Auditor General Edward Ouko has raised the red flag on Sh2.54 billion worth of property investments by the National Social Security Fund (NSSF) that have either stalled or are giving inadequate returns to the pension scheme.
The single-largest idle investment, Hazina Trade Centre, is only 38 per cent complete yet it is two years behind schedule. The completed section is valued at Sh1.5 billion, although about Sh1.9 billion has already been spent in the construction.
The building, located in Nairobi’s city centre, was tendered for a contract sum of Sh6.7 billion but has only reached the 15th floor. It was to be undertaken for a period of 155 weeks ending July 2016 but stalled more than a year ago after questions were raised on its stability.
“As at March 2018, the building was still incomplete and builders work had stalled after reaching the 15th floor or 38 per cent and its Sh1,887,744,544 spent on the project out of the total contract cost of Sh6,715,218,188. All efforts should be made to ensure completion of the building to safeguard members’ contributions,” said Mr Ouko.
The NSSF bought Hazina Plaza in Mombasa in 1994, but has lost cash due to rent arrears amounting to Sh239.5 million since only Sh66.5 million had been paid by September 2016 yet Sh323.6 million had been expected.
“So far the fund has not realised any value for money from the investment of Sh450 million in Hazina Plaza Mombasa since 1994. The unrealised benefit from the investments in Hazina Plaza casts doubt on prudent financial management of the lease for the interest of contributors,” said Mr Ouko.
Land worth Sh126 million was disposed of in Mavoko, Machakos County, in 2011 but only Sh12.6 million was paid and the rest, amounting to Sh113.4 million remains outstanding despite having become due in the same year, 2011.
The then Municipal Council of Kisumu swapped property in Milimani Estate valued Sh178 million for a debt it owed the NSSF in 2012, but the houses located in it bring in only Sh66,000 annual rent from NSSF staff who occupy them, yet the amount should have been reviewed upwards to benefit the Fund’s contributors.
“Value for money has not been received from the investment over the last five years up to June 2017,” says Mr Ouko.
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