How billions went down the drain in dubious NSSF project

Dege Eco Village was marketed as the ultimate solution to the real estate woes in Dar es salaam. But, behind the scenes, Dege was an audacious scheme to defraud NSSF contributors out of hundreds of billions of shillings.

It all began in November 2013 when Azimio approached NSSF, claiming to possess sites suitable for the development of satellite cities and thus requesting NSSF to finance the projects. The two organisations agreed to undertake multiple real estate development projects together.

Barely two months later, Dege was unveiled at the site where Azimio claimed to have 20,000 acres. With 7,460 apartments scattered across 300 acres, Dege was the second-largest real estate complex in Africa. It was dubbed a “heavenly place”, providing all the amenities that modern middle- and upper-income people would expect. But, for the majority of low-income Tanzanians putting their money into NSSF, Dege was a hellish inferno.

The anticipated cost was Sh1.4 trillion, with NSSF paying 45 percent and Azimio funding 35 percent in cash plus the value of the land, taken at 20 percent.

The details were shocking.

For starters, the value of land was highly inflated. While many people acquainted with Kigamboni would agree that an acre cost less than Sh10 million in 2013, NSSF eventually valued it at Sh25 million. However, in the NSSF-Azimio agreement, the value of the 300 acres given by Azimio was set at Sh800 million each! With one daring manoeuvre, the swindlers swiped Sh233 billion from NSSF, using NSSF valuation.

NSSF was an eager participant in this scam. They performed no due diligence. They performed no valuation. They conveniently ignored that NSSF owned substantial tracts of land in Kigamboni valued at just Sh4.5 million per acre. Ultimately, despite the fact that Azimio does not possess 20,000 acres in Dege, and its ownership of the 300 acres is questionable (according to one source, the title deed is nowhere to be seen), NSSF ignored all that. The affair was quite blatant - the perpetrators did not even bother to mask their misdeeds.

There was a time when I was so taken by NSSF’s outward appearance that I thought it was a very well run organisation. There are so few success stories to go around in Tanzania, so it is easy to fool people with an appearance of success. But mounting evidence suggests that something was seriously wrong with NSSF at a certain point in the last decade. Dege is just the tip of the iceberg.

But the horror show was only beginning.

According to a recent NSSF announcement, Azimio has only invested Sh12 billion out of Sh490 billion, whereas NSSF has already invested Sh271 billion. Moreover, Azimio has requested a loan from NSSF in order to invest in the project in which it is a majority shareholder!

Tanzanians are well acquainted with this type of corruption. A classic example is the controversial NSSF Ubungo warehouse saga. In the Dege case, nothing would have stopped Azimio from taking a bigger chunk of the Sh1.4 trillion or more if it had not been for the Magufuli factor.

In this affair, NSSF did not need Azimio to carry out the Dege project. NSSF had both land and money to invest in Kigamboni. It is also clear that Azimio had nothing to offer NSSF apart from empty words. It is no surprise that Dege was inexplicably abandoned barely two months after Magufuli became president. Given the illegality of the enterprise, it is understandable that they had to run for cover when someone that was not part of their plan came to power.

Strangely, though, no one has had their day in court.

One of the most pressing concerns is the identity of those behind Azimio. We have seen it before: whenever the trail usually goes cold, there is an untouchable person at the end. We know that Magufuli was aware of the Dege fraud; apart from CAG findings, the state had well-placed insiders in the project. To understand why are the wheels of justice not turning one needs to identify the people behind Azimio.

With regard to social security funds, Dege is not an exception. There are many reports of corruption, majorly via poor investment of their resources. That highlights the issue of their accountability to their contributors.

That is the argument that Prof Lusuga Kironde, a columnist for The Citizen, made in one of his recent articles. The professor observed that all NSSF board members are appointed by either the president or the minister. So, what is the role of the contributors? As long as social security funds are viewed as an extension of the government, the funds will continue to be subjected to the grand corruption pervasive among the political elites.

Also Read: Pension funds’ mega projects: What is the role of the contributors in the deals?

Finally, given the recent announcement by NSSF that it wishes to sell its Dege assets, Tanzanians should be extremely wary of this move. Given the cash investments, using the valid land valuation, Azimio owns only 7 percent of the shares. As a result, there is a strong case for NSSF to acquire the remaining Azimio shares obtained through fraud and proceed with the project as planned. Otherwise, it is unlikely to recoup its investment this way.

Furthermore, since NSSF allowed barely three weeks for bids on a Sh1.4 trillion project to be submitted, with a guarantee of 25 percent of the bid price, isn’t this a backdoor for the fraudsters to retake control of the project? According to one scholar, “what is likely to happen is that the award will be given to a company we have never heard of, representing the interests of the very persons behind the current Dege scheme”.

The Dege fiasco is far from over.

Watch this space.