CONTENTS Page

Letter of Submission 1

Chairman's Statement 2

Director General's Review of Operations 5

Report of the Trustrees 12

Report of the auditors 15

Balance Sheet as at 31 st December, 2000 16

Income and Expenditure Account for the year ended 31 st December, 2000 17

Cash Flow Statement for the year ended 31st December, 2000 18

Notes on the Accounts 20

Acknowledgement 30

The Parastatal Pensions Fund (PPF) was established under section 6 of the Parastatal Pensions Act No. 14 of

1978, to provide pensions and other allied terminal benefits to all eligible employees of parastatal organisations in

Tanzania. However, section 2(1)(c) of the Act provides for private companies to join membership of the Fund with

the consent of the Minister for Finance. The Fund had 95 member companies from private sector as at 31st

December 2000.

The fund continued to grow during the year and the size of the accumulated funds as at December 2000 stood at

TZS 91.93 billion as shown in the table below.

FINANCIAL HIGHLIGHTS

(TZS IN BILLION

YEAR 1997 1998 1999 2000

Total Contributions 14.96 18.684 25.806 27.646

Total interest

Income

5.345 4.418 4.254 3.930

Benefits Paid 7.750 10.569 12.198 15.832

Size of Acc. Fund 59.699 70.808 83.060 91.932

PPF MISSION STATEMENT

"TO BE THE RECOGNISED INDUSTRY LEADER AND PREMIER PROVIDER OF PENSIONS AND RELATED

BENEFITS AS WELL AS OTHER FINANCIAL SERVICES THROUGH RESPONDING TO CUSTOMER NEEDS,

PRUDENT INVESTMENTS, STIMULATING AND CHALLENGING EMPLOYEES. TO BE AN EXPERT

ORGANIZATION FAVOURED BY ITS CUSTOMERS, RESPECTED BY ITS POTENTIAL COMPETITORS,

SUPPORTED BY ITS EMPLOYEES AND WELL REGARDED BY THE COMMUNITY AT LARGE."

PPF FOR SECURE FUTURE

Director General Telephones:

PPF House Direct: 022 -2113560

Samora Avenue/Morogoro Rd. General lines: 022 - 2110642/ 2113919-22

P 0. Box 72473 Fax: 022 - 2117772

Dar es Salaam Telex: 41053 PPF TZ

Tanzania Email: ppf@ppftz.com

LETTER OF SUBMISSION

June, 2001

Mr. Basil Mramba

Hon Basil P. Mramba (MP)

Minister for Finance,

P.O. Box 9111,

Dar es salaam

Dear Hon. Minister,

In accordance with section 14(3) of parastatal Pensions Fund Act of 1978. I hereby submit, on behalf of the Board

of Trustees, a report on the Fund’s operational performance together with its audited accounts for the financial

year ended 31st December 2000.

Yours sincerely,

P.J. Ngumbullu

CHAIRMAN OF THE BOARD OF TRUSTEES

CHAIRMAN`S STATEMENT

Mr. P.J. Ngumbullu

I have great pleasure in presenting the Fund's operating results for the year ended

31st December 2000. The year 2000 was the fourth since the Third Phase

Government began implementation of the socio-economic reform programmes, with

the Tanzanian economy experiencing a moderate growth successively for the fourth

year running. It is expected that the Poverty Reduction and Growth Facility

(PRGF) Programme under implementation will create favourable macroeconomic

environment for higher growth; and with the ongoing reforms in agriculture and 'rural

development, the public sector and increased spending in social and infrastructure

services, the pace for poverty reduction and growth will be ~enhanced. The measures

being pursued have recorded successes in several areas lamely; declining inflation

reaching 5.5 percent as at December 2000, accelerated Growth in GDP, estimated at

5.1 as at the end of the year, favourable balance of )payments and strengthened fiscal

performance that has contained the fiscal deficit and excess money supply. We at the

Fund received these achievements with much relief as they have contributed positively

to the prospects for increased quality investment opportunities and also towards

achieving real growth of the Fund's portfolio.

