building the country's biggest sugar factory that is expected to double the current national output of the sweetener and confine recurring shortages of the commodity to history books.
The cash-rich NSSF and PPF pension funds have traditionally opted to put their substantial liquid assets in relatively safe investments such as government securities (treasury bills and bonds), real estate, fixed deposits and other areas.
But following much prodding from the government, the pension funds will now venture into the manufacturing sector, which has previously been perceived as a relatively risky investment.
Government officials hope the grand sugar factory to be built in Morogoro Region in line with the industrialisation policy of President John Magufuli's administration will turn out to be a sweet deal.
The proposed NSSF-PPF sugar factory is expected to be the largest in the east and central Africa region, with an annual output capacity of 200,000 tonnes and employ more than 100,000 people.
The four existing sugar factories in Tanzania -- Kagera Sugar Limited, Mtibwa Sugar Estates, Kilombero Sugar Company Limited and TPC Limited -- have a combined output of around 220,000 tonnes against an annual demand of 420,000 tonnes.
This means that the country currently has a deficit of at least 100,000 tonnes of sugar each year, which is met by imports from Brazil and elsewhere.
The government earlier this year banned sugar imports, leading to shortages of the commodity and price hikes.
The sugar factory to be built by the two social security giants is expected to create a surplus of around 100,000 tonnes of sugar a year when completed.
Two cabinet ministers visited the site of the proposed mega sugar factory at Mkulazi village in Morogoro Region over the weekend and inspected the blueprint for the plant.
Speaking to Mkulazi villagers, the Minister of State in the Prime Minister's Office (Policy, Parliamentary Affairs, Labour, Employment, Youth and the Disabled), Jenista Mhagama, applauded the two social security schemes for the joint venture (JV) project, saying it would create thousands of new jobs and boost the economy by curbing sugar imports.
“I want this factory to be one of a kind in the region," said Minister Mhagama who was also accompanied by Finance and Planning Minister Philip Mpango and Morogoro Regional Commissioner Stephen Kebwe.
The Morogoro South East Member of Parliament, Omary Mgumba, and representatives of the JV firm formed by the pension funds, the Mkulazi Holding Company, were also in attendance at the site inspection tour.
Mpango said the government has already allocated 17 billion shillings in the current fiscal year 2016/17 for compensation and relocation of villagers to pave way for the project.
An area covering 63,000 acres has been set aside by the government for the proposed mega sugar factory.
"Our goal is to produce sugar output that not only meets our internal needs as a country, but we also plan to export surplus production to neighbouring countries," said Mpango.
He also urged contractors to speed up construction of a 61-kilometre road leading to the site of the project.
"The road is a crucial infrastructure that will be used to transport various goods to and from the factory," he said.
The Bank of Tanzania (BoT) last year approved social schemes investment guidelines under the Social Security (Regulatory Authority) Act No. 8 of 2008 to guide investments of pension funds.
The stated objectives of the central bank guidelines is to "guide the boards of trustees of the (pension) schemes to undertake investment decisions in line with best practices."
The guidelines prescribe limits for pension funds for investments in various asset categories to “foster risk diversification and limit excessive concentration of risk.”
They are also aimed at safeguarding and protecting the interest of members of the social security schemes by directing investments in "safe and high yielding investment opportunities without compromising diversification and social economic utility criteria."
Although the guidelines do not specifically cite the manufacturing sector among a list of investment categories that social security firms are allowed to invest their money in, they give pension funds leeway to put members' contributions in virtually any project "subject to prior approval by the (central) bank."