Following an August 29 publication by African Confidential, Femab Properties, a Nigerian real estate firm, has cleared the air on a $4.5 million deal involving the University of Sierra Leone (USL).

Africa Confidential had written that the University of Sierra Leone (USL) advanced US$4.5 million to a Nigerian property developer towards a $50m project to build a new campus for its business school in 2019, but nothing was built and the Nigerians won’t return the money.

“It’s a tale of excessive ambition, the pitfalls of Public-Private Partnerships (PPPs), and the risks of not doing due diligence on your contractors,” it had said.

However, speaking during an interview with EQ, Gafar Adewale, the general manager of Femab; Shina Aguda, the public relations officer of the property company; and Toyin Ajiboro, the firm’s legal counsel, said there was no case of fraud between their agency and the institution.

They explained that the expansion of USL at Bureh Campus was initiated by the firm after they saw the discrepancy between the number of students that graduate yearly from high school and the quota that could be admitted by USL. They said the project stalled because there were several concessions between them and the Institute of Public Administration & Management (IPAM), an arm of the university.

Aguda explained that the initiative had met the approval of the Sierra Leone Parliament, the Bank of Sierra Leone, the Ministry of Finance, and other bodies whose consent was needed.

“Femab was in Sierra Leone and introduced to IPAM through the Sierra Leonean Investment Promotion Agency (SLIPA) as we were in the country for the first time and needed to contact all the bodies in charge of people coming to invest in the country,” he told EQ.

“They introduced us to IPAM and on our first visit to them, we saw the condition of the place and found out that they graduate about 105,000 West African Examinations Council (WAEC) students every year, and admission was only available to less than 10%, so what happens to the remaining 90%?

“As it happens in Nigeria that after writing your Joint Admissions and Matriculation Board (JAMB) exams, you have your result and money, but you can’t get admission for one reason or the other. So we thought that if they expanded their horizon, they could take more students and also make more money.

“We agreed that we would construct a residential campus that would host classrooms and hostels; the university liked the idea and passed it on to their university senate, which also approved the idea.”

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The PRO said an evaluation of the cost of the project revealed that it would cost $50 million; however, USl said they would not be able to afford the entire cost and could only muster 25% of the amount, that is $12.5 million.

He explained that Femab agreed to foot the remaining cost, as they had financial partners with whom they worked on projects of this nature. However, he said it was on the condition that the institution would provide them with a sovereign guarantee, a sort of assurance that whatever money they were investing into any institution of a country would be covered by the government if the institution could not pay.

Aguda said that soon enough, the institution returned to say it could no longer afford the $12.5 million and that it could only raise $5 million, which was 10% of the project.

“We had our roles clearly stated out in the contract, and when they said the 25% was no longer possible, we told them no problem, that we would raise the remaining $45 million if they would give us the sovereign guarantee as backed by the contract,” he continued.

“After the agreement with IPAM, the contract passed through their ministerial committee, which included the ministries of finance, works and education. All three ministries, as well as the project’s cost, were approved.

“At the time, there were no concerns about over-valuation or under-valuation, as professionals had reviewed the figures and compared them to international standards for similar projects. Parliament ratified the project, and the senate of the university also approved it.

“We assured them that we would raise the $40 million, provided they gave us the required assurance. They agreed and said their 10% would be realised immediately to kick-start the project. The project was set to take two years to complete, with a payment structure spread over eight years, and the construction itself would take three years.”

Aguda said before USL released their 25%, Femab had started to dispense funds and had to pay designers, architects and lots of other professionals who only billed them in dollars. He said once the agreements were signed, they moved to the site of the project where they conducted various Environmental Impact Assessments (EIAs) to determine how the project would affect Bureh town, as it was the first of its kind there.

“We fenced the perimeter to prevent encroachment, as some people had already begun building structures nearby. Once their funds were released, we reimbursed ourselves for the expenses we had incurred before the actual construction began. We commenced construction and awaited the sovereign guarantee so we could release our own funds.