During the period under review a number of member organisations, as has been the

case in recent years, continued to experience liquidity problems reflected mainly in the

accumulation of contribution arrears. The privatisation exercise, which was initiated in

1992, saw more than 320 entities, falling under private ands, as at 31st December

2000, thus adversely affecting membership growth, ; in most cases this was

associated with retrenchments of staff and workers. In addition, the rising intensity of

HIV/AIDS scourge was another setback taking lives f many of the Fund's active

contributing members, severely affecting the growth f contributions on one hand, and

increasing death benefit payments on the other

On the business environment, preparation of the long awaited Policy and social

security, which was expected to address the existing problems in the sector including a

regulatory framework was not completed. The need for the Policy has become more

pronounced in recent years, following the reform measures being undertaken in the

economy, particularly in the public sector, which have led to increasing labour mobility

and inter transfers between the public and private sectors. The -rigidity of the existing

laws to respond to the demands from members of the Fund and the liberalisation of the

economy at large, have added to the constraints of the Fund's operations. The Policy

is therefore expected to create conducive environment that allows competition and a

level-playing field in the pricing and service delivery to members consistent with the

government's market led economy and the socio-economic developments. To that end,

during the year, the Fund invited views from its stakeholders, prepared and submitted

to the government as its input to the proposed Policy preparation exercise. In addition,

the Fund reviewed its establishing Act and proposed some crucial amendments that

are required to enable it operate within the framework of the government policy

pending promulgation of the Social Security Policy as well as the Regulatory

Framework for Social Security Schemes. The proposed amendments with current Act

establishing PPF will soon be submitted to government for its appropriate action. We

believe that these amendments will, to a great extent; relieve the Fund, albeit part of

the burden brought about by the negative impact of the current legal framework and

the social and economic reforms that are currently under implementation. We also

understand that there is need to have a critical look at the various issues with the

objective of creating opportunities for the social sector to grow and perform its core

function of delivering the best products to members and the economy.

It is evidently clear that members of the various Social Security Schemes and the

economy will benefit more if there is fair competition within a defined policy and

regulatory framework. The Fund is ready for this competition and is prepared to play its

role as a public and accountable institution to Tanzanians and the economy. The

foregoing difficulties and inclement environment notwithstanding, the Fund recorded an

increase of 11 percent of the size of the accumulated Fund from TZS 83.1 billion

realised during the year 1999 to TZS 91.9 billion at the end of December 2000. This

growth has been brought about by increased contributions resulting mainly from

increased salaries. Investment income from the various Fund's investment ventures,

also contributed to this modest increase. Contributions increased by 7 percent from

TZS 25.8 billion earned in 1999 to TZS 27.6 billion as at 31st December 2000. This

increase, is however, low and off trend, mainly due to the declining membership

following the shrinkage of the parastatal sector, and also, problems related to the

absence of the social security policy and a regulatory framework. Interest income for

the second year in a row decreased by 4 percent from TZS 4.1 billion earned in 1999

to TZS 3.9 billion in 2000. The decrease, as has been the case in recent years, is

attributed to the declining interest rates in the money markets. The Fund's endeavour

is to have all the ongoing projects in the real estate brought to completion to further

enhance the earnings from rent income. Rent income as a result, increased from TZS

1.3 billion earned in 1999 to TZS 2.8 billion earned in 2000. The Fund also received

dividends out of its equity investments in some companies amounting to TZS 132

million during 2000. Consequently, total income from the entire portfolio grew by 7

percent from TZS 34.6 billion recorded in 1999 to TZS 36.9 billion in 2000.

However, benefit payments made by the Fund during the year increased by 30

percent from TZS 12.2 billion in 1999 to TZS 15.8 billion in 2000. The sharp rise was

attributed to the consolidation of allowances into salaries ahead of retrenchments

which hiked exit salaries, growing number of premature (under- age) pensioners since

1993, brought about by retrenchments, taking more than 60 percent of pension

benefits as well as a rising trend in death benefit claims caused mainly by HIV/AIDS,

as explained above.

