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.
