THE NSSF PROBE AND THE LUBOWA PROJECT

As an interested observer of National Social Security Fund (NSSF), having been a saver since the 1990s, I have been following the Fund’s probe quite closely.

I was waiting for jaw dropping revelations and headshaking moments. I am still waiting. Maybe because I have heard worse in the past from NSSF and everything I hear in this probe pales in comparison.

I heard about squabbling unionists, some benefits accessed before they were due, Workers’ House encumbered title, difference in opinion between the seller and the buyer about land off the Entebbe Expressway and a host of other administrative issues, which truth be told, did not need parliament’s intervention. The real action was about meetings outside official hours and places, billions requested by the gender minister from NSSF and not the consolidated fund, which made me think the wrong people are in the dock...

But what really got me going was the suggestion that NSSF’s real estate investments were strange and  the membership did not have first call on them.

Real estate development has been the waterloo of many NSSF CEOs before. The development of Workers House put paid to the tenure of Abel Katembwe; the development of Nsimbe Estate cost Ronald Mpiima the top job and at the heart of David Jamwa’s dismissal was issues surrounding the development of Temangalo. Real Estate is messy business for NSSF’s bosses.

So when questions were raised about Lubowa estate I paid attention. The net concern about Lubowa estate development was that the houses were priced out of many NSSF members’ reach.

Last year president Yoweri Museveni launched the sale of the  Solana Lifestyle Residences at which the entry price for the phase launched was about $150,000 (sh570m). At the time NSSF management explained that the cost of laying down infrastructure – roads, electricity, water& sewerage, were such that it was hard to push the price lower.

During the probe some people seemed to suggest that the NSSF should have built less grander houses in order to bring the price down to managable levels for the average NSSF member.

"From a purely statistical standpoint the average saver in NSSF is good for about sh13m – I took the full asset base of sh17trillion and divided it by the 1.3m members. What does a house that a sh13m man look like?

Lubowa situated between Entebbe Road and Entebbe Expressway is a prime property. In order to maximise its return, it requires that development be tailored towards a higher tier of the society.

Patrick Bitature, a man who knows something about real estate development, suggests that to derive optimal value from commercial real estate you need to invest at least ten times the value of the land, the market allowing.

Going by this rough rule of thumb the 600 acre Lubowa development, which had a book value of sh305b in June 2020 would require at least a sh3trillion investment to make sense.

Not to overstate the obvious, simple arithmetic would indicate that that would be sh5b invested per acre.

Put another way, you would not build a bungalow on Kampala Road, if you are to maximise your piece of land’s earning potential.

That being said NSSF is in advanced stages of completing the first phase at the Temangalo development, 17 km outside Kampala, which houses will be more price friendly – starting at sh90m.

The point is that you cannot criticize a project based on your pain point.

That being said NSSF’s main mandate is to ensure social security for its members when they are out of work. This entails that it keeps the savings they contribute and provide an adequate return that will ensure, at the bare minimum, the value of their savings are not eroded by inflation.

"We judge NSSF on what we will get when our working days are over  first. Other things like its asset allocation are secondary to us the members...

But because of its size NSSF also feels a greater responsibility to society. In its investment it also seeks to have a transformative effective on the environment it invests in. So it would be a disservice to the wider society to under invest in Lubowa to accommodate its members.

I know most people are biased towards fixed asset investment; they would rather have NSSF more involved directly in the real estate development. I don’t share the sentiment because there are better returns elsewhere than in real estate. But I can understand that NSSF, with its sh17trillion war chest is an anomaly in our dysfunctional society that cannot be left alone.

To he who is given much, much is expected of him.