“We had already secured the funds as our partners provided a letter confirming the funds were ready; we just needed the sovereign guarantee to release them.”

He further said that Femab Properties laid foundations, produced over 100,000 building blocks, and brought in container loads of cement, granite, sand and iron rods, all the while asking for updates from the institution.

He said it was afterwards that they released the government could no longer provide them with the sovereign guarantee and was instead asked to provide an Advanced Payment Guarantee (APG) from a Sierra Leonean bank. He explained that they provided it even though it came at the cost of $5000.

“If the project had proceeded smoothly, they could have activated the APG, much like claiming insurance after an accident. However, because of issues on their end, the APG expired, and they couldn’t claim it,” he told EQ.

“Despite their breach of contract, we remained committed and proposed alternatives. We agreed to recoup our investment through the university’s projected cash flow over eight years. By expanding the university’s capacity from 4,000 to 10,000 students, revenue would double, and we were ready to proceed.

“We wanted to make our mark in Sierra Leone with this project, as we had done previously in Nigeria. We had already invested significantly and brought in equipment, materials, and workers. It was evident that we had the capacity, but the delays were caused by their inability to provide the sovereign guarantee. Nevertheless, we remained committed to completing the project.”

He told EQ that they soon found out that the government could not provide them with a sovereign guarantee due to debt obligations to the World Bank, and providing a private firm with it would mean that it would have exclusive access to their resources, wherever they are in the world.

“It wasn’t as if the government wasn’t satisfied with the project, but based on their commitment to the World Bank at that time, they could not secure additional debts or have additional arrangements with another company.”

Aguda said there were a lot of risks associated with the contract, but they had to take them because they had invested too much into the project than they could afford to lose.

He said one major drawback the project had was the continuous change of USL’s administration. “After they admitted that the sovereign guarantee was dealing with us, we came up with new terms where we said we would depend on their cash flow.”

Adewale said the cash flow system was for them to look at how the university makes its money and then plan a recouping strategy around it. While they were still on this, he said they hit another roadblock while on site in 2020: Sahr Jusu, financial secretary of the country’s ministry of finance, came with thugs to seize their equipment and ordered that work be stopped on the site.

He said Jusu sent them away from the site because they were Nigerians and should not be in Sierra Leone to make money.

He said they reported the issue to IPAM, which promised to intervene. However, he said this had taken shape as delegates from the university visited Nigeria in August to discuss the project since they were still interested in partnering with their real estate firm.

“There is no fraud in this case,” he emphasised.

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USL RESPONDS

EQ first contacted USL via email for their side of the contract on October 18, but there was no response. However, on October 30, EQ sent a WhatsApp message to Tonya Musa, USL’s director of communications, who then shared the school’s official position with EQ.

In the eight-paged reaction to the allegations of fraud in its contract with Femab Properties, the statement issued on September 4, corrected the notion that its contract with the Nigerian real estate firm was kept a secret.

It stated that its contract to build a campus extension in Bureh Town was brought before different agencies and bodies, such as the institution’s Finance and General-Purpose Committee (F&GPC), the country’s Ministry of Lands and Country Planning which allocated 70 acres of state land, the Parliament of Sierra Leone which ratified the contract, the Ministry of Technical and Higher Education (MTHE), and the Ministry of Finance. All of these agencies gave their necessary approvals as required and the project proceeded.

The government of Sierra Leone was to provide Femab with this through the Bank of Sierra Leone (BSL). To this effect, the Ministry of Finance sent a letter to the bank on October 30, 2019, requesting it to “issue a guarantee to FEMAB Properties through Standard Chartered Bank (SCB), an “A” rated Financial Institution agreed to issue a counter-guarantee on behalf of BSL”.

It said following the ratification of the project by the parliament, the first drawback it faced was the provision of bank guarantee for Femab Properties who were financing the project with 75 % of the cost — $37.5 million.

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While both parties waited for the bank guarantee, the real estate firm moved to the site to begin work and even dredged the foundations of the hostels and administrative buildings. All of this was in January 2020. However, the work was soon to be suspended due to the Covid-19 pandemic.

