Indirect industrial investment schemes need prudence

This follows the fact that such schemes won’t be involved in direct industrial investment being touted so much by the current government.

It seems, this has been a thrust of a public appeal by President John Magufuli to the pension funds that they abandon their penchant for "tall buildings" in favour of investing in industries, which means in a specific industry, directly, one such fund actually moved to act.

It was the National Social Security Fund (NSSF) the most important of public pension funds, which took up the presidential call with an announcement that it was 'dishing out' (as the media usually put it) about Sh34bn into a grain milling outfit hitherto operated by the long defunct National Milling Corporation (NMC).

The latter was a pain in the neck during the first phase government and as it is evident; there are quarters in the government who are still hankering after it. It was characterised by terrible shortages, queues, bribes.

It is unclear if the NSSF is going ahead with that questionable subsidy plan. There are many ways to adapt to the new Magufuli ethos and get away with cash, and one of them is to show evident patriotism in the direction the president wants, and then expect but the joy and harmony. In that way the euphoria so generated lends a blind eye to other uses of funds.

The idea of investing in industries by pension funds is reminiscent of other earlier roles of pension funds, that the government sources funds from this sphere what it can neither rationally present in its budgets nor obtain loans.

And as a norm in government work methods, it first rules out privatisation, and then seeks funds from whatever quarter. In that case most use of pension funds for this or that project is always hovering on danger zones. It saves projects like building of Dodoma University or Kigamboni Bridge outside the folds of the state budgets.

But what makes Dodoma University and Kigamboni Bridge acceptable investments is that they are fixed assets which do not rot or decay quickly, unlike dishing out working capital to state owned industries, for never to see the cash again.

While it is fair and just to refuse, to take precautions about directly investing in industries as Dr Magufuli's advisers want, as it would put in peril all the cash being held by those funds in Alice industrial wandering projects, even what remains of this intention is questionable.

What is needed is to stay clear of this proposition as a whole, that pension funds ought to have nothing to do with industries, as the latter are supposed to be started by market logic, and source their funds in banks. State subsidies, pension funds only lead to drain.

There is a discernible mood among the current authorities holding office at Magogoni, that we have the right atmosphere for reintroducing most of the first phase industrialisation thrusts, without having learnt anything from their collapse.

Private sector firms which were created amidst shortages and chaos in the management of public industries thrived, partly using managerial soft points and glaring weaknesses in the public sector.

And what advisers don't say is that there is a dearth of honesty in how public firms are run, that is why industries, prone to losses, are best left to private entrepreneurs to undertake.