Skip to main content

WELL DONE UGANDA REVENUE AUTHORITY BUT …


Over the weekend President Yoweri Museveni commissioned the new head office of the Uganda Revenue Authority, an imposing structure that is set to dominate the Nakawa skyline for some time to come.

Congratulations are in order to URA for the construction of such an aesthetically appealing building, which I hope wills set the pace for other developments not only in the area but in Kampala and even Uganda as a whole.

I know the pride that comes with having completed such a massive build for the initiators and implementors.

The new 22-story structure has allowed the tax man to fold back all his offices from around the city back to the head office, a move they estimate will save them sh7b annually. Using simple math the sh140b will pay for itself in 20 years.

The move is seen as precursor to a government move to build a ministerial compound in Bwebajja, where all ministries will be relocated sometime in the future. I have seen comments that such actions are evidence that the government is thinking strategically and saving the tax payers’ money.

I am not so sure about that.

I will assume that the URA put out that savings figure for publicity purposes. But they must know that utility bills, maintaining, and depreciation charges on that building will cost them a lot more than the assumed rent they have “saved”...

The real benefit is the convenience to the administration of URA of having all its departments under one roof. It helps that they have built up their E-tax system and therefore some, not all tax payers, need not have a face to face interaction with URAs staff, but I would not relish the journey to Nakawa, through the hustle and bustle of Kampala to do my tax business.

And god help us if their systems go down, the traffic on Jinja road will be horrendous.

That aside with a single stroke URA has reordered the whole commercial property market. The Nakawa building is more than 20,000 square meters of commercial space. Crested Towers URA’s former landlord is already in the market for 5000 sq meters that have fallen vacant as will so many landlords now.

In an ideal market this single move may have collapsed the property market in and around Kampala, putting property developers out of business and setting dozens of real estate professionals out on the street.

It has not happened yet. The peculiarity of our market and the promise of continued economic growth may help us smooth over this major shock to the system.

"The point is that property developers are going to have to think twice about investing in Kampala as returns are not certain. Already there is reported glut of rentable space in the city and that was before URA relocated its tent to Nakawa...

Government’s plans for Bwebajja can only heighten anxiety in the industry.

Government’s plan to build its own building is having the detrimental effect of crowding out the private sector.

The plan for government and its departments to house themselves will have numerous unintended consequences, not least of which will nip in the bud the beginnings of a local property development industry, that over the last three decades has helped us dent the huge deficit in commercial and residential property sector.

As shown above the economic sense of government housing itself is tenuous at best, which makes cutting off local property developers at the knees even more questionable.

We all want the best for our country. Government saving money on their procurements would be a welcome development.

But there are always two sides to the coin.

In this case it could mean a slowdown in the progress of local developers, who employ thousands on construction sites, property managers and an ecosystem of suppliers and service providers.
As they say not everything that glitters is gold.

Labels:

Comments

Post a Comment

Popular posts from this blog

NOT ONLY THE HARDWARE BUT THE SOFTWARE TOO

In the middle of September the United Nations released its annual Human Development Indicator (HDI). This index serves as an indicator of the quality of life of a country’s people by measuring the health, education, inequality, poverty and security standards. Aside from the statistical measures of development like GDP growth, this is obviously a better measure of how people are actually doing. In this year’s HDI report Uganda was ranked 162 out of 189 countries with a HDI score of 0.516. The index goes from zero to one, the nearer you are to one the better. Our score puts us in the low human development category. But as bad as that sounds we have been worse. In 1990, the earliest year that these figures were compiled our score was 0.311 even the UN recognises that we have improved 66 percent in the last three decades. According to the UN figures life expectancy has risen to 60.2 years   from 45.5 in 1990; expected years of schooling has doubled to 11.6 fr...
Post a Comment
Read more

A STITCH IN TIME

Last week the Bank of Uganda raised its key Central Bank Rate (CBR) a percentage point to ten percent from nine percent. This was the first increase in more than a year, a move prompted by BOU’s projection that price increases coming around the corner. Increasing oil prices, a weaker shilling and new taxes on mobile money services were cited as reason for this anticipated increase. We know that in the last year or so there has been a cash squeeze, money has been hard to come by. While the economy has been growing this has not been spread around evenly. It was hoped that if the economy can keep growing we can all begin to feel the joy. The Bank of Uganda has helped on this front by lowering its CBR from a high of 21 percent about seven years ago when inflation hit record levels. This allowed more borrowing by the private sector which has helped keep our economy ticking. But just when the economy was beginning to gain traction BOU has slammed on the brakes. We may ...
Post a Comment
Read more

FINANCING OUR ENTREPRENEURS, A CHALLENGE WE CANNOT IGNORE

In recent weeks the issues of financing for business has been in the news, in one form or the other. We have seen the challenge a past minister is facing with having to hang onto his home. The case is in court, so we can’t discuss its merits and demerits, just to say he may have fallen prey to some predatory practices, with the lender skirting dangerously on the edge of the law. Across the border in Kenya a cap on bank lending rates has been repealed. Three years ago Kenya’s parliament passed a law restricting lending rates to two percentage points above the rate at which the central bank lent money. In reaction banks pulled back their lending to businesses, depressing the economy and prompting the reversal. So now banks can “properly” price their loans, often to the discomfort of small and medium sized businesses. The two incidents are related and speak to the availability and cost of credit. In my business career I have benefitted immensely from credit. It is next...
Post a Comment
Read more

OUR HISTORICAL SITES SHOULD NOT GO UNATTENDED TO

Recently I was at Makerere University to attend a wedding ceremony. I hadn’t been on the university’s grounds in a while. I was shocked at how run down Mary Stuart and Lumumba Halls were. They are in need of serious work. These thoughts were reawakened with the recent launch of the coffee table book “Beyond the Reeds and Bricks” promoted by the tourism ministry, the cross cultural foundation of Uganda and the European Union Delegation. The book which is aimed at the protection of historical sites and buildings in Kampala, Entebbe and Jinja, is a moving collection of pictures of buildings and sites we know, but probably take for granted when we pass them as we go about our business. "Entebe za Mugula in Entebbe, Mackay’s Cave, the post office in Entebbe, the Stanbic Bank Branch in Jinja, Hamu Mukasa’s house in Mengo, the main building at Makerere , the Bahai Temple, Kibuli mosque and many other sites have pride of place among the 60 pictures in this book, which is ...
Post a Comment
Read more