With these operational results, the Fund recorded a reduced pretax surplus of TZS

10.5 billion during the year. This surplus is however lower by 11 percent when

compared to the surplus of TZS 11.8 billion earned in 1999. The shortfall being

explained by the sharp increase in -benefit payments and a low growth rate in

contributions from member institutions. However, looking forward, all of us at the Fund

believe that the Board of Trustees, Management in cooperation with the staff and

workers are putting in place a firm foundation to enable the Fund implement the

strategic plan to restructure its operations and achieve reasonably sustained profit

levels in the days ahead. In the days ahead we have resolved to focus our attention to

attain the following six strategic imperatives, namely:

Financial Stability

Appropriate Investment Policy; Customer Service Leadership; Efficient Organisation;

powerful Sales and marketing; and Member Involvement in Governance

The social security sector like other sectors in the economy is moving into a competitive environment. It is for this

reason that in order to enable the Fund remain strong and playa leading role, all of us are working on the

necessary infrastructural and human resources requirements for its sustainability. This work started in 1998 by

commissioning a diagnostic study to assess the Fund's requirements to operate successfully in the new and

changing environment. The outcome of the study was the identification of some six key strategic imperatives

stated above. Our prime cQrporate objective is the survival of the institution and to lead the way as an institution of

excellence and earn a place where we will be primus inter pares in the social security sector.

Finally, I wish to take this opportunity to thank all the Fund members and business associates for their utmost

cooperation, my fellow Trustees for their continued commitment, and the Management and staff of the Fund for

their hard and dedicated work, which made these results possible. I know that team spirit, hard work and

commitment towards our corporate goals are our lead indicators for the Fund to do much better in the coming

years and to ensure our cooperating partners an improved Annual Operations Report every year.

P.J. Ngumbullu

CHAIRMAN OF THE BOARD OF TRUSTEES

June, 2001

DIRECTOR GENERAL`S REVIEW OF OPERATIONS

Mr. Naftal Nsemwa

OVERVIEW

I am delighted to once again have this chance to review the operational performance of our Fund. The year 2000

has been among the difficult ones in the history of the Fund. Problems being experienced by member

organizations as a result of the deepening competition in the economy in the wake of the government's

commitment to implement reform programmes have impacted greatly on our operations. Most of member

organisations continued to experience liquidity constraints thereby failing to honour their statutory obligations.

Reforms in the parastatal and private sectors that are geared to enhance necessary efficiency required in the

market economy, led to a number of retrenchment cases. Big amounts of money proportionate to the recently

enhanced salaries were therefore paid out as benefits to the retrenched employees. A peculiar feature on these

payments has been the increasing premature (under age) pensioners who are generated by the retrenchments.

Deaths of members from HIV/AIDS, and related illnesses kept on increasing and the Fund had to pay huge

amounts of money as death and survivors' benefits.

The economy on its side however, was encouraging as inflation continued to slow down thereby reducing the

speed of growth of prices of our purchases. On the other side a large interest differential, which is partly explained

by the risks and immature competition in the credit market, continued to suppress deposit rates further down

thereby reducing hopes for real returns on our deposits. The government cash budget management system

introduced in 1996 significantly reduced bank borrowing consequently forcing down yields on Treasury Securities,

as the need for massive borrowing has significantly been reduced. These factors combined have adversely

affected the Fund's income, from this traditional source. The completion of PPF Tower complex in Dar es Salaam,

Kaloleni and Kijenge Housing estates in Arusha, considerably increased the Fund's earnings from this source

during the year, although rent arrears adversely affected targets. Accumulation of rent arrears can partly be

explained by the unfavourable provisions in the Rent Restriction Act (1984), which give more rights to tenants than

to Landlords, ignoring their responsibilities over the properties they are renting.

Despite this unfriendly environment, I am glad to report that the Fund performed satisfactorily during the year

under review. Total contributions increased by 7% from TZS 25.806 billion in 1999 to TZS 27.646 in 2000. Interest

income decreased slightly from TZS 4.109 billion in 1999 to TZS 3.930 billion in 2000. The decrease can be

attributed to a downward trend in interest rates for Treasury Securities and Bank deposits as explained above.

Rent and other incomes combined increased by 14% from TZS 4.646 billion earned in 1999 to TZS 5,287 billion in

2000. The total income of the Fund grew by 7% from TZS 34.561 billion for 1999 to TZS 36.863 billion during the

year under review.

