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Badilisha Lugha KISWAHILI

Revealed: State`s top ten billions makers

26th May 2012
National Social Security Fund (NSSF)

Ten state-owned corporations and agencies posted a combined profit amounting to a whopping Sh520 billion ($320million) in the financial year 2009/10, with the National Social Security Fund (NSSF) topping the league by posting Sh 207 billion - which is equal to the total combined profits posted by the top five banks in the country last year, The Guardian has learnt.

The top ten corporations fall under the category of service industry, but some of them have been investing heavily in real estate, lending and treasury bills.


According to financial details sent to the National Assembly recently, the top ten public corporations and agencies operate their businesses without receiving any subsidy from state coffers.

Though the banking sector is bigger than the combined assets of the top public corporations and agencies, their profits surpassed what the industry posted last year.


The top ten firms and their gross profits in brackets are NSSF (Sh207.9 billion), PPF (Sh97.6 billion), LAPF (Sh90.4 billion) and National Health Insurance Fund (Sh63.7 billion).


Others are Government Employees Pension Fund (Sh18.6bn), Public Service Pension Fund (Sh16.2 billion), Vocational Education and Training Authority (Sh16 billion), Tanzania Communications Regulatory Authority (Sh14 billion), Deposits Insurance Board (Sh10 billion) and Energy and Water Utilities Regulatory Authority (Sh7 billion).


Unlike pension funds, which have been in a spending spree investing in real estate, issuing loans to big businesses and trading in treasury bills, it is not clear how the National Health Insurance Fund made the staggering profit.


However, in health insurance if the total cost of health bills of those falling sick in a year is lower than the contributions made by the members, the Fund stands a good chance of posting a super profit.

Introduction of the National Health Insurance Fund (NHIF) as an alternative financing option in the health sector is a result of the government’s decision to implement health sector reforms, which the government embarked on in 1993 when the cost-sharing system was first introduced in government hospitals after three decades of free health care services.

Under the health sector reforms, various programmes, including the National Health Insurance Scheme, were introduced. To implement the scheme the National Health Insurance Fund was established by an Act of Parliament in 1999.

The law requires members to contribute 3 per cent of their salaries every month while the employer is also required to contribute another 3 per cent. The employer is therefore required to remit to the Fund a total of 6 per cent of the employee’s salary.

According to details contained in a report authored by chairman of the parliamentary Public Organisations Accounts Committee POAC) Zitto Kabwe, what NHIF posted as gross profit in the year under review was bigger than what the second biggest bank in Tanzania posted last year.

The whopping profit posted by NHIF also reveals how the health insurance business is lucrative in Tanzania - a country of about 44 million - but with only a very small minority enjoying health insurance cover.

NSSF, which tops the list, makes its huge profit from the money market - treasury bills and fixed deposits as well as commercial papers - which constitutes 35 percent of the Fund’s investment annually.

According to the Fund’s reports, part of its profit also came from bonds, mainly government and corporate, which take 25 per cent of NSSF’s annual investment budget.

NSSF also makes its profit from loans by lending to the government, corporate and small and medium enterprises (SMEs) whereby this sector comprised 12 per cent of the Fund’s annual investment budget.

Surprisingly, real estate takes only 8 per cent of the Fund’s annual investment budget while equity gets a mere 7 per cent.

The Fund’s total benefit payments to its members increased from Sh 50 billion in the financial year 2006/2007 to Sh 81 billion in the year 2007/2008.

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