Govt spends billions of taxpayers’ on rented ministries’ agency office

21Feb 2016
Bilham Kimati
Guardian On Sunday
Govt spends billions of taxpayers’ on rented ministries’ agency office
  • It may take over 120 years to settle Sh6.3trillion
  • It pledges an annual repayment of Sh50bn

The government will continue injecting billions of Shillings into none State buildings currently hosting various ministries, departments and agencies;

Ministry of Finance and Planning, Phillip Mpango.

Unless it puts in place a strategic plan to oversee the construction of its own structures, a decision that will save billions of taxpayers’ money on rent.

Various ministries, government agencies and departments are currently being hosted in non-governmental buildings, costing them hefty amount of money on rental charges.

Analysts consider this as inappropriate spending by the government as the huge amount could have been directed into various developmental projects.

This is happening amid the fact that office spaces in Dar es Salaam are massively expensive as real estate managers opt to peg rental charges on US dollars per each rented square metre. Rental charges vary from one building to another, dictated by a number of things, including packing lots and building location.

The Golden Jubilee Towers, one of the city’s distinctive buildings host various government ministries, agencies and departments. Available data from Knight Frank, an internationally property management firm, indicates that Golden Jubilee Towers charges $16 per square metre per month and a service charge per month per square metre is $2. For instance, the building’s 12th floor has 785 square metres in total fetching a total of $12,560 per month.

“Indeed, the respective government office bearer would have to pay a total of $150,720 per year on rent, an amount that would reach $753,600 in five years, certainly to complete a tenure of a government before the next poll,” a property management expert told this paper. The $753,600 is equivalent to Sh1.65 billion enough to have a modest structure to host at least a ministry’s docket.

However, the Golden Jubilee Towers seems to be charging lesser amount compared to other high rise building in the city. NHC House Samora Avenue for instance, charges between $18 - $30 per square meter per month.

In the past two years ago, office spaces hired to clients increased to an average of up to $21 from $15 per square meter per month while the lowest increased to $16 per square meter from $ 10 rates that dominated the market for the last five years.

When reached for comment on Friday, whether there is any plan to rescue the government from such avoidable costs, Tanzania Building Agency (TBA) Director of Real Estate could not say anything on ground he is not the agency’s spokesperson.

TBA is government’s Executive Agency under the Ministry of Works, Communications and Transportation, with a primary mandate of providing quality accommodation to Goverment and public servants as well as building consultancy services to Goverment.The Agency was established in may 2002 in accordance with the Executive Agencies Act No 30 of 1997 as a transformation of the building Department (BD) within the Ministry.

“Unfortunately, I’m not a spokesperson. I would advise you to write down questions to the acting director general, who is mandated to speak for the agency, get back to his secretary for an appointment,” an official who introduced himself as Director of Real Estates at TBA told this paper via phone after being referred to him by the DG’s secretary. “The Director General is currently out of office, but he will certainly here next Monday.”

However, available data indicates that the rental rates in the city are slightly lower than what is being charged in other buildings on the outskirts of the city such as the Mlimani city located in Mwenge. Its renting charges are measured at $40 per square meter per month. The motive behind rental charges increase has been attributed to the recent introduction of a Value Added Tax (VAT) on property renting introduced some three years ago.

Nevertheless, incredible sources have tipped this paper that the government’s decision to hire spaces in said social security institution is not accidental. He says it was an agreement that had been entered between the government and the funds as a way of enabling the repayment of huge amount of money it owes the fund.

As of mid 2014, the government owed PSPF a staggering amount of Sh6.4tn, mostly as a result of monthly accumulation of unremitted members’ contribution from the government since the fund’s inception in 1999. It’s known how much has been so far repaid by the government todate, but until 2014 it had already paid back a total of Sh90bn, according to available record. However, the government had committed to be paying Sh50 billion each year, during the following year until it completes repaying the entire loan.

If this is exactly what has been agreed between the government and the Fund, then it will take over 120 years for the debt to be settled. An effort to reach the government treasurer register, Lawrence Mafuru to explain on rented offices, government plans and security funds repayments was fruitless on Friday as his office phone number went unanswered.
It’s such a lucrative market which has now convinced Turnstar Holdings, the Botswana Stock Exchange listed property investment and Management Company to embark into an expansion drive of its Mlimani City investment project.

The expansion drive is set to include additional retail and commercial space, including basement parking, additions to the Conference Centre and a Botanical Garden, the company has been quoted as saying in its recent report.

“The Mlimani City expansion is due to the fact that the Tanzanian property market is potentially a money-spinning as opposed to an oversupplied property market in Gaborone,” the Gaborone-based company states in its recent report.

On top of these renting rates, clients are forced to pay extra charges of between $2 to $4 per square meter to facilitate other expenses such as water, security, fumigation and refuse collection as well as land scarping with exception of electricity and telephone charges.

In recent years, a handful of ministries and agencies have so far managed to have their own building that saves as their offices. This includes the ministry of tourism and natural resources with its permanent head offices at Mpingo House along Nyerere road in Dar es Salaam, and the Tanzania Civil Aviation Authority (TCAA) with its permanent headquarters at the Aviation House, Ukonga in the outskirt of the city, near the Julius Nyerere International Airport (JINIA).

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