Benefit payments increased by 30 percent during the year from TZs 12.199 billion in 1999 to TZs 15.832 billion in

2000. This significant increase is largely explained by benefit payments made to victims of .etrenchments as well

as HIV/AIDs related deaths as explained above. Value of death benefits claims rose by 35 percent from TZs 1.612

billion in 1999 to TZS 2.170 billion in 2000. HIV/AIDS and the induced illnesses accounted for 70 percent of the

total death benefit claims processed during the year under review.

Despite the foregoing, the Fund recorded a surplus of TZS 10.454 billion before tax. This surplus reflects an 11%

decrease when compared to the surplus of TZS 11.791 billion recorded in 1999. The size of the accumulated fund

increased by 11% from TZS 83.059 billion as at 31 st December, 1999 to TZS 91.931 billion as at 31 st December,

2000.

INCOME

Total income of the Fund increased by 7% from TZS 34.561 billion earned in 1999 to TZS 36.863 billion in 2000.

The income is made up of contributions, interest and others. The share of contributions to total income remained

constant during the two year period, as the variability in interest income was compensated by the income raised

from other sources as shown at the table below.

Table 1:

INCOME (Amount TZS BILLION)

A Graphic comparison of income earned during the two-year period is depicted at figure 1 below

Figure 1: Income comparison between 1999 and 2000

The Fund's total has been growing steadily although growth recorded during the year under review, has been the

lowest in five years in a row as shown at the table below.

Table 2:

Growth of Total Income in Percentage

Figure 2: Annual Income growth Trend

INVESTMENTS

The Fund's investment portfolio is made up of three major categories namely, fixed income assets properties and

equities. The benchmarks for the three investment categories are 55%, 40%, and 5°1. respectively. Fixed Income

Assets class consist of Bank Deposits, Treasury Securities, Commercial Papers, and Term Loans. The Investment

policy is reviewed consistently with developments in the economy.

A breakdown into specific asset classes of the Fund's investment portfolio as at 31st December 200( and

comparative figures for 1999 are given in the table below:

Table 3: Comparative Investment Position (amount in TZS billion)

Fixed Income Assets

This group of assets has been the traditional and principal source of income of the Fund. During the period under

review it contributed 51 percent of the total Fund's income, a share that is lower than 75 percent share contributed

during 1999. The fall in the share contribution is explained mainly by a fall in yields in the money markets as

explained above, as well as a fall in investment share allocated to this asset following the decision to finance

completion of all the major housing projects, so that the Fund could start earning rental income.

Properties

The amount in investment properties as at December 31, 2000 stood at TZS 47.36 billion. The properties include

office and residential accommodation for commercial purposes, and land in Dar es Salaam and Arusha. All

developed properties are already rented out to tenants and the Fund is earning income out of them. No major

construction project was started during the year, save for a diplomatic residential house located along Kenyatta

Drive, Oysterbay Dar es Salaam. In terms of contribution to total income, rental income increased its share from

22.6 percent recorded in 1999 to 41.2 during the year.

PPF House at the corner

of Morogoro Road and

Samora Avenue is one of

major properties of PPF.

Equities

Equity investment involves holding of or subscribing to shares in Private and Public companies and it amounts to

direct participation in their capital and therefore the profits of the companies concerned. As at the end of the year

2000, shares worth TZS 3.814 billion were held by the Fund. Of these shares, 66 percent are public and therefore

tradable at the Dar es Salaam Stock Exchange, (DSE), while 34 percent are private and not tradable at the DSE.

Investment in equities during the year under review rose by 44 percent when compared to TZS 2.64 billion held in

1999. Investment in private equities has been necessitated by the infancy of the stock market.

The elegant Estate in Dar es salaam was completed in the year. Fully furnished is now rented earning the fund

substantial income.

Investment Income Investment income from various Fund’s investment as discussed above for the year 2000 is as shown in the table

below with comparative amount for 1999 (in TZS billion)

Table 4: Comparative Income composition

Figure 3: Comparative Income Composition

On the whole, investment income of the Fund increased by 18 percent from TZS 5.76 billion in 1999 to TZS 6.79

billion In 2000. While there was a decrease in interest income from TZS 4.109 billion recorded in 1999 to 3.930

billion in 2000, the decrease was however more than offset by the

increase in rental income.

