Skip to main content

REAL ESTATE DEVELOPMENT CAN BE KEY IN OUR TRANSFORMATION


I have been around long enough to see real estate development, or maldevelopment, lead to the sprawl that is Kampala today.

From atop the Skyz Hotel in Naguru, one can see as far as Mukono to the east, Entebbe to the South and Bombo to the north. At night the lights from traffic, streetlights and from residences makes it a sight to behold.

But we were here in 1986 when Kampala’s outer limits were Kibuye roundabout, Rubaga, Wandegeya, Ntinda and Nakawa.

The NRM did the smart thing and removed restrictions – rent controls, on real estate and spawned a real estate boom that has led to the dramatic expansion of the capital city’s boundaries to what they are today.

During the same period the government’s National Housing & Construction Company (NHCC) has not kept pace with private developers, be they individuals or companies developing a few dozen units.

"Official statistics suggest that there is a 550,000 deficit of acceptable quality housing in Uganda of which 160,000 is in urban areas. This last figure is the equivalent of almost 160 Bugolobi Flats estates!...

Clearly our small individual efforts are not keeping up with demand and there is no sign that demand will stop growing soon.

Is it possible that the private sector is fast reaching the end of road in how far they can meet the housing demand in Uganda?

I don’t think so, but I think more proactive involvement by government is required to not only bridge the housing deficit but also to scale up the real estate sector and drive the transformation of the economy.

Across the border from us in Kenya, as part of President Uhuru Kenyatta’s ambitious Big 4 plan is the intention to build 500,000 affordable housing units for Kenyans.

A promise from the last election in 2017, it’s been in design since. It will be a massive collaboration between the government and the private sector.

The government among other things will create the legal and tax framework under which it will operate, develop supporting infrastructure and create wholesale financial and mortgage institutions, while the private sector will execute the development and market it.

A rough calculation, using the cheapest unit of Ksh800,000 (sh32m) means this is at least a sh16 trillion project.

It’s a bit hard to wrap one’s mind around the numbers but even if it’s still in its conception stage, it could serve as a useful model that we in Uganda can adopt to bridge our own housing deficits.

Even assuming we just start by attempting to bridge the urban housing gap of 160,000 units the impact on our lives can be significant.

For the benefits we have to look beyond the provision of housing, which while it is the end goal is only part of the potential benefits from such a project.

"The beauty of real estate development is that, most of the inputs will come from within our borders – the labour, the cement, the paint, the tiles and even the steel. The transportation industry would also get a boost, as would many catering businesses. The ripple effect such a project would have on this economy would be huge....

In terms of jobs, workers can be skilled and retooled in a relatively short time, with skills they will use long after the initial projects have been done.

And if executed properly, may very well seed other major real estate investments around the country and accelerate the move to a middle income status country.

But clearly like in Kenya our government has got to take the lead and carry the private sector along.
The Private Sector Foundation of Uganda (PSFU) would be interested in such an initiative and be willing to help formulate the strategy and coordinate the various stakeholders required to make a success of the initiative.

The naysayers may be against government involvement warning that it may cause them to contract more debt or worse divert much needed resources from priority areas like infrastructure, education and health, but that need not be the case.

The Kenyans are pushing for a developer led financing, with government undertaking to buy all the houses once completed and will be paid by eventual owners of the houses.

Seen against the larger goal of transforming the economy a more deliberate and systematic focus on the real estate sector by government can aid in efforts to transform the economy. See housing as a catalyst and it will give the economy the Big Push.

