NSSF enters fresh Shs 20bn land deal

By Agnes Asiimwe

Workers’ Fund to finance new 20 storeys building in Nakasero

This NSSF – Temangalo land purchase scandal could spoil the fortunes of some, especially those who were a heartbeat away from getting their hands on their own chunk of the workers’ fund, like the Uganda National Farmers’ Federation (UNFFE).

The Independent has learnt that on September 11, NSSF Managing Director David Chandi Jamwa and the UNFFE president Frank Tumwebaze, also MP Kibaale County signed ‘a memorandum of deposit’ in which the latter deposited UNFFE’s land title of plot 27 in Nakasero, Kampala to NSSF as security.

UNFFE would in return receive $12 million (approx Shs 20 billion) to build their headquarters, making UNFFE the first beneficiary of NSSF’s new financing project known as Build Own Operate Transfer (BOOT).

NSSF announced the BOOT financing in the print media in March and said it would allocate funds to private and public investors ‘ready to develop commercial real estate in Uganda in line with NSSF’s strategy of bridging the deficit in the commercial space in the country which it estimated at about 250,000 to 300,000 square metres.’ The UNFFE project is a 10-story farmers’ centre to be constructed on plot 27, Nakasero Road.

‘We transfer the property from onset, the land is in our names till the period of recovery plus interest and then we transfer it back to the owners,’ said Grace Isabirye, NSSF chief investment officer. To qualify for BOOT, an institution must have plans to develop a project of not less than $10 million, it must be able to inject at least 33% of the total cost of the project and must own prime land of at least two acres with the market value of at least $1 million per acre.On August 14, just as the Temangalo scandal was beginning to unravel, NSSF announced that it was lending Shs 16 billion (approx US $10 million) to the Uganda Revenue Authority (URA) which the tax body would use to build its headquarters. Barely a week after, on August 23, NSSF announced that it was investing Shs 128 billion in the redevelopment of the National Theatre, under BOOT financing. The current National Theatre structure would be destroyed to pave way for a new 20 story building with rental space, conference centres and a theatre among others. Then in September NSSF signs with UNFFE. All these big real estate projects, worth $10 million plus are announced just as all lights are turned on the Mbabazi Temangalo ‘ NSSF project. Was this a deliberate effort by NSSF to show that Security Minister Amama Mbabazi wasn’t the only beneficiary of the workers’ fund? Is it an attempt by NSSF to demonstrate that it is business as usual at Workers’ House? Or is it mere coincidence?

‘It’s a coincidence that we signed in September,’ said Tumwebaze, ‘besides Temangalo, some other business must go on.  It would be unfair to tag our project with the Temangalo project.’

But this is possibly why these stampede contracts are questionable right now. How could NSSF enter into new transactions with the Temangalo scandal still hot on their laps? The NSSF ‘ UNFFE signing on September 11 coincided with Mbabazi’s first appearance before the Parliamentary Committee on Commissions and Statutory Bodies. Lastly, BOOT was only advertised in the print media for the first time in March 2008 when NSSF placed the invitation for the expression of interest notice. This means UNFFE applied for BOOT before it was advertised. Isabirye says there wasn’t any wrongdoing.

‘The BOOT idea was there since the time of Onegi Obel [former NSSF board chairman], it’s just that they hadn’t closed any deals,’ he told The Independent. ‘When we came in, applications started flowing in.’  Later on Isabirye contradicts himself to say less than 15 clients have so far applied for BOOT financing.

During Onegi Obel’s tenure, BOOT was only an idea that had not been formalized. When David Jamwa was appointed MD and the board was constituted, they came with concrete proposals. It is therefore irregular that NSSF could start processing UNFFE’s application before March.  In fact, the NSSF board of directors approved UNFFE’s funding in December 2007 and the minister of Finance approved it in February. Isabirye simply says, ‘UNFFE showed that they needed it. If somebody has the need for something they will look for who can offer it,’ Tumwebaze said.

‘We looked around for a loan. We first went to EADB but EADB was willing to fund 50%. We came to learn that NSSF has a BOOT.’

Tumwebaze says they approached NSSF, gave it their business plan and eventually deposited their land title as security. He said their application process started in July 2007 but only got a letter notifying them that NSSF board of directors had accepted their proposal early this year. ‘If we pay NSSF the current market rental rates of per square metre, there will be a profit [at the end of BOOT] which will help the federation not to depend on donors,’ said Tumwebaze.  The repayment will last 20 years.

The final agreement is yet to be signed. NSSF is in the process of transferring UNFFE land into the names of the fund. ‘We also have to ensure that service providers like the contractors have been procured in a transparent manner,’ said Isabirye. Tumwebaze said the federation is worried. ‘May be we expect it to be finalized in two months,’ he said, ‘We are worried the Temangalo controversies could derail it but we have our contract to fall back to.’

Then there is the Uganda Revenue Authority.  In August, NSSF gave a Shs 16 billion to URA with which the tax body would build its headquarters. Jamwa told a press conference while announcing the deal that the loan security would be the property itself, meaning that it was a BOOT project. Now, Isabirye says URA got the money as a straight loan with a fixed rate of 12%, to be repaid over 15 years. ‘It was supposed to be a BOOT but URA didn’t want to transfer its property into NSSF’s names,’ he said, adding, ‘It could have started as a BOOT but at the moment of signing it wasn’t.’

Isabirye maintains that no rules were flouted in awarding BOOT projects to two institutions before letting the public, particularly the workers know how their hard earned money was being used. He also claims he sees nothing amiss that NSSF could enter new contracts during the heat of the Temangalo scandal.  ‘To us in the fund we don’t take it that there is a lot of trouble. Even if there are lapses, the work has to go on.’  Jamwa was not ignoring what was going on, said Isabirye. ‘Internally we know that this has been blown out of proportion by the media.’