CLAIMS

Parastatal sector reforms continued to take course during the year under review resulting into further

retrenchments of employees. The private sector was not spared either. Deaths on account of AIDS and related

illnesses saw an increasing trend. In view of the foregoing, coupled with increased salaries prior to retrenchments,

benefits incurred increased by 30% from TZS 12.198 billion in 1999

to TZS 15.832 billion in 2000. All processed claims were promptly settled.

PERSONNEL

As at 31st December 2000 the Fund had a total manpower complement of 110 employees, following a

retrenchment of 30 employees and termination of 4 others on grounds of misconduct. One member of staff passed

away, and some 8 were recruited during the year.

TRAINING AND EXPOSURE The Fund continued to put considerable emphasis on the training and staff development. The Consultants who

conducted the diagnostic study of the Fund in 1998/99 also stressed this fact. I' was planned that emphasis would

be placed on in-house training programmes. In addition to such programmes some members of the Management

team as well as staff attended various training! programmes both locally and abroad. Two employees were

pursuing degree courses at the University of Dar es Salaam and two others doing diploma courses at the Institute

of Finance Management

More employees will be encouraged to take up long courses, so that they can acquire skills necessary to face the

increasing demands of the competitive business environment.

WORKERS' PARTICIPATION As per agreement with Trade Union (TUICO), the PPF Workers' Council held two meetings to discuss issues of

interest to employees and the Fund in general. Workers are always fully involved in discussing matters of interest

and advising the Management and the Board of Trustees.

PRODUCTIVITY

Members of staff are required to work hard and observe discipline. They are also encouraged to be creative and

innovative. The Fund's incentive scheme provides for rewards to best workers from various Directorates, Units and

categories of staff.

PPF MEMBERS' SEMINAR

A very successful members' seminar was held at the Arusha International Conference Centre on 15- 17th

November 2000. This was the tenth members' seminar and it was, as usual, well attended. A variety of papers

presented at the seminar by reputable resource persons from both within and outside the Fund made the seminar

exceptionally interesting.

Participants to the Member’s Seminar held at the Arusha International Conference Centre from 15th November

2001. About 200 delegates representing Member Organisations, Trustees of the Fund and Senior staff attended

the meeting.

CONCLUSION

The performance of the Fund during the year was satisfactory despite the prevailing difficult social and economic

conditions. This is attributed to the support of the Fund's members (both employees and employers), the wise

guidance of the Board of Trustees, and the commitment and dedication of Management and staff of the Fund. The

Fund is desirous of attaining a continuous and a healthy growth in tandem with its members -both current and

prospective.

Let's share this desire, and grow together for a secure future.

Naftal M. Msemwa

DIRECTOR GENERAL

REPORT OF THE TRUSTEES

The Trustees are pleased to present their report together with the Audited statement for the year

ending 31st December, 2000 in accordance with section 14(3) of the Parastatal Pension Act No 14

of 1978.

1:0 MEMBERS OF THE BOARD OF TRUSTEES

2.0: MANAGEMENT OF THE FUND

Management of the Fund comprises the Director General who is the Chief Executive Officer, four

directors and three heads of units.

3.0 MAIN ACTIVITIES OF THE FUND

The Parastatal Pensions Fund was established by the Parastatal Pensions Act No 14 of 1978. The Fund

currently offers two products, namely, the contributory pension scheme with defined benefits as the main

product and the deposit administration scheme. The two schemes cover employees of both the parastatal

and the private sectors.

4.0 SUMMARY OF OPERATIONAL RESULTS (TZS ILLION)

5.0 ACTUARIAL VALUATION

In accordance with section 16(1) of the Parastatal Pensions Act No 14 of 1978, actuarial valuation of the

Fund is a statutory requirement, which is carried out at intervals of not less than five years or at any time

when the Minister so directs. An actuarial valuation was carried out as at 31st December 1999. The

valuation report is expected soon from the Fund's Actuaries, M/s Hymans Robertson Consulting Actuaries

Limited of Nairobi, Kenya.

6.0 ADMINISTRATIVE EFFICIENCY

The Fund has no loans and consequently no interest charges have accrued against the Fund. All statutory

payments such as PAVE, PPS contributions and deductions, and development levy were made promptly to

the relevant authorities. All properties of the Fund have requisite certificates of ownership and are

adequately insured. No loss of assets was sustained during the year under review.

