Uganda Social Fund Awards China Railway $110 Million Deal

(Bloomberg) -- Uganda’s state-controlled pension fund offered China Railway Group Ltd. a $110 million deal to construct a 32-story office tower in the capital, Kampala.

Construction will begin next month and will be finished in two to three years, National Social Security Fund Chairman Patrick Byabakama Kaberenge said Tuesday in an interview. The project, which has been stalled for a decade, is part of NSSF’s plans to invest as much as $600 million in housing estates and office blocks, he said.

Growth in the East African real estate market could lead to the industry overtaking manufacturing as the region’s biggest economic driver after agriculture, according to Nairobi, Kenya-based ICEA Lion Asset Management Ltd.

NSSF, which ranks itself as the biggest provident fund in East Africa, had 9.98 trillion shillings ($2.66 billion) of assets under management at the end of June. At least 70 percent of its investments are in fixed income, 25 percent in equities and the rest in real estate.

NSSF is lobbying the government to revise Ugandan laws to allow investment outside East Africa to boost its income, Kaberenge said. The fund posted a 1.6 trillion-shilling of profit in the 12 months through June.

The body’s membership may grow to at least 5 million in five years from about 2 million people presently if laws are amended to allow companies with less than five employees to register them, he said. Uganda, which is on the cusp of oil production, has a working population of about 15 million of an estimated 40 million people, he said.

Contributions by members climbed 14 percent to 1.05 trillion shillings in 2017-18 and the fund plans to raise total assets to 20 trillion shillings by 2025.

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