Labels:

Comments

Post a Comment

Popular posts from this blog

GOOD BUSINESS SENSE WILL HELP OUR AGRICULTURE

The recent drought has at once alerted us to our deficiencies in our agriculture production and reawakened a drive to revitalise the sector. How is it that a country with half the arable land in the region has people suffering starvation? How is that our crops dried up in the fields when a fifth of our land mass is under water? And on a macro level how is it that the 70 percent of our people who rely on the land directly for a living, account for 30 percent of our economic output or GDP? Given our natural endowments in land, weather and manpower it is obvious that we are performing well below our potential. Reversing this trend of affairs should be the concern of everybody in the country. A lot of the debate has revolved around increasing production, value addition and market access locally and internationally. And rightly so. Taking one example the Uganda Coffee Development Authority says that the average yield per hectare is half a ton of coffee. But meanwhile with...
Post a Comment
Read more

BEWARE OF THE CON MAN

I read with a mixture of horror and sympathy for the victims of the latest Ponzi scheme gone bad in town. Last week a company, Global Cryptocurrencies Ltd, collapsed and along with it went billions of shillings, by police estimates, of their clients’ money. The company working out of an obscure office on Namirembe road, managed to rope in all manner of clients with the promise of magical returns – 40% a week! I have been in business for most of my life, if I could be guaranteed 40% week I would sell everything I own and jump in with both feet. Or maybe not. And this is why. They say if anything is too good to be true, it is. If you can get an annual return of 40% on your investment you will be doing extremely well. So if you put in a million shillings in your business and walk away at the end of the year with sh400,000 after taxes you have found a good thing, and I would like to be your friend. I have seen my share of scam artists and con men. Below are my fast an...
Post a Comment
Read more

HOW TO RECOGNISE A PONZI AND NOT FALL VICTIM

Another Ponzi scheme has come crashing down around the ears of hundreds of “investors”. Unsurprisingly. In its recent reincarnation poor Ugandans were lured into a scheme where they bought computer tablets. This entitled them to a monthly pay off, $100, and a Christmas bonus for their children. In this case the unsuspecting investors -cum -victims were being given a share certificate. Meaning you accept to take the part of the risk in this project. Which was inadvertently reducing their burden of risk and liability for the issuing company. I leave that area to smart lawyers to handle.   As is always the case with these things, it’s not quite clear where the pay-out will come from. A common characteristic of these schemes is that you might get initial payments before you starting missing a few and the stories begin. The promoters of these schemes or scams often use the money from the latest entrants to pay the older “investors” until one of two things happen. Either...
Post a Comment
Read more

THE GOOD THAT CAN COME OF THE NEW UGANDA AIRLINES

I have fond memories of the Old Uganda Airlines. As a secondary school child, I took advantage of ticket concessions (my mother worked for Uganda Airlines) to fly to the UK to buy clothes and other goods for sale to my friends at school. These trips were a great adventure and served as a good foundation for the businessman I am today. It has been reported that the first two planes of the revived Uganda Airlines will be landing in the country within the month. The finance ministry has been presenting to parliament their needs to pay off deposits on the first two of six planes they are to take possession of in coming months. The project has its equal share of supporters and critics. I am a qualified supporter of the project. In business nothing is certain. We deal in probabilities. When getting into a venture we often must weigh the risks versus the returns of a project. If the risk of failure outweighs the potential profit we stay away, otherwise you are gambling...
Post a Comment
Read more

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...
Post a Comment
Read more

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

THE MUKWANO I KNEW

We have lost the greatest Ugandan entrepreneur of our time, Mr Amirali Karmali, more popularly known as Mzee Mukwano. I have known Mzee Mukwano for more than 40 years and most of what I am today is due to him. And I am not alone. "He has helped countless people through school – as he did me. Helped countless more in business – as he did me. And he has been a steadfast friend and source of support to countless more – as he was to me.... I first met Mukwano around about 1977. My mother was the secretary for the chief of operations at Uganda Airlines, a man I knew only as Hamid. Mukwano had come to charter the Uganda Airlines’ Hercules plane and I happened to be around the office then. He was a short man, an unassuming man, but clearly a serious businessman who would charter the plane to bring in goods that were in high demand here. He run a popular whole sale shop in Nakasero – Egesa Commercial Agencies, a beehive of activity and the go-to place for anythin...
Post a Comment
Read more