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US firm pulls out of Dar housing project friend
l The Citizen Digital paper
Sunday, 26 September 2010 09:55
l TRUST - Japanese Vehicle
By Tom Mosoba and Alvar Mwakyusa l Japanese used cars
An American real estate development company has l Used Toyota Carina
decided to pull out of a multi-billion shilling housing project l Mwananchi Newspaper
for Dar es Salaam and Dodoma, following a bitter fallout with l Mwanaspoti Newspaper
the government.The impasse, blamed on state bureaucracy,
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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.

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