Following this, USL said that Sahr Jusu, the financial secretary of the Country’s Ministry of Finance, wrote to Professor Foday Sahr, the Vice Chancellor and Principal of USL, requesting the evidence of work that had been carried out by Femab properties after they received $4.5 million (25% of the project take off funds).

They were obliged. However, in May 2020, Jusu visited the site of the construction, seized the building plans from the engineers and ordered that the project be halted with immediate effect.

“The Financial Secretary, Mr Sahr Jusu sent a letter to the Vice-Chancellor and Principal of the University, Professor Foday Sahr, requesting the submission of evidence of work done by FEMAB Sierra Leone under the development/building contract for IPAM’s residential campus at Bureh Town. On February 2020, the Developers (FEMAB) presented a valuation report on evidence of work done and activities undertaken upon the receipt of the $4.5 million from USL as requested by the Ministry of Finance who in turn presented the plan to the Ministry of Works and Public Assets for validation and technical verification on 6th May 2020.  The Ministry of Works in a letter dated June 10, 2020, attached a valuation report in respect of the work done at the IPAM Bureh Town project,” the statement reads.

“The Minister of Technical and Higher Education, Prof Aiah Gbakima; the Vice Chancellor and Principal of the University of Sierra Leone, Professor Foday Sahr; the Deputy Vice Chancellor of IPAM, Professor Edmond Nunie, and two representatives from the Bank of Sierra Leone met with the Ministry of Finance and discussed the challenges with the project financing.

“In May 2020, the Minister of Finance, Mr Jacob Jusu Saffa visited the site in the presence of Dr Alhassan Mansaray (Fiscal Risk Director of the Ministry of Finance), Prof. Aiah Gbakima (Minister of Technical and Higher Education), Mr Gilbert Cooper (Permanent Secretary in the Ministry of Tertiary and Higher Education), Prof. Edmond Nunie (Deputy Vice Chancellor of IPAM), Mr Theophilus McIntyre (Senior Assistant Finance Officer, IPAM), Dr Ezekiel Duramany-Lakkoh (Business Consultant University of Sierra Leone), and Mr Gafar Adeyemi (Financial Controller FEMAB Properties).

“In the presence of these officials and some FEMAB contractors at the site, Mr. Jacob Jusu Saffa took all the building plans from the engineers, and thereafter instructed them to stop work with immediate effect.”

The university said after this seizure, the same ministry of finance, through the Fiscal Risk Director, introduced Wealth Taylor, an individual who said he was willing to finance the project, to USL, but the school refused to proceed with him due to the absence of a valid contract.

Again, the Ministry of Finance sent another letter to the Office of Presidential Infrastructure Initiative (OPII), asking that it conduct another technical audit on the work done by Femab Properties and the Bill of Quantity (BOQ) of the IPAM Bureh Town Campus. 

“A report was sent in by OPII, and a response letter was sent to OPII by FEMAB Properties followed by a meeting to discuss the conclusions of OPII without the details from FEMAB.”

Three months after this, the same ministry announced that it could no longer commit to issuing the bank guarantee. It cited the debt burden it would place on the government as the excuse. This was contrary to its contract with Femab Properties.

In September of the same year, the Ministry of Finance went further to introduce another company, Caraja, which is a sub-contractor of Femab Properties, to USL. The ministry said they were willing to provide finance for the project without requesting a bank guarantee.

“Caraja were not able to provide any details of their capacity to fund the project without a guarantee. The project stalled from here,” the statement said.

What followed in 2022 was the university and Femab Properties discussing new ways of financing the project since the BSL through SCB could not provide the bank guarantee.

USL said in February 2023, they then came to a new agreement with the real estate firm stating that the project be broken down into small milestones; that IPAM and FEMAB should finance the milestones without a guarantee, that a new structural proposal be done on Milestone One at the cost of the developers on specifications agreed on with IPAM and That a new BOQ be presented for the new structural designs.

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