II) The existing management systems are invariably complied with. This has resulted in smooth

operations of the Fund.

III) The Fund had a total manpower complement of 110 employees as at 31st December 2000.

7.0 SOLVENCY

The Fund is solvent as current assets adequately cover current liabilities processed claims without

borrowing or selling investments.

8.0 RELATED PARTY TRANSACTIONS

There were no related party transactions during the year.

9.0 STAFF WELFARE

Employees are provided with various social services as stipulated in the approved incentive scheme and

other regulations of the Fund.

10.0 BOARD MEETINGS

The Board of Trustees held all statutory meetings in line with the First schedule to the Parastatal Pension Act.

As Auditors appointed under Section 14 (2) of the Parastatal Pensions Act, 1978, we have examined the attached

Balance sheet of Parastatal Pensions Fund as at 31st December, 2000, the related Income and Expenditure

Account and the Cash flow Statement for the year ended on that date. Our examination was made in accordance

with generally accepted auditing standards and accordingly included such tests of the accounting records and such

other auditing procedures as we considered necessary.

REPORT OF THE AUDITORS

In our opinion, the accompanying Balance Sheet, Income and Expenditure Account and the Cash flow Statement

present fairly the financial position of Parastatal Pension fund as at 31 st December, 2000, its surplus and cash

flows for the year ended on that date.

TANZANIA AUDIT CORPORATION

S.F. SAYORE – FCCA

DIRECTOR GENERAL

DAR ES SALAAM

DATE: 11TH MAY, 2001

BALANCE SHEET AS AT 31ST DECEMBER, 2000

INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER, 2000

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2000

NOTES ON THE ACCOUNTS

NOTE1: PRINCIPAL ACCOUNTING POLICIES

1.1 Basis of Accounting

The accounts of the Fund have been prepared on the basis of the historical cost convention. No

adjustments have been made for inflationary factors affecting the accounts except for revaluation of

investment buildings {Note 1.4).

1.2 Fixed Assets

Pursuant to the Fund's existing policy, fixed assets are stated in the Balance Sheet at cost net of

depreciation. Investment properties, however, are treated differently as per Note 1.4 below.

1.3 Depreciation of Fixed Assets

Depreciation on fixed assets is calculated on a straight line basis so as to write off the cost over the

economic useful life of the assets. The rates of depreciation applied on respective categories of fixed

assets and which are consistently used are as follows:-

Particulars

Buildings

Motor Vehicles

Machines and Equipment

Computer Equipment

Furniture and Fittings

Annual Rate

%

4.0

25.0

20.0

33.3

20.0

Full year's depreciation is charged in the year of acquisition and no depreciation is charged in the

year of disposal.

No depreciation is charged on investment properties

1.4 Investment Buildings

Investment buildings are included in the balance sheet at their open market values. Property valuation

is carried out at least after every three years. Valuation for the PPF House and Msasani Flats was

made on 31st December, 1997 by the University College of Lands and Architectural Studies. The

valuation resulted in a surplus of TZS. 743,682, 780. The surplus in the value of these properties

have been credited to revaluation reserve -investment properties.

1.5 Investment -Others

Investment -others comprise of investments in government stocks, long term loans and equity.

Investments in equity, in companies listed on the Dar es Salaam

NOTE 1: PRINCIPAL ACCOUNTING POLICIES (CONT'D)

Stock Exchange are reflected in the balance sheet at the lower of cost and net market value, determined on

a portfolio basis. All other investments are disclosed in the accounts at cost since there is no system of

determining their market values. Provision for bad and doubtful term loans, however, is made in compliance

with the provision policy explained in 1.6 below.

1.6 Provision for Bad and Doubtful Debts

Pursuant to the Fund's provisioning policy, provision for bad and doubtful debts at the rate of 100% is made

on specific debts considered doubtful of recovery as specified hereunder:-

(j) Debts for contributions receivable and debtors outstanding for over two years.

{ii) Debts for penalty receivable outstanding for over one year.

