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US firm pulls out of Dar housing project

Discussion in 'Habari na Hoja mchanganyiko' started by Ujengelele, Sep 26, 2010.

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    Ujengelele JF-Expert Member

    Sep 26, 2010
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    US firm pulls out of Dar housing project Send to a friend Saturday, 25 September 2010 22:57

    [​IMG] The American firm at the centre of controversy had planned to build 212 mortgege housing units in Dar-es-salaam and Dodoma.PHOTO/FILE

    By Tom Mosoba and Alvar Mwakyusa
    An American real estate development company has decided to pull out of a multi-billion shilling housing project for Dar es Salaam and Dodoma, following a bitter fallout with the government.The impasse, blamed on state bureaucracy, could now see the country lose out on an investment worth over Sh30 billion, which could have gone a long way in easing the housing shortage in the two cities.
    The company had intended to build modest, affordable houses for the middle class in the urban centres, where demand by far outstrips supply.

    Colom Investment (T) Limited’s vice-president (operations), Dr Gaidi Faraj, confirmed that they had discontinued the plan to build some 212 mortgage housing units.Some 90 houses were to be built in Dar es Salaam and 122 in Dodoma.
    Yesterday, the Capital Development Authority (CDA) director, Mr Martin Kitila, said they had held talks over the Dodoma project, but he was not aware of the US firm’s withdrawal.

    Dr Faraj had said the board of directors had made the decision after the authorities failed to offer the company a letter of allotment for a 15-acre plot in Dar es Salaam’s Bunju suburb, despite having paid Sh288.2 million ($211, 000) last April. The Dar project was to be implemented first.

    “We have cancelled the deal and are demanding our money from the ministry of Lands... (Housing and Human Settlement) who have refused to give us the title,” said Dr Faraj.
    He said efforts to seek assistance from the Tanzania Investment Centre (TIC) and the investors’ complaint bureau based at State House, Dar es Salaam, had failed.

    The firm’s lawyers wrote on September 17, to the Attorney General and the Lands ministry’s Permanent Secretary about their intention to sue the government to recover the money.

    Dr Faraj also wrote on August 18, to the American embassy in Dar es Salaam, seeking intervention. In the letter, he appealed to the US Government to issue an alert against Tanzania to all American investors over what he termed “potential fraud.”
    Contacted to confirm if they had received such a letter, a spokesperson at the embassy said they did not wish to comment on the matter.

    But in a rejoinder, the Permanent Secretary for Lands, Mr Patrick Rutabanzibwa, and the TIC executive director, Mr Emmanuel Ole Naiko, sought to exonerate their respective offices from blame.

    Mr Rutabanzibwa said the ministry was waiting for an okay from State House to vest the piece of land to the TIC, which would in turn issue derivative user rights to Colom, as required of any foreign investor.

    “We are only waiting for procedures to take their course. We can’t just give out land without following laid down procedures,” said the PS, adding that the ministry wanted to ensure that people were not wrongly evicted or that there was double allocation.

    He clarified that once the President declared the land general, meaning it could be taken away from the villagers, other procedures would follow before it could be made available to the investor for the housing development project.

    Mr Ole Naiko told The Citizen on Sunday in Dar es Salaam that the investor did not follow the right channels in his endeavour to acquire the land. He said the American company had by-passed the TIC, contrary to the law.

    According to the TIC boss, the Land Policy of 1995 does not permit foreigners to directly own land, as Colom tried to do. However, he said, the Land Act of 1999 gives authority to the TIC to lease land to foreigners for a period of 99, 66 or 33 years, which can be renewed.
    “In Tanzania, the land system is based on lease-hold rather than free-hold…the investor just decided to go on his own to obtain the land, which is not right,” said Mr Ole Naiko.
    He said the process to create a land bank, in which land earmarked for investments would be clearly allocated would be completed by the end of the year.
    It was not immediately clear why the ministry accepted payment for the plot in the Mabwe-Pande area before all the technicalities could be completed.
    According to the regulations, the Commissioner for Lands can only enter into any agreements after the presidential consent.

    The TIC boss said the agency was trying to resolve the matter and he was optimistic the project would go ahead if the investor would abide by the procedures.
    He said the snag was the use of derivative rights that could not allow the investor to transfer the land to a third party without seeking fresh approval.
    Colom, we learnt, was opposed to this arrangement because it wanted the buyers of its housing units to get individual rights to own the plots.

    The TIC boss said he was concerned that the investor had written to the US embassy, asking it to issue an alert to prospective American investors.

    Dr Faraj said though the company had cancelled the housing project, it would retain its other investments, including interests in the hospitality industry.