg, but the same processed by breaking the outer shell; would fetch
$7.
In a country where the rate of unemployment stands
at 10.7 percent, Dr. Dau says, it is unwise to export raw materials to foreign
markets because by so doing, the country is not only exporting jobs, but also
the proceeds that it receives in foreign exchange is low compared to what it
would have otherwise earned if the commodities were exported as finished
products.
At the moment Tanzania exports only 20 percent of
processed cashew nuts as most of its cashew nuts production are processed in
India, denying the country’s opportunity to earn more foreign exchange.
There are only three operational plants located in
Mtwara, Dar es Salaam and Newala which can process not more than 20,000 tonnes
a year out of the country’s production volume of over 150,000 tonnes of cashew
nuts annually.
Cashew nuts provide an important source of income
for some 250,000-smallholder farmers in the southern coastal regions of Coast,
Lindi, Mtwara, and Ruvuma.
It accounts for 80-90 percent of Tanzania’s
marketed cashew crop.
Senior Lecturer at Institute of Finance Management
(IFM) Dr Abdallah Saqware said much as he understand the importance of NSSF to
invest in a bid to boost its reserve, but he worries about the management of
the factory by the fund.
“Its easy for NSSF to initiate the projects
because they have capital, but to run them sustainably and profitably is a
different issue altogether…so I advise the NSSF to be careful bearing in mind
that these money are public funds” Dr. Saqware warned.
However, NSSF boss allayed fears over the issue,
saying all these investments will be carried out through special purpose
vehicle (SPVs), which will be responsible for their implementation and
management.
The fund will assume either full control of
the companies or will partly own them through joint venture arrangements (JVs),
Dr Dau said.
Elifuraha
Laltaika, a Lecturer at the Tumaini University Makumira said it is high time
NSSF invests in large-scale food production to curb food insecurity, which he
described as a major driver of inflation.
“Food is the second most lucrative business
globally, next to oil. To this end, NSSF stands high chance of not only making
huge profit, but also addressing a social challenge which impacts negatively on
its members as a major driver of inflation” he noted.
With 55o, 000 member base with a capacity to
contribute Tsh 594 billion ($371.250 million) annually, NSSF total assets stand
at Tsh 1.8 trillion ($1.125 billion), while its investment portfolio is
somewhere around Tsh 1.6 trillion ($1 billion) earning the fund annual returns
of Tsh 150 billion ($94 million).
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