(iii) Debts for term loans outstanding for one year after the grace period

(iv) Outstanding rent receivable provisioned when in the opinion of management collection is

considered doubtful. As such provision is set aside when tenants have left Fund's premises without

honoring their obligation or when rent remain outstanding for more than one year and the tenant is

occupying Fund's premises in which case the entire rent outstanding is provisioned for tenants who

show indication of unwillingness to settle their rent.

1.7 Stock Valuation

Stationery stocks are valued at the lower of purchase cost and net realizable values. The basis of valuation

is based on FIFO method.

1.8 Foreign Currency Translations

Assets and liabilities designated in foreign currencies are translated into Tanzanian shillings at the

exchange rates ruling on the Balance Sheet date. Exchange gains and/or losses arising thereof are dealt

with in the Income and Expenditure Account.

Day to day transactions entered into foreign currencies are translated into Tanzanian shillings at the

exchange rates ruling on the date of the transactions.

Exchange gains and/or losses arising thereon are taken into account in determining the amount of surplus

or deficit for the year.

1.9 Penalty Receivable

In accordance with Section 9 (1) of the Parastatal Pensions Act (No.14) of 1978, an employer failing to

remit to the Fund the whole or any part of the contributions required to be remitted under Section 9 (2)

within 30 days after the

NOTE 1: PRINCIPAL ACCOUNTING POLICIES (CONT'D)

end of the month to which the contributions, both employers' and employees relate, a penalty equal to 5

percentum per month of the amount unremitted is levied. As at 31 st December, 2000 penalty levied on

various institutions stood at TZS. 8.014.148.357 across of provision for bad and doubtful debts.

1.10 Accounting for Pension Contributions

Employers' and employees' contributions are accounted for on accrual basis. Contributions are accrued in

the accounts based on the latest received particulars of members' contributions. Full provision for doubtful

contributions is made in the accounts as per Note 1.6 of the accounts to cover contributions outstanding for

over two years.

1.11 Outstanding Claims Payable

The figure for outstanding claims payable is calculated taking into account the average number of claims

and the related amount settled during the most recent financial years including the financial year under

audit on quarterly basis multiplied by the number of claims outstanding as at the year-end.

1.12 Refund of Contributions

Refund of contributions represent amounts received but due to such contributions being considered invalid

under the Parastatal Pensions Scheme are refunded to the contributions.

1.13 Actuarial Valuation of Parastatal Pensions Fund

Pursuant to section 16(1) of the Parastatal Pensions Act, (No.14) of 1978 at lease every five years an

actuarial valuation is supposed to be carried out on the Fund to determine sufficiency of funds to support

accrual of benefits of members due for retirement. The last actuarial valuation of the Fund was carried out

as at 31st December, 1993 by professional valuers M/s Hymans Robertson Consulting Actuaries Ltd. of

Nairobi, Kenya.

Accrued TZS. (Billion)

Value of

Pension in Payment 0.700

Past service Pension Benefit for Active

Member Based on projected Earnings 19,286

Total Past Service Liability 19.986

Assets

Value of Existing PPF Asets 21,285

Excess of Assets Over Accrued

Liabilities

1,299

NOTE 2: MOVEMENT OF FIXED ASSETS FOR THE YEAR ENDED 31ST DECEMBER, 2000

NOTE 18: CAPITAL COMMITMENTS

As at the balance sheet date capital commitments for capital work in progress on investment buildings stood at

TZS. 222,083,000 for which no provision has been made in the accounts. During the year under review the Board

of Trustees has authorized capital expenditure on investment buildings amounting to TZS. 3,858,560,000 of which

TZS. 1, 108,550,000 was not committed as at the balance sheet date.

NOTE 19: CONTINGENT LIABILITIES

The Fund had no contingent liabilities as at the year end

NOTE 20: COMPARATIVE FIGURES

Previous year's figures have been regrouped whenever considered necessary in order to make them comparable

with those of the current year.

ACKNOWLEDGEMENT

The Board of Trustees and Management of the Parastatal Pensions Fund would like to thank those who assisted

in the preparation of this annual report; in particular the auditors, Tanzania Audit Corporation, our members -

employers and employees alike, as well as employees of the Fund. We also wish to thank all our business

associates as well as the designers and printers of this report, M/s Colour Print (Tanzania) Limited.

P.J Ngumbullu

CHAIRMAN