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

A SHIFT AWAY FROM AGRICULTURE IS CRITICAL FOR UGANDA

Anyone who has half a stake in this country would be a keen observer of the economy and the direction it is taking. In the last three decades the economy has shown strong growth, only slowing to overcome bad weather, a global financial crisis or unrest in the region. Compared to when I started out in business, it has become a more liberal economy, with individual initiative being rewarded more and more. While the economy is still dominated by the informal sector, the formal sector is growing annually. But the biggest shift in the economy has to be the reduction in agriculture’s share of the economy from more than 80 percent to about 25 percent today. This has happened despite the leap in the production of everything from bananas to coffee or from milk to maize. What has happened is that more of the economy – though not nearly enough, has been taken up by industry, construction and services. This is how it should be and in fact, more work is needed in shifting t...
Post a Comment
Read more

ARE WE HELPLESS TO DO ANYTHING ABOUT THE CARNAGE ON OUR ROADS?

Recently there was a horrific crash between a passenger bus and sand laden Isuzu truck on the Masaka-Kampala highway. To look at the pictures of the aftermath it is a miracle that only two were killed and 20 injured in the accident, which it is reported was a head-on collision between the two vehicles. We don’t go a week without news of a major accident on our trunk roads. I suspect that a combination of poorly maintained vehicles, improperly trained or inexperienced drivers, driving at break neck speeds are to blame. "A few months ago, there was a suggestion that the new paved roads were not properly designed and therefore causing the accidents, but I think that is a case of poor workmen blaming their tools.... If one was to buy this argument, what about the argument that we had fewer accidents when our roads were pot holed and it would take whole days travelling journeys that now take a few hours? So, we should we go back to our potholed roads? "Accord...
Post a Comment
Read more

WE NEED A BETTER SOLUTION FOR KAMPALA TRAFFIC

I am sure I am not the only one feeling it. Kampala’s traffic is becoming increasingly unbearable. Even the removal of roundabouts around the city seem to have an opposite effect to the intended purpose of easing traffic flow in the city. Kampala Capital City Authority (KCCA) has an ambitious plan of flyovers, underground tunnels and railway transport, which should help the cause, I hope. The snarl ups that we are coming fast accustomed to, are not only an issue of teeth grinding inconvenience but have a real cost on our economy by hampering and increasing the cost of doing business. A recent World Bank report suggests that as an economy, we are losing about sh3trillion annually due to traffic jams. The losses come in form of delayed deliveries, higher fuel consumption and the health consequences of seating in a smoke filled environment. To put this in perspective this is the combined budget of the health, agriculture and ICT ministries in this year’s budget. Or ...
Post a Comment
Read more

GIVE OUR TRAFFIC POLICE A CHANCE

Last week during an investor interaction   Kampala Capital City Authority (KCCA) officials called on police to stop overriding traffic lights while directing traffic. KCCA argues that the traffic lights are large investment and it makes no sense for police to countermand them. In a classic case of “The importance of the river was not known till it dried up” on Friday the traffic police desisted from directing cars at the traffic lights leading to the worst traffic snarl-up in the city’s history. People were stuck in traffic jams around the city for hours and long into the night. Maybe it was the unhappy coincidence of the traditional Friday traffic and pre-Christmas excitement but without the traffic police directing traffic it was a mess. They made their point. It of course points to the bigger issue of a revamping of Kampala’s road network, which has remained   largely the same since independence but with an exponential increase in cars in the last three...
Post a Comment
Read more

COME HELP BEAT BACK HIV/AIDS

Uganda has made tremendous strides in containing the AIDS pandemic. For some of us who were around in the 1980s and saw the worst effects of the AIDS pandemic, the way the country has contained the disease is not what we had envisaged back then. Ignorance, stigma and lack of drugs surrounding the disease saw thousands die horrible deaths – wasting away, tortured by opportunistic diseases and being shirked by family and a society out fear.  The doomsayers were projecting a major fall in our population, a collapse of the economy and a total breakdown of social cohesion. That the country is still around and fighting back the disease successfully, could not have been envisaged in those scary days of the 1980s when the disease came into the public conscious. Thankfully rather than sweep the problem under the carpet like many of the neighbouring countries, President Yoweri Museveni led a fight back against AIDS that had at its core widespread dissemination of infor...
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