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Funds Should Offer Housing Loans'
By Bakari Machumu
Africa.com, May 9, 2003
A call has been made
for Tanzanian pension funds to provide soft housing loans to their
An experienced estate developer,
Mohamed Khalfan, says being state organisations, social security funds
like the Parastatal Pensions Fund (PPF) and the National Social Security
Fund (NSSF) should help their members to acquire private houses.
Said he: "They should not be
tempted to make their investments solely for maximum commercial gains like
high rise offices projects...they should also have a policy of focussing
on the social dimension."
Khalfan was speaking in an exclusive
interview with Business Times in Dar es Salaam recently.
He argues that, with the inclusion of
housing loans for their members, Pension Funds' investments get the dual
purpose of generating profit in terms of interest while helping members to
According to him, the importance of
soft loans can be illustrated by the past experience in Tanzania when
workers accessed housing loans through the collapsed Tanzania Housing Bank
At one time, when loans were easily
accessible, people could afford building houses amid shortages of building
materials like cement, electrical and roofing materials.
"Such was the thirst for owning
houses... now materials are available but the crucial input is missing,
the financing part" says Khalfan, once a banker and chief executive
officer of an estate development company.
Now rumor has it that some workers,
raring to own houses before they retire, opt to quit their jobs to qualify
for a lump-sum pension to have their dreams of owning a house come true.
"It is very shocking that in the
absence of the badly needed soft loans, an employee would go to such
length in order to acquire a house and get him/herself free from keeping
on paying rent as high as Tsh 10,000 per room per month," he added.
Critics say the decision to concentrate
on investment in high rise buildings is partly because of the low level of
members' representation in the decision hierarchy such as the board of
"It is an unfair structure to see
that members (workers) are inadequately represented in the board,"
they argue. Board members are (by law) appointed by the minister of
According to them, to have a collective
interest of workers in particular and the society in general, workers
should form the majority in the board.
For example, says Khalfan "any
diminishing influence of expertise in the board can always be made up by
paying (hiring) for consultancy. It (the board) should not be a board of
Reached for comment, Michael Mjinja,
the director of commercial services at the Parastatal Pensions Fund (PPF),
said looking at the whole issue from the legal point of view, there is no
room to allow it now.
For example, he says, at the moment
there is no guarantee from which "we could extend soft loans to our
members, because we talk of contributions which would be at any time of a
"We do not know when a misfortune
will face our members. What if a member faces one while you have given him
a loan... but we are looking at it," he adds.
Recently, the public has increasingly
become concerned with the preference of pension funds to invest in
highrise buildings and expensive estates beyond the reach of the common
Other investment areas include Treasury
bills/ bonds and shares at the Dar es Salaam Stock Exchange. However, a
recent move by NSSF to construct 104 houses at Kinyerezi area is
considered as a breakthrough for the common man. If successful, the
program will cover the whole country.
Recent reports have it that the NSSF
plans to invest in neighbouring countries of Kenya and Uganda. According
to our sister paper, Majira, NSSF is conducting studies on the possibility
of venturing